Part V, Division 4 of the Act is headed “Committee Member Duties, Liabilities and Enforcement”. It gives committee members of an association, for the first time, a statutory code of conduct with criminal sanctions behind it.
The duty of care, diligence and skill
A committee member, when exercising powers or performing duties as a committee member, “must exercise the care, diligence, and skill that a reasonable committee member would exercise in the same circumstances taking into account, but without limitation — (a) the nature of the incorporated association; and (b) the nature of the decision; and (c) the position of the committee member and the responsibilities undertaken by the committee member”.
The standard is objective but contextual. More is expected of the treasurer of a national NGO handling grants than of a committee member of a village sports club, and more of a committee member who is an accountant than of one who is not. Section 38(3) adds that delegating tasks to the public officer “does not limit or eliminate the responsibilities imposed by this section”. The wording follows section 112 of the Companies Act 1997, and the cases on directors’ duties will be read across.
The duty not to act contrary to the Act or rules
Section 38(2) of the Associations Incorporation Act 2023 provides that a committee member “must not act, or agree to the incorporated association acting, in a manner that contravenes this Act or the rules”. Voting for an expenditure the rules do not permit, or for an activity outside the objects, is a breach even if the decision is honest. This is the duty most often enforced by a member under sections 50 and 52.
Reliance on information and advice
Section 39 allows a committee member to rely on reports, statements, financial data and other information prepared by, and professional or expert advice given by, an employee, a professional adviser or expert, or another committee member, if the committee member acts in good faith, believes on reasonable grounds that the matter is within the third party’s competence, and “makes proper inquiry where the need for inquiry is indicated by the circumstances”. A committee member who accepts the treasurer’s figures without question when the bank statements plainly contradict them cannot invoke section 39.
Good faith and best interests: the criminal duty
Section 44 makes it an offence, punishable by a fine of up to K50,000 or two years’ imprisonment or both, for a committee member to exercise powers or perform duties “(a) in bad faith towards the incorporated association; or (b) believing that the conduct is not in the best interests of the incorporated association; or (c) believing that the conduct will cause serious risk of loss to the incorporated association”. The test is subjective: what the committee member believed. Diverting grant money to a relative’s business, or approving a contract known to be ruinous, falls squarely within it. Section 45 lets the Court remove a committee member for “bad faith or dishonest conduct”, and section 32 lets it disqualify him.
Material interests
Sections 40 to 42 prohibit a committee member from exercising any power in which he or a relative has a material financial interest unless the interest is first disclosed in writing to the other committee members (or the members, where their approval is needed) or the rules expressly permit it, and allow the association to avoid an undisclosed-interest transaction within a month of discovery unless it received fair value. Breach is an offence with the same K50,000 or two-year penalty. See conflicts of interest.
Use of the association’s private information
Section 43 forbids a committee member from disclosing, using or acting on “private information”, meaning information obtained as a committee member or employee that would not otherwise be available to him, except for the association’s purposes, as required by law, with the authority of the rules, a special resolution or the committee, or in acting under section 39. Leaking a tender price, a member list or a grant application to a competitor is an offence carrying up to K50,000 or two years.
To whom the duties are owed and who enforces them
The duties are owed to the association. They are enforced by the association itself; by any member or committee member, creditor or (for a public benefit association) the Registrar seeking an injunction under section 50; by a member seeking an order for compliance under section 52; by a member or former member suing for breach of a duty owed to the member in that capacity under section 51; by members holding 20 per cent of the votes, and the Registrar, seeking removal under section 45; and by the Registrar prosecuting under sections 40, 43, 44 and 162. The next article but two deals with liability and defences, including the protection for unpaid committee members in section 38(4).
Read the papers before the meeting; ask questions; declare any interest in writing before the item is discussed and stay out of the decision; keep association information confidential; never approve anything outside the rules or the objects; record dissent in the minutes; and do not rely on the treasurer alone for the state of the accounts.
Sources
- Associations Incorporation Act 2023 — ss 32, 38–45, 50–52, 162
- Companies Act 1997 — ss 112–116 (directors’ duties)
Before relying on anything here, read the current text of the Associations Incorporation Act 2023 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.