New Years’ (Special) Resolution? Amending Victorian School Constitutions for VRQA compliance and good governance

The Victorian Regulation and Qualifications Authority (VRQA) has published new Guidelines to the Minimum Standards and Requirements for School Registration (the new Guidelines). The new Guidelines apply to new schools from 1 January 2021 and to existing schools from 1 July 2021. Importantly, schools operating or proposing to operate an Early Learning Centre (ELC) must amend their governing document (the Constitution, Rules or Trust Deed) to expressly provide for the delivery of ELC services.

A governing document sets out matters such as your school’s purpose, how decisions are made, the composition and role of your Board, Committee or Trustees and the role of any members. It is also the framework around which the school’s delegations and policies are built. Despite the importance of governing documents, they are often not reviewed for long periods of time. For this reason, when making changes for VRQA compliance, schools should take the opportunity to carry out a comprehensive review of their governing document.

We have highlighted some key considerations below:

  • VRQA compliance
    As noted above, you’ll need to expressly provide for the delivery of ELC services in your governing document. It’s also worth considering appropriate provision for compliance with the VRQA requirements relating to a schools’ not-for-profit status, distribution of income and assets, government funding, probity and prohibited agreements or arrangements.
  • Charitable companies
    Following the establishment of the Australian Charities and Not-for-profits Commission (ACNC) in 2012, the Corporations Act 2001 (Cth) was amended to introduce flexibility for charitable companies. In particular, companies that are registered charities are exempt from certain provisions of the Corporations Act, including those that relate to general meetings. It may be appropriate to introduce this flexibility to your constitution.
  • Victorian incorporated associations
    In 2012, the Associations Incorporation Reform Act 2012 (Vic) came into force. If your Rules have not been changed since 2012, you need to review them for compliance with the new legislation. Among other things, you’ll need to make sure you have an appropriate grievance process in place.
  • ACNC Governance Standards
    All registered charities must comply with the ACNC Governance Standards. Does your governing document appropriately reference the standards? For example, can you remove responsible persons if they are disqualified by the ACNC or ASIC?
  • Is your governing document clear?
    Is your governing document clear, concise and written in plain English? Lack of clarity can result in unnecessary confusion and conflict over proper interpretation. It can even expose decisions made by your Board, Committee or Trustees to the possibility of legal challenge on the basis that the governing body was not properly constituted.
  • Is your governing document past its prime?
    We regularly see governing documents that were first prepared twenty or more years ago. Regulation and governance have changed a great deal over that time. So has written communication. Is it still appropriate to keep patching up your old document or do you need a fresh start?
  • Does your governing document support good governance?
    A good governing document will help rather than hinder, your School’s governance. Consider matters such as term lengths for responsible persons, meetings via technology (essential under recent COVID restrictions), how and when responsible persons or members can be removed and the ability for members to require the Board to convene a general meeting.
  • Should your governing document provide for any DGR funds?
    Does your school maintain a tax deductible school building fund, scholarship fund or library fund? It is important that you know where the rules for these funds are and ensure that the Board, Committee or Trustees has oversight of the fund operations. It may be appropriate to embed these rules in your governing document.

Allowing time for the review process

Amending or replacing a governing document takes time. Many schools will form a subcommittee for this purpose, but ultimately your entire Board, Committee or Trustees will need to review and approve the document. Once it is approved, you may need to allow time for a consultation period with members (if appropriate). Then you’ll need to formally adopt the governing document – unless your school is established as a Trust or unincorporated association, this usually requires a special resolution, including convening a general meeting with a notice period of at least 21 days.

How we can help

Our For Purpose team regularly assists schools (and not-for-profits across the sector) to ensure that their governing document is compliant with relevant legislation, expressed in plain English and tailored to their unique governance requirements. For further guidance, please do not hesitate to contact us.