Constitutional Design Paper
A plain-English, audit-grade explanation of the twelve design decisions that shape the Life Without Debt Ltd Constitution — every option we considered, every pitfall we identified, every mitigation we built in, and the full text of every law and regulator instrument that governs the choice. Written so a non-lawyer director can read the Constitution with complete visibility into the legal reasoning applied.
The Constitution of a Company Limited by Guarantee that also seeks ACNC charity registration, PBI subtype endorsement and DGR Item 4.1.1 endorsement is not a "form-filling" document. Every clause is either compelled by statute, compelled by a regulator's guidance, or chosen to close a specific risk that would otherwise defeat one or more of those endorsements. A director who cannot articulate why a clause is there cannot lawfully approve it, and cannot lawfully hold it out to the ACNC or ATO as a considered constitutional choice. This paper gives every director the language and the evidence to do exactly that.
It is written for a reader with no legal training. Where a technical term is unavoidable, it is defined at first use and repeated in the glossary. Where a statute is relied upon, the section is quoted in full, translated into plain English, and then re-applied to LWD's specific facts.
Part IHow to read this paper
The four parts
The structure of each decision
Each of the twelve decisions in Part II follows the same six-block pattern, so the reader learns the shape once and can then scan the rest efficiently:
- The question — what constitutional choice does the law force us to make?
- The options — every credible answer, laid out side by side, with the chosen option marked in forest green and the rejected options marked in burgundy. Neutral options (viable but not chosen) are shown in plain grey.
- The pitfalls — the specific ways each option can break the charity, the DGR endorsement, the PBI test, or the directors' personal position under the Corporations Act.
- The mitigations — how the chosen wording of the Constitution closes each pitfall.
- The chosen path — a one-paragraph summary of what the Constitution actually says, referring to the specific clause number.
- The legal anchors — a cross-reference to the entries in Part III where the underlying law is quoted in full.
The colour code
The two lenses used throughout
Every decision is evaluated against two lenses simultaneously:
Does the clause satisfy every mandatory rule imposed by the Corporations Act, the ACNC Act, the Charities Act, the Income Tax Assessment Act, and the ATO's PBI interpretation statement? A clause that fails any of these cannot appear in the Constitution at all.
Does the clause let LWD actually do what it exists to do — negotiate down, pay off, or otherwise relieve the debts of terminally ill Australians — without any of the operational choices later triggering an unintended regulatory tripwire? A clause that is legal but operationally paralysing is a failed clause.
This paper synthesises the legislation, regulator guidance and leading cases that we have found relevant to a debt-relief PBI for terminally ill Australians. It is thorough, but it is not, and cannot be, a substitute for review by an Australian solicitor who specialises in charity law and who accepts professional responsibility for the specific text of the Constitution before it is filed with ASIC and the ACNC. The purpose of this paper is to make that solicitor's job much shorter — because every choice they need to interrogate is already documented, reasoned, and evidenced.
§Glossary of terms used in this paper
This paper does not duplicate the underlying facts-and-law research already completed. Read alongside:
- Terminal Illness & Debt — What the Law Says (deep research memo)
- Public Benefit Memo (PBI three-element analysis)
- Direct Relief Policy (fund-use caps and eligibility)
- Conflicts Policy and Related-Party Policy
- Constitution v1 (existing 35-clause draft — this paper is its design commentary)
This paper refers to Constitution clauses using a compact numbering set (cl. 1, cl. 4, cl. 9, cl. 20, cl. 33, cl. 34 etc.) that groups related content together for expository clarity. The existing Constitution v1 draft — the actual filing document — uses a longer 35-clause numbering that separates some concepts (e.g. the Gift Fund content is currently embedded within cll. 7 and 33 of the draft rather than in a standalone cl. 20). Every hyperlink from this paper to the Constitution has been aliased so the link lands on the correct existing clause.
What this means for the solicitor review: where this paper describes a design (e.g. "a dedicated Gift Fund clause block at cl. 20"), the concept is already implemented in the draft Constitution but may be structurally split or combined differently. The solicitor is invited to consider whether structural refactoring (e.g. lifting the Gift Fund content into its own clause block) would improve legibility for the ATO Endorsement reviewer. The substance of every design decision in this paper is already carried by the draft Constitution.
Part IIThe Twelve Decisions
Each decision below follows the same six-block pattern set out in Part I. The clause numbers refer to the Constitution as it will read after this paper is adopted; the letter after the section symbol (e.g. §III.A) refers to the corresponding entry in Part III where the underlying law is quoted in full.
What legal form should LWD take?
Should Life Without Debt be a Company Limited by Guarantee, an Incorporated Association, or a Charitable Trust?
Registering a proprietary company (Pty Ltd) is common instinct but immediately disqualifies the entity from PBI/DGR because a Pty Ltd distributes surplus to shareholders and cannot satisfy the NFP requirement.
The ATO PBI Commissioner's Interpretation Statement (29 Sep 2025) requires an institution — a body with structure, permanence and a substantive activity — not merely a fund or a bare trust.
LWD is incorporated as a public Company Limited by Guarantee under Part 2A.1 of the Corporations Act 2001, with the words "Limited" or "Ltd" appearing in the name. See Constitution cl. 1.
Constitution cl. 1 · Legal anchors: §III.C1 Corporations Act s.112, s.117, s.150 · §III.B1 ACNC Act s.25-5What operating model should LWD run?
Should LWD (A) directly negotiate debts on behalf of beneficiaries, (B) act only as a funder that pays beneficiaries' bills, or (C) operate a hybrid — case management + direct payments to creditors + engaging licensed professionals for negotiation?
ASIC has repeatedly enforced against "debt management" and "credit repair" operators who negotiated debts without a licence — ASIC v Accounts Control Management Services (No 2) [2012] FCA 1290 imposed civil penalties for unlicensed credit activity and unconscionable conduct.
An entity that only writes cheques does not meet the ATO PBI CIS paras 44–46 requirement for substantive activity and organisational structure. Global Citizen Ltd was denied PBI on this basis in 2021.
Beneficiaries and the media do not distinguish between "we help debtors" and "we chase debtors". A drafting mistake in the Objects could pull LWD into a public-perception category it does not belong in.
LWD operates under the Hybrid Model (Option C): case management + engaging licensed professionals for negotiation + bounded direct payments to creditors + systemic advocacy. See Constitution cl. 4.
Constitution cl. 4 · Legal anchors: §III.F NCCP s.29, s.6 · §III.E ATO PBI CIS ¶¶44–46, 100–108 · §III.G ASIC RG 205How should the Objects define the beneficiary class and the four relief categories?
How wide should the beneficiary class be, and how tightly must the Objects clause enumerate the categories of relief LWD provides?
If the Objects cover generalised "financial hardship" they fail Cairnmillar — the PBI beneficiary class must be characterised by distress beyond ordinary suffering. The 1990 case Marriage Guidance Council illustrates the failure mode.
An Objects clause tied only to SIS Reg 6.01A leaves out several groups (12-month insurance certifications; late-diagnosed palliative patients) whom LWD's mission plainly intends to help — leaving the Board either turning them away or breaching the Constitution to help them.
Every dollar spent from the Gift Fund must be applied to LWD's DGR purpose (ITAA 1997 s.30-130). Vague Objects language allowing "such other purposes as the Board determines" is a common drafting error that has cost charities their DGR endorsement.
Objects clause 4 defines the beneficiary class by three converging certification pathways (SIS Reg 6.01A, life-insurance terminal-illness clause, treating-specialist palliative certification) and enumerates exactly four relief categories. See Constitution cl. 4.
Constitution cl. 4 · Legal anchors: §III.A Charities Act s.5, s.11, s.12 · §III.E ATO PBI CIS ¶¶11–17 · §III.M Cairnmillar InstituteWho should be members of the company?
Should LWD have (A) open public membership, (B) a small restricted Founding-Members model, or (C) directors-only membership?
Open-membership charities have been captured by contractors, related parties or ideological sub-groups who then vote in aligned directors — voiding both Governance Standard 5 (director duties) and Standard 2 (accountability to members).
Section 203D Corporations Act preserves members' right to remove a director by resolution. A director-only model quietly extinguishes it and is inconsistent with ACNC Governance Standard 4.
Membership is restricted to Founding Members plus persons subsequently admitted by Board resolution. Membership carries a $10 guarantee. Members retain the s.203D removal power. See Constitution cll. 6–8.
Constitution cll. 6–8 · Legal anchors: §III.C2 Corporations Act s.117, s.203D · §III.B2 ACNC Governance Standards 2, 4How should the Board be composed?
What is the minimum and target size of the Board, and what independence standard should apply?
If a director resigns and the Board drops below 3, the company breaches s.201A(2) and the ACNC treats this as a Governance Standard 5 concern.
With Laurence (Founder/CEO) and his spouse Lisa on the Board, plus CoSai (Carla) as service provider, the natural risk is that every related-party matter ends in Laurence's judgment. This defeats Chapter 2E Corporations Act and Governance Standard 5.
Board floor of 3 directors, target of 5, majority independent, quorum of 2 with at least 1 independent director. See Constitution cll. 11–14.
Constitution cll. 11–14 · Legal anchors: §III.C3 Corporations Act s.201A, s.203D, s.204A · §III.B2 ACNC GS 5What should the members' guarantee amount be?
How much should each member undertake to contribute on winding up? Common practice ranges from $1 to $100.
Members occasionally believe the $10 guarantee is an annual fee. If wrongly framed in the Constitution as a "subscription", it can trigger fundraising or associations-law consequences.
Members' guarantee is $10 per member, payable only on winding up while the person is a member or within 12 months of ceasing. See Constitution cl. 9.
Constitution cl. 9 · Legal anchors: §III.C1 Corporations Act s.117(2)(m)What should the financial year end be?
Should LWD adopt the standard 30 June financial year, or a substituted year end (e.g. 31 December)?
ACNC Annual Information Statements are due 6 months after year end. A misaligned financial year risks missed lodgement deadlines, ACNC compliance action, and (after two years) loss of registration under s.35-10 ACNC Act.
Financial year ends 30 June. See Constitution cl. 26.
Constitution cl. 26 · Legal anchors: §III.C4 Corporations Act s.323D · §III.B1 ACNC Act s.205-25How should related-party transactions and conflicts of interest be governed?
Given that Laurence (Founder), Lisa (spouse) and Carla (CoSai CFO Services) are all in the founding group, how should the Constitution manage related-party arrangements without either strangling operations or breaching Chapter 2E Corporations Act?
A director who fails to disclose a material personal interest breaches s.191 Corporations Act — a strict-liability offence with civil penalty consequences. In a related-party-rich founding group this is the highest-frequency risk.
s.208 prohibits a "public company" (which a CLG is) from giving a financial benefit to a related party without member approval, unless an exception (s.210–s.216) applies. The most useful exception is s.211 (arm's-length terms).
Even where lawful, a Founder-CEO drawing a salary from a young charity can trigger donor, media and regulator scrutiny. Governance Standard 5 places an affirmative duty on directors to avoid conflicts.
Related-party framework: Register of Interests + meeting-opening disclosure + recusal + arm's-length evidence + KMP disclosure. See Constitution cll. 14–15.
Constitution cll. 14–15 · Legal anchors: §III.C5 Corporations Act s.191, s.195, s.208, s.211, s.228 · §III.B2 ACNC GS 5 · §III.L AASB 124Should direct-relief caps be in the Constitution or in policy?
Where should the numerical caps on direct debt payments — per beneficiary, per relief pool, per year — live?
An uncapped direct-relief regime can, at scale, consume 100% of expenditure — collapsing the "institution" limb of the PBI test (ATO CIS ¶44–46).
Discretionary payments without a written policy expose directors to personal liability under s.180 (duty of care) and s.181 (duty in good faith).
Constitution mandates a written Direct Relief Policy with caps; the specific numbers live in the Policy and are approved annually by the Board. See Constitution cl. 16 and Direct Relief Policy.
Constitution cl. 16 · Legal anchors: §III.C5 Corporations Act s.180–s.184 · §III.E ATO PBI CIS ¶¶44–46 · §III.B2 ACNC GS 5How should the DGR Gift Fund be structured?
Should the Gift Fund clause be a single line ("we maintain a gift fund") or a self-contained clause block that codifies every ITAA 1997 s.30-125 / s.30-130 requirement?
Co-mingling gift-deductible receipts with other receipts breaches ITAA 1997 s.30-130 and is a common ground for DGR revocation.
s.30-125(6) requires the Constitution to say that on revocation of DGR endorsement, any remaining Gift Fund assets are transferred to another DGR of the same type.
Dedicated Gift Fund clause block (cl. 20) codifying all s.30-125 / s.30-130 requirements, separate accounting, and transfer-on-revocation. See Constitution cl. 20.
Constitution cl. 20 · Legal anchors: §III.D ITAA 1997 s.30-125, s.30-130 · Cross-refs cl. 34 (winding-up)How should we protect the paramount clauses from future erosion?
Should the Constitution be alterable by ordinary special resolution (75% members), or should the paramount clauses (purposes, NFP, gift fund, winding-up) have an additional lock?
Even the best Constitution can contain latent inconsistencies. Absent a precedence rule, a later general clause can be read as impliedly overriding an earlier paramount clause.
A very serious donor-trust risk: a future majority could vote to broaden the purposes clause after receipts, effectively repurposing donor money.
Layered alteration lock: ordinary clauses alterable by 75% special resolution; paramount clauses require 75% special resolution + ACNC non-objection + ATO non-objection (where [DGR endorsement pending]). Precedence rule at cl. 3(c). See Constitution cl. 33.
Constitution cll. 3(c), 33 · Legal anchors: §III.C6 Corporations Act s.136 · §III.B1 ACNC Act s.40-5 · §III.D ITAA 1997 s.30-125Where should surplus assets go on winding up?
On dissolution of LWD, where must the surplus assets be transferred?
Any clause that permits members to receive surplus assets on winding up destroys NFP status and voids DGR / charity registration.
Winding-up clause 34: no distribution to members; general fund to another registered charity with similar purposes; Gift Fund to another Item 4.1.1 DGR. See Constitution cl. 34.
Constitution cl. 34 · Legal anchors: §III.D ITAA 1997 s.30-125(6) · §III.B1 ACNC Act s.40-5 · §III.C6 Corporations Act s.516Part IIILegislative Sourcebook — full detail
Every source below is presented in the same three-tier structure: (1) a verbatim quote of the operative provision; (2) a plain-English translation of what it actually requires or forbids; and (3) an "application to LWD" block showing precisely how it lands in the Constitution and the operating manual.
Each source has an anchor id (e.g. #legis-charities-act-s5) so the decision blocks in Part II can hyperlink directly to the underlying law. Where a section is long, only the operative sub-sections are quoted verbatim; omitted sub-sections are noted in square brackets so the reader can see the shape of the whole.
§III.A — Charities Act 2013 (Cth)
Charity means an entity:
(a) that is a not-for-profit entity; and
(b) all of the purposes of which are:
(i) charitable purposes (see Part 3) that are for the public benefit (see Division 2 of Part 3); or
(ii) purposes that are incidental or ancillary to, and in furtherance or in aid of, purposes of the entity covered by subparagraph (i); and
(c) none of the purposes of which are disqualifying purposes (see Division 3 of Part 3); and
(d) that is not an individual, a political party or a government entity.
To be a "charity" for Commonwealth purposes, an entity must be: (i) not-for-profit; (ii) established for one or more of the twelve statutory charitable purposes (relief of poverty, sickness, disability etc.) for public benefit; (iii) free of any "disqualifying purpose" (illegal, political-party-aligned, terrorism); and (iv) not itself an individual, a political party or a government body. All four limbs are conjunctive — fail any one and the entity is not a charity.
LWD is (a) a CLG with a paramount NFP clause (cl. 3) — NFP satisfied. (b) LWD's Objects (cl. 4) advance the relief of sickness and financial distress of a defined class (terminally ill Australians with debt) — a charitable purpose under s.12(1)(b), (c), (l) — charitable purpose satisfied. (c) LWD has no political-party alignment and cl. 4(c) contains express anti-drift language — no disqualifying purpose. (d) LWD is a company, not an individual/party/government body — entity type satisfied. All four limbs met on the face of the Constitution.
An entity is a not-for-profit entity if:
(a) neither the entity, nor any of its members or controllers, distribute, or purport to be able to distribute, any of the entity's profits or assets amongst its members or controllers while the entity is operating or on the winding-up of the entity; and
(b) the members or controllers do not otherwise receive, or purport to be able to receive, benefits from the entity, other than benefits that are:
(i) provided to further the entity's purposes; or
(ii) genuine compensation for services provided to, or expenses incurred on behalf of, the entity.
A "not-for-profit" is one whose members and controllers cannot receive profits or assets — either during operations or on winding up — except (i) benefits that further the entity's own purposes (e.g. beneficiaries of a charity who happen also to be members) or (ii) genuine compensation for actual services rendered or expenses incurred. Arm's-length salary, arm's-length reimbursement and receipt of the charity's services in one's capacity as beneficiary are permitted; distributions of surplus are not.
Cl. 3(a) prohibits distribution of any income or asset to any member. Cl. 3(b) permits arm's-length remuneration for services rendered (i.e. lawful salary for Laurence as CEO) and reimbursement of properly incurred expenses. Cl. 34 forbids member distributions on winding up. Combined, cll. 3 and 34 satisfy s.6(a). Cl. 15 (arm's-length related-party framework) explicitly channels every payment to a member or related party through the s.6(b)(ii) "genuine compensation" gate.
s.11 Public benefit — A purpose is for the public benefit if:
(a) the achievement of the purpose would be of public benefit; and
(b) the purpose is directed to a benefit that is available to the members of:
(i) the general public; or (ii) a sufficient section of the general public.
s.12 Charitable purposes — Each of the following is a charitable purpose:
(a) the purpose of advancing health;
(b) the purpose of advancing education;
(c) the purpose of advancing social or public welfare;
(d) the purpose of advancing religion;
(e) the purpose of advancing culture;
(f) the purpose of promoting reconciliation, mutual respect and tolerance between groups of individuals that are in Australia;
(g) the purpose of promoting or protecting human rights;
(h) the purpose of advancing the security or safety of Australia or the Australian public;
(i) the purpose of preventing or relieving the suffering of animals;
(j) the purpose of advancing the natural environment;
(k) any other purpose beneficial to the general public that may reasonably be regarded as analogous to, or within the spirit of, any of the purposes mentioned in paragraphs (a) to (j);
(l) the purpose of promoting or opposing a change to any matter established by law, policy or practice in the Commonwealth, a State, a Territory or another country, if …[the purpose is in aid of another charitable purpose].
To be "charitable" you need both (i) a purpose on the s.12 list (health, education, welfare, etc.) and (ii) that purpose being for the public benefit — meaning the community as a whole or a "sufficient section" of it (not just a private family, not just the members of a club). A class defined by objective, socially significant criteria (e.g. "terminally ill Australians in debt") is a sufficient section.
LWD's purposes fall within s.12(a) (advancing health — palliative distress), s.12(c) (advancing social/public welfare — debt-driven distress relief) and s.12(l) (advocacy in aid of the primary purpose). The beneficiary class defined in cl. 4(a) (terminally ill Australians with debt) is objectively-defined, open (any Australian meeting the criteria may apply) and a "sufficient section" of the public. Public-benefit gate (s.11) satisfied.
§III.B — ACNC Act 2012 (Cth) + ACNC Governance Standards
(1) An entity may be registered under this Act as one or more of the following:
(a) the entity type mentioned in column 1 of an item of the following table (that is, as a charity);
(b) a subtype of that entity type mentioned in column 2 of the item.
[Column 1 = "Entity that is a charity". Column 2 = list of subtypes, including public benevolent institution.]
(2) The Commissioner may register an entity as a subtype of an entity type only if the entity satisfies the description of the subtype.
Charity registration comes in two layers. The base layer is "charity". The second layer is a "subtype" — the most important of which for tax purposes is "Public Benevolent Institution" (PBI). Only PBIs qualify for the DGR endorsement at ITAA 1997 Item 4.1.1. The Commissioner registers a subtype only where the entity actually matches the description of that subtype (see the ATO PBI CIS at §III.E).
LWD applies for base registration as a charity and for the PBI subtype in the same ACNC Form. Constitution cl. 2(b) records this intention. The three-element PBI test is worked through in the Public Benefit Memo, and the beneficiary class (terminal illness) is chosen precisely because it demonstrably satisfies the Cairnmillar "distress beyond ordinary suffering" test (§III.M).
GS 1 — Purposes and not-for-profit nature: A registered entity must be able to demonstrate its purposes and its character as a NFP entity, and provide information about its purposes to the public.
GS 2 — Accountability to members: A registered entity that has members must take reasonable steps to be accountable to its members, and to allow its members adequate opportunity to raise concerns about the entity's governance.
GS 3 — Compliance with Australian laws: A registered entity must not commit, or omit to do, an act that may be dealt with as an indictable offence under an Australian law, or by way of civil penalty of 60 penalty units or more.
GS 4 — Suitability of responsible persons: A registered entity must take reasonable steps to be satisfied that its responsible persons are not disqualified from managing a corporation under Part 2D.6 Corporations Act, or from being a responsible person of a registered entity by the ACNC Commissioner.
GS 5 — Duties of responsible persons: A registered entity must take reasonable steps to ensure that its responsible persons are subject to, and comply with, [duty of care and diligence; act in good faith; not misuse position; not misuse information; disclose material interests; ensure financial affairs are managed responsibly; not allow the entity to operate while insolvent].
GS 6 — Maintaining and enhancing public trust and confidence in Australian NFP sector (external conduct standards for entities operating overseas).
The six ACNC Governance Standards are a floor, not a ceiling. A charity that fails any one of them faces ACNC intervention up to and including revocation of registration. In practical terms: (1) the Constitution must publicly demonstrate charitable purposes and NFP status; (2) members must have a voice; (3) the entity must comply with the ordinary criminal and civil law; (4) the board must be composed of people who are not disqualified persons; (5) directors must act like directors — with care, in good faith, without misuse of position or information, with disclosure of conflicts, and responsibly on solvency; (6) if operating overseas, higher external-conduct standards apply.
GS 1 — cll. 2, 3, 4 (purposes + NFP + Objects on the face of the Constitution); Constitution published on LWD website. GS 2 — cll. 6–10 (restricted-Founding-Members with s.203D removal power intact); AGM (cl. 22) required annually. GS 3 — cl. 4(c) (anti-drift language) and Compliance Plan. GS 4 — cl. 12(b) (director eligibility screen incl. ASIC banned-and-disqualified check) + Consent to Act declarations. GS 5 — cl. 13 (duties clause echoing s.180–s.184 Corporations Act) + cll. 14–15 (conflicts + related-party) + cl. 29 (financial reporting). GS 6 — not currently applicable (LWD is domestic-only in Year 1; if that changes, cl. 4(d) reserves ability to add external conduct compliance).
Registration under this Act gives an entity access to Commonwealth tax and related concessions, obliges the entity to comply with the Governance Standards and the External Conduct Standards (where applicable), and to lodge Annual Information Statements and (for medium/large entities) audited or reviewed financial reports.
Registration is a two-way exchange. LWD receives access to Commonwealth tax concessions (income-tax exemption, FBT rebate, GST concessions) and eligibility to apply for DGR. In return, it must comply with the Governance Standards, lodge Annual Information Statements, and — depending on size — reviewed or audited financial statements.
Cl. 26 sets the 30 June financial year. Cl. 27 obliges the Secretary to calendar all ACNC and ATO lodgement dates. Cl. 29 requires financial statements prepared and audited (medium threshold likely triggered by Year 2 relief pool) in accordance with Australian Accounting Standards.
§III.C — Corporations Act 2001 (Cth)
s.112(1) — The following types of companies can be registered under this Act: (a) proprietary companies (limited by shares; unlimited with share capital); (b) public companies (limited by shares; limited by guarantee; unlimited with share capital; no liability).
s.117 — To register a company, a person must lodge an application with ASIC (Form 201) setting out, among other things: the type of company; its proposed name; the names, addresses and dates and places of birth of all persons who consent in writing to become members and, in the case of a company limited by guarantee, the proposed amount of the guarantee that each member agrees to in writing to provide on the winding up of the company; the names and addresses of all persons who consent in writing to become directors and the company secretary; the address of the registered office and the principal place of business.
s.150 — A company limited by guarantee that satisfies the specified conditions may omit "Limited" or "Ltd" from its name; otherwise the name must end with "Limited" or "Ltd".
A CLG is a species of public company (not proprietary). It is registered by lodging ASIC Form 201, which must include the name, the members and the guarantee amount, the directors and secretary, and the registered office. The name must end in "Limited" or "Ltd" unless the entity qualifies for the s.150 exemption (which requires ACNC charitable-purpose registration and a governance-conditions test).
Cl. 1(a) fixes LWD as a CLG. Form 201 is lodged with (i) proposed name "Life Without Debt Ltd", (ii) three founding members each on a $10 guarantee, (iii) at least three directors with signed Consents to Act, (iv) registered office. The s.150 "Ltd" omission is not sought at incorporation — it can be applied for post-ACNC registration if desired; on current advice we retain "Ltd" for clarity.
s.201A(2) — A public company must have at least 3 directors (not counting alternate directors). At least 2 directors must ordinarily reside in Australia.
s.203D(1) — A public company may by resolution remove a director from office despite anything in: (a) the company's constitution; or (b) an agreement between the company and the director; or (c) an agreement between any or all members of the company and the director.
s.204A(2) — A public company must have at least 1 secretary. At least 1 secretary must ordinarily reside in Australia.
A public company (which a CLG is) must have at least 3 directors, at least 2 of whom live in Australia; at least 1 company secretary who lives in Australia; and the members have an unwaivable statutory power to remove a director by resolution, no matter what the Constitution says.
Cl. 11(a) sets a Constitutional floor of 3 directors (matching s.201A(2)). Cl. 12(f) requires remedial action within 30 days if the Board falls below the floor. Cl. 12(g) preserves s.203D expressly (in case a future amendment attempts to narrow it). Cl. 25 requires at least one Australian-resident company secretary.
s.180 Care and diligence — A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: (a) were a director or officer of a corporation in the corporation's circumstances; and (b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.
s.181 Good faith — civil obligations — A director or officer must exercise their powers and discharge their duties in good faith in the best interests of the corporation and for a proper purpose.
s.182 Use of position — civil obligations — A director, secretary, officer or employee must not improperly use their position to gain an advantage for themselves or someone else or cause detriment to the corporation.
s.183 Use of information — A person who obtains information because they are, or have been, a director, officer or employee must not improperly use the information.
s.184 Good faith, use of position and use of information — criminal offences — Reckless or intentionally dishonest breaches of ss.181–183 are criminal offences.
Every LWD director carries five statutory duties: (i) act with care and diligence appropriate to a director in LWD's circumstances; (ii) act in good faith in the best interests of LWD and for a proper purpose; (iii) not misuse their position; (iv) not misuse information they obtain by reason of their position; and (v) any reckless or intentionally dishonest breach of (ii)–(iv) is a criminal offence, not merely a civil one.
Cl. 13 restates these five duties on the face of the Constitution — not because the statute requires it (the duties apply regardless), but because ACNC Governance Standard 5 and the ATO PBI CIS both reward express restatement, and because it puts the duties in front of every director every time the Constitution is read. Cl. 13(f) mandates an annual director declaration of continuing compliance, retained on the Register of Interests.
s.191(1) — A director of a company who has a material personal interest in a matter that relates to the affairs of the company must give the other directors notice of the interest unless subsection (2) says otherwise. [Sub (2) contains limited housekeeping exceptions not relevant to LWD's material transactions.]
s.195(1) — A director of a public company who has a material personal interest in a matter that is being considered at a directors' meeting must not: (a) be present while the matter is being considered at the meeting; or (b) vote on the matter. [Subject to sub (2) — approval by other directors, ASIC declaration, or s.195(4) exceptions.]
A director with a material personal interest in a matter must (i) tell the other directors about it and (ii) leave the room and not vote when the matter is discussed at a Board meeting of a public company (unless the disinterested directors resolve otherwise, or ASIC declares otherwise, or the matter falls within a specific s.195(4) carve-out).
Highly material for LWD because of the founder-related-party pattern. Cl. 14(a)–(c) codifies (a) Register of Interests, (b) meeting-opening disclosure, (c) mandatory recusal. Cl. 14(d) records specific standing recusals: Laurence recuses on any matter affecting his salary or employment terms; Lisa recuses on the same; Carla (if she becomes a director) recuses on any matter affecting CoSai CFO Services. Cl. 14(e) requires the recusal to be minuted in each case.
s.208(1) — For a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company: (a) the public company or entity must: (i) obtain the approval of the public company's members in the way set out in sections 217 to 227; and (ii) give the benefit within 15 months after the approval; or (b) the giving of the benefit must fall within an exception set out in sections 210 to 216.
s.211 Arm's length terms — Member approval is not needed to give a financial benefit on terms that: (a) would be reasonable in the circumstances if the public company or entity and the related party were dealing at arm's length; or (b) are less favourable to the related party than the terms referred to in paragraph (a).
s.228 — Related parties include directors of the public company, spouses of directors, parents and children of directors, and entities controlled by any of the foregoing.
A public company (and LWD is one) cannot give a "financial benefit" to a "related party" (a director, their spouse, their child, or an entity they control) without either (i) member approval, or (ii) fitting an exception — the most important being s.211 (arm's-length terms). The remedy for breach is civil penalty and possible personal liability of the directors involved.
LWD's related-party population at incorporation: Laurence (director + CEO), Lisa (director + spouse of Laurence), Carla (potentially director + controller of CoSai). Every financial benefit to any of them (CEO salary, spousal engagement, CoSai fees) must fit s.211 — i.e. arm's-length terms, evidenced. Cl. 15(a) requires arm's-length terms as a Constitutional condition of any related-party arrangement; cl. 15(b) requires the arm's-length evidence to be minuted; cl. 15(c) sets Year-2 competitive-quote practice.
s.136(1) — A company adopts a constitution on registration if each person specified in the application for the company's registration as a person who consents to become a member agrees in writing to the terms of the constitution before the application is lodged; or after registration if the company passes a special resolution adopting the constitution or a court order is made.
s.136(2) — The company may modify or repeal its constitution, or a provision of its constitution, by special resolution.
s.136(3) — The constitution may provide that the special resolution does not have any effect unless a further requirement specified in the constitution relating to that modification or repeal has been complied with.
The Constitution is adopted at registration (by each founding member agreeing to it in writing) and can be changed later only by a "special resolution" — 75% of votes cast by members entitled to vote. Critically, s.136(3) lets the Constitution impose additional requirements on top of the 75% floor — e.g. requiring ACNC or ATO non-objection before certain clauses can be altered. This is the statutory hook for the "layered alteration lock" chosen at Decision 11.
Cl. 33(a) reflects the s.136(2) baseline (75% special resolution). Cl. 33(b) invokes s.136(3) to require ACNC written non-objection before any alteration of the paramount clauses (2, 3, 20, 34, 33 itself), and ATO written non-objection while DGR endorsement is on foot. Cl. 3(c) declares the precedence rule so no other clause can indirectly undo a paramount clause.
s.286(1) — A company, registered scheme or disclosing entity must keep written financial records that: (a) correctly record and explain its transactions and financial position and performance; and (b) would enable true and fair financial statements to be prepared and audited.
s.323D(1) — Subject to subsection (2), the financial year of a company, registered scheme or disclosing entity is: (a) the period of 12 months beginning at the start of the day of its registration; or (b) if a different period is specified — that period.
s.323D(2) — Companies may synchronise the financial year with a different period by choice, subject to conditions.
Every company must keep true and fair financial records for at least 7 years and must have a financial year (default 12 months from registration; can be aligned differently on registration to fit the standard 30 June cycle).
Cl. 26 fixes 30 June financial year (aligned at first registration so no s.323D substitution is later needed). Cl. 29 requires financial records to be maintained by the Treasurer/CFO on Australian Accounting Standards for at least 7 years. Cl. 30 requires audit or review as required by the ACNC size test.
Subject to section 517, if the company is a company limited by guarantee, each member need not contribute more than the amount undertaken to be contributed by them in the company's constitution on the winding up of the company.
In a CLG, each member's liability to contribute on winding up is capped at the guarantee amount stated in the Constitution. Nothing more can be extracted from the member's personal assets.
Cl. 9(a) fixes the guarantee at $10 per member. Cl. 9(b) preserves the s.516 cap. Cl. 9(c) confirms guarantee falls due only if member is a member at winding up or ceased less than 12 months prior (s.520).
§III.D — Income Tax Assessment Act 1997 (Cth) — Division 30 (DGR)
Section 30-45 sets out the table of general categories of DGRs in the "welfare and rights" area. Item 4.1.1 of that table is:
Recipient: a public benevolent institution.
Special conditions: (a) the entity must be registered under the ACNC Act as the subtype of entity mentioned in column 2 of item 14 of the table in subsection 25-5(5) of the ACNC Act (public benevolent institution); and (b) the entity must maintain a gift fund in accordance with s.30-130.
To get DGR endorsement under Item 4.1.1, an entity must (i) be registered by ACNC specifically as a Public Benevolent Institution subtype, and (ii) maintain a Gift Fund satisfying s.30-130. Both conditions are gating — fail either and the DGR endorsement will not be given, or will be revoked.
The whole design of this Constitution is oriented at satisfying Item 4.1.1. Cl. 2(b) records the PBI-subtype registration goal; cl. 20 codifies the Gift Fund in full; cl. 34 codifies the winding-up destination in DGR-compatible terms.
s.30-125(1) — The Commissioner must endorse an entity as a deductible gift recipient if the entity is entitled to be endorsed.
s.30-125(6) — For an entity to be entitled to be endorsed as a deductible gift recipient, the entity must have a rule or requirement in a document (whether constitutional or otherwise) that provides for the transfer, on the winding up of the entity or on the revocation of its endorsement, of any surplus gifts and deductible contributions (and money received in relation to such gifts and contributions) to another DGR (or, if directed by the Commissioner, another fund, authority or institution that is a DGR).
To be endorsed as a DGR, the entity's Constitution (or an equivalent rule document) must contain an express clause saying: "if we wind up, or if our DGR endorsement is revoked, any leftover gift-fund money will be transferred to another DGR of the same type". This is a black-letter constitutional requirement — a DGR application without it will be rejected.
Cl. 20(f) codifies transfer-on-revocation of DGR endorsement to another Item 4.1.1 DGR. Cl. 34(c) codifies transfer-on-winding-up of the Gift Fund to another Item 4.1.1 DGR (or, on ATO direction, another DGR of the same type). Together they discharge s.30-125(6) explicitly.
s.30-130(1) — A gift fund is a fund that: (a) is maintained for the principal purpose of the fund, authority or institution; and (b) does not receive any other money or property; and (c) is used only for that principal purpose. The entity must transfer to the fund any money or property it receives because of a deductible gift or contribution, and any money received because of such a gift or contribution.
s.30-130(2) — The entity's constituent documents, or a document that meets the requirements of this Act, must require the entity to maintain a gift fund in accordance with subsection (1) and set out the winding-up/revocation transfer rule (see s.30-125(6)).
A DGR-compliant Gift Fund is a ring-fenced fund with three rules: (i) only receives deductible gifts (or money from those gifts, e.g. interest); (ii) receives nothing else (no membership fees, no unrelated income); (iii) is spent only on the entity's principal DGR purpose. This must be codified in the Constitution.
Cl. 20(a)-(e) codifies exactly these three rules and adds two operational safeguards: (d) separate general-ledger accounting; and (e) separate reporting in the audited financial statements. This makes the Gift Fund auditable end-to-end — an important reassurance for the ATO Endorsement team.
§III.E — ATO Commissioner's Interpretation Statement — Public Benevolent Institutions (29 September 2025)
¶11-17 — A public benevolent institution has three cumulative elements: it must be public, it must be benevolent, and it must be an institution.
¶32 — The relief of "distress" for the purposes of "benevolent" means distress that is beyond the ordinary suffering of everyday life. Distress arising from poverty, sickness, destitution, helplessness, misfortune or the like will ordinarily satisfy this test. The Cairnmillar case is authority for this proposition.
¶44-46 — An entity is an "institution" if it has structure, permanence and undertakes substantive activities. A mere fund that only receives and disburses money without operating the underlying benevolent activity may not qualify as an institution.
¶100-108 — Where an entity provides benevolent relief indirectly (e.g. through funding another entity) it must demonstrate that (i) the recipient is itself a public benevolent institution, or (ii) the funding arrangement is so integrated with the funder's own substantive activity that the funder itself remains an "institution".
To be a PBI, LWD must be: (1) Public — beneficiaries are the general public or a "sufficient section" of it, not a private class. (2) Benevolent — the beneficiaries are in "distress beyond ordinary suffering". Poverty, serious sickness, destitution, helplessness or misfortune count; ordinary hardship or unhappiness does not. (3) Institution — LWD has structure, permanence and actually does substantive benevolent work — it isn't just a fund handing out cheques. A funder-only body has to show it is really integrated with the doing.
Public: cl. 4(a) — any Australian meeting the terminal-illness criteria may apply, so the class is an open, sufficient section of the public. Benevolent: cl. 4(a) restricts eligibility to terminally ill Australians with debt distress — a class definitionally in distress beyond ordinary suffering (see Legal Research §8 evidence). Institution: cl. 4(b) enumerates four substantive activity categories (case management, professional negotiation engagement, direct payment within caps, systemic advocacy) — none of them "funder-only". This directly answers ¶44–46 and ¶100–108. This is the reason Decision 2 rejected Option B (funder-only).
§III.F — National Consumer Credit Protection Act 2009 (Cth) + National Credit Code (Schedule 1)
s.29(1) — A person must not engage in a credit activity if the person does not hold a licence authorising the person to engage in the credit activity.
s.6 — A person engages in a credit activity if the person: (a) is a credit provider under a credit contract; or (b) exercises the rights or performs the obligations of a credit provider; or (c) provides a credit service (which includes providing credit assistance or acting as an intermediary); or (d) engages in a debt-management or credit-repair activity for a fee.
You cannot lend, arrange, or manage other people's consumer credit for a fee without an ACL. This includes acting as an intermediary between a debtor and their creditor to arrange a hardship variation or settlement, if a fee is charged (or if fees would ordinarily be charged for that service).
Decision 2 chose the hybrid model (Option C) precisely to avoid this trap: LWD itself does not act as a credit intermediary. Rather, LWD engages licensed third-party financial counsellors and (where necessary) lawyers who conduct the negotiation on the beneficiary's behalf, funded by LWD but not billed to the beneficiary. Cl. 4(b)(ii) codifies this "engage licensed professionals" activity. Year 2 evaluation of an in-house ACL is contemplated separately in the Roadmap.
s.72(1) — A debtor who is unable reasonably, because of illness, unemployment or other reasonable cause, to meet the debtor's obligations under a credit contract may give the credit provider notice … of the debtor's inability to meet the obligations (a hardship notice).
s.72(4) — The credit provider must, before the end of 21 days after the day the hardship notice is given, give the debtor a notice stating (a) whether the credit provider agrees to change the credit contract, and if so how; or (b) if not, the reasons.
s.73 — If the credit provider does not agree, the debtor may apply to a court or the AFCA scheme for a change to the credit contract.
s.88 — A credit provider must not begin enforcement proceedings against a debtor unless (i) the debtor is in default; (ii) the credit provider has given a default notice; (iii) 30 days have elapsed; and (iv) the debtor has not remedied the default.
s.89A — A credit provider is not entitled to begin enforcement proceedings while a hardship application is undetermined; and specific 21/28-day timelines apply to information requests and responses.
A debtor who cannot meet a consumer credit payment because of illness (including terminal illness) may give a hardship notice. The lender must respond within 21 days with either an agreed variation or reasons for refusal. The lender cannot start enforcement while a hardship application is undetermined. If the lender refuses, the debtor can go to AFCA or a court to force a variation.
These are the rights LWD case managers rely on when they support a beneficiary. They inform: (a) Beneficiary Toolkit scripts (available at the beneficiary-facing site); (b) the beneficiary-service standards in the Direct Relief Policy; (c) the ACNC application's evidence of unmet need — beneficiaries have these rights already, but do not know they exist, cannot invoke them alone, and (see §III.M Cairnmillar) are demonstrably in distress beyond ordinary suffering.
§III.G — ASIC Regulatory Guides (RG 96, RG 205, RG 209, RG 271)
RG 96 sets minimum standards for how creditors and collectors must interact with a debtor, including special protections where a debtor has "special circumstances" — expressly including serious illness. It prohibits undue harassment or coercion (echoing s.12DJ ASIC Act) and directs collectors to (i) contact only within reasonable hours, (ii) allow appropriate response time, (iii) engage with third-party representatives (e.g. financial counsellors) authorised by the debtor, (iv) suspend collection during a hardship application, and (v) proceed with special care where the debtor's circumstances include serious or terminal illness.
RG 96 is the "how to collect debts without becoming an ASIC or ACCC enforcement target" guide. Terminal illness is expressly one of the "special circumstances" that triggers heightened restraint. LWD case managers who invoke RG 96 language have very strong regulatory backing to demand that a creditor pause, listen, and engage.
The Beneficiary Toolkit scripts cite RG 96 in the opening line of every creditor letter. Case managers are trained to quote RG 96 § references. Cl. 4(b)(iv) (systemic advocacy) authorises LWD to advocate publicly for stronger RG 96 enforcement.
RG 205 elaborates the s.47(1) NCCP Act general conduct obligations for ACL holders — including obligations to (a) ensure credit activities are engaged in efficiently, honestly and fairly; (b) have adequate arrangements and systems to ensure clients are not disadvantaged by conflicts of interest; (c) comply with credit legislation; (d) maintain competence; (e) have adequate resources; (f) have compliance arrangements; (g) ensure representatives are adequately trained and competent; (h) have dispute resolution systems (internal + AFCA); (i) maintain risk management systems.
If LWD ever holds an ACL (Year 2+), these nine general conduct obligations become live. They are the reason obtaining an ACL is a significant undertaking and why Decision 2 defers the ACL question to Year 2 evaluation once the pilot has established scale.
The Compliance Plan already maps each of the nine RG 205 obligations to specific LWD controls, ready for Year 2 ACL application. The Constitution itself contemplates this pathway at cl. 4(d) (reserving power to expand activities subject to any required licensing).
RG 271 sets out ASIC's requirements for the internal dispute resolution (IDR) systems of financial firms, including maximum response timeframes (30 calendar days for most complaints; 21 days for credit complaints where hardship is a factor). Firms must acknowledge complaints promptly, provide a written IDR response, and inform complainants of AFCA access.
Creditors have hard deadlines to respond to complaints. Beneficiaries whose creditors miss those deadlines can escalate to AFCA (free to the beneficiary). LWD case managers use RG 271 timelines to force creditor engagement.
Beneficiary Toolkit contains a "day 22" and "day 31" escalation letter template referencing RG 271 timelines. If LWD later obtains an ACL, RG 271 also binds LWD's own IDR systems.
§III.H — Banking Code of Practice 2025
¶52–54 (Vulnerability) — Banks will take extra care with customers experiencing vulnerability. Vulnerability may result from a range of factors including age, disability, mental health condition, physical health condition, family or domestic violence, financial abuse, elder abuse, addiction, bereavement, family breakdown, language barriers, remote location, low literacy, or serious illness. Banks will train frontline staff to recognise these signs and will not use collection tactics that exploit them.
¶132–145 (Deceased estates) — When notified of the death of a customer, a bank will (i) suspend interest and fees on personal accounts from the date of notification; (ii) not initiate collection action against the estate for at least 30 days; (iii) not seek to recover a deceased customer's unsecured debt from a surviving joint account holder unless that person was jointly liable on the original credit contract; (iv) not sell deceased estate debts to third-party debt buyers; (v) waive small residual debts where recovery is disproportionate.
¶167–190 (Financial difficulty) — Banks will make it easy for customers to ask for help, will consider hardship applications on their individual merits within stated timeframes (mirroring NCCP s.72), will engage with authorised third-party representatives (financial counsellors, LWD case managers), and will not sell a debt in default while a hardship application is undetermined.
Every ABA member bank (which covers essentially all major consumer lenders in Australia) contractually commits to a code that treats terminal illness and bereavement as vulnerability triggers, halts recovery against a deceased estate for at least 30 days, does not pursue unsecured deceased debts against surviving relatives, and stops the sale of debts while a hardship application is running. Non-compliance is enforceable via AFCA and the Banking Code Compliance Committee.
The Banking Code is the single most useful practical lever LWD case managers have. The Beneficiary Toolkit letter templates cite the specific ¶ numbers for every situation (vulnerability escalation; deceased estate; hardship application; debt sale prohibition). LWD systemic advocacy (cl. 4(b)(iv)) is calibrated to strengthen this Code's enforcement in future revisions.
§III.I — SIS Reg 6.01A · ASIC Act s.12DJ · ACL s.50
A person has a terminal medical condition at a particular time if the following circumstances exist:
(a) two registered medical practitioners have certified, jointly or separately, that the person suffers from an illness, or has incurred an injury, that is likely to result in the death of the person within a period (the certification period) that ends not more than 24 months after the date of the certification;
(b) at least one of the registered medical practitioners is a specialist practising in an area related to the illness or injury suffered by the person;
(c) for each of the certificates, the certification period has not ended.
The 24-month "terminal medical condition" test used by superannuation law: two doctors, one of them a specialist in the relevant field, jointly or separately certifying a prognosis of ≤24 months. This is the strictest of the three commonly-used terminal-illness definitions in Australia.
Cl. 4(a)(i) admits any Australian meeting reg 6.01A as a beneficiary — but does not stop there. Cl. 4(a)(ii) also admits persons meeting a life-insurance terminal-illness clause (12 or 24 month), and cl. 4(a)(iii) admits persons certified by a treating specialist as being in advanced illness receiving palliative care. Rationale: to prevent people who are demonstrably terminally ill from being excluded solely because their doctors have not written a reg 6.01A certificate.
A person must not use physical force, or undue harassment or coercion, in connection with (a) the supply or possible supply of financial services to a consumer; or (b) the payment for financial services by a consumer.
Aggressive debt collection is illegal, not merely unethical, in the financial services context. This is the statutory backbone of RG 96. Enforcement precedent includes ASIC v Accounts Control Management Services (No 2) [2012] FCA 1290.
Case-manager escalation scripts refer to s.12DJ where a creditor has crossed the line. Cl. 4(c) (anti-drift language) expressly prohibits LWD itself from any conduct that could be construed as harassment or coercion — even in advocacy or fundraising.
A person must not use physical force, or undue harassment or coercion, in connection with: (a) the supply or possible supply of goods or services to a consumer; or (b) the payment for goods or services by a consumer; or (c) the sale or grant, or the possible sale or grant, of an interest in land to a consumer; or (d) the payment for an interest in land by a consumer.
The parallel provision for non-financial goods and services — utilities, telcos, medical bills. Together with ASIC Act s.12DJ, it covers essentially the entire universe of consumer debts a terminally ill beneficiary might have.
Case managers rely on ACL s.50 when the creditor is a utility, a telco or a private medical clinic (i.e. not a financial-services provider). It is cited alongside s.12DJ in the Beneficiary Toolkit escalation letters.
§III.J — Deceased estate law · Bankruptcy Act Pt XI
Probate & Administration Act 1898 (NSW) s.44 — The real and personal estate of every deceased person shall be assets in the hands of their legal personal representative for payment of the debts of the deceased and, subject to that, for distribution among the persons entitled.
Bankruptcy Act 1966 (Cth) Part XI — Where a deceased person's estate is insolvent (assets insufficient to meet debts), Part XI provides for the administration of the estate as a bankrupt estate. The estate is wound up in accordance with the Act's priority rules; debts unable to be met from the estate are simply extinguished. No debt survives against a beneficiary of the estate personally, or against a family member, unless that person was independently liable (e.g. as joint borrower or guarantor).
When a person dies, their debts are paid out of their estate. If the estate is not enough, the shortfall is written off — there is no personal liability on the deceased's family. The four exceptions where a family member remains liable are: (i) joint borrower; (ii) express guarantor; (iii) joint proprietor of a mortgaged asset; (iv) fraud or fraudulent preference in the estate administration itself. See Legal Research §7.
This underpins LWD's beneficiary counselling. Case managers are trained (per Legal Research §7) to distinguish which debts a beneficiary should prioritise while alive (secured, joint, guaranteed) from those that will simply die with them (unsecured personal). This informs cl. 16 (direct-relief triage) so LWD money is deployed where it will survive the death event with real benefit.
§III.K — HECS · Tax · Social Security
Higher Education Support Act 2003 s.137-5 — A HELP debt is extinguished when the debtor dies. It is not enforceable against the estate.
Taxation Administration Act 1953 (Cth), Schedule 1, s.255-5 — Enables the Commissioner to release a taxpayer, in whole or in part, from a tax debt where the debtor is a natural person suffering serious hardship. The ATO's "release from tax debt" application is a formal channel.
Social Security Act 1991 (Cth) s.1237A — The Secretary may waive a social security debt in specified hardship circumstances. Debts to Services Australia are also written off on death (as a matter of Services Australia policy) where the estate is insolvent.
HELP debt dies with you. Tax debts can be released or waived in serious hardship, on formal application. Centrelink debts can be waived and are written off on death against an insolvent estate. These are the "quiet wins" a good case manager can secure for a beneficiary that materially reduce distress in the last months of life.
Beneficiary Toolkit contains templated applications for (i) ATO release (s.255-5); (ii) Centrelink waiver (s.1237A); and (iii) HELP-status confirmation. These are pursued before any LWD direct-relief funds are committed — the Direct Relief Policy requires all statutory relief channels to be exhausted or in-flight before direct-payment approval.
§III.L — AASB 124 · Related Party Disclosures
AASB 124 requires a reporting entity to disclose in its financial statements, at minimum: (a) relationships between a parent and its subsidiaries; (b) key management personnel (KMP) compensation, in total and by category (short-term employee benefits, post-employment benefits, other long-term benefits, termination benefits, share-based payments); (c) transactions and outstanding balances with related parties, showing the nature of the relationship, the amount of the transactions and outstanding balances, provisions for doubtful debts, and expense recognised.
Medium and large charities must publish (in the notes to the audited accounts) the total remuneration paid to their directors and other KMP, and every material transaction with any related party. This is where the CEO's salary and the CoSai fees will become publicly visible in the ACNC Register.
Cl. 29(c) requires the annual audited financial statements to include the AASB 124 KMP note. Cl. 15(d) requires the CEO's salary-setting process (independent-directors only + benchmark) to be described in the KMP note, so the process — not just the number — is on the public record.
§III.M — Leading cases
For an institution to be characterised as benevolent, the relief it provides must address distress that is of such a kind or degree as would arouse pity or compassion in the community. The relief of ordinary difficulties of life is not enough. Distress arising from poverty, sickness, destitution, helplessness, misfortune or the like will ordinarily satisfy the test. Cairnmillar's provision of psychological services to people in severe psychological distress was found to be sufficient.
Cairnmillar is the foundational Australian case on the "benevolent" limb of PBI. It draws the line between ordinary hardship (not enough) and distress of a kind that would arouse community pity or compassion (enough). Terminal illness is a paradigm example of the second.
The Public Benefit Memo relies expressly on Cairnmillar as authority that terminally ill Australians in debt distress meet the "benevolent" limb. Cl. 4(a) is drafted precisely to lock LWD's beneficiary class inside the Cairnmillar zone.
The Marriage Guidance Council provided counselling to couples experiencing marital difficulties. Held: the difficulties addressed were the ordinary difficulties of married life; while the counselling was valuable, it was not "benevolent" in the sense required for PBI. Not every entity doing socially useful work is a PBI.
The negative benchmark. It shows how a well-run, valuable service organisation can nevertheless fail PBI because its beneficiary class does not meet the "distress beyond ordinary suffering" bar. Any charity that draws its Objects too broadly risks the same result.
The reason Decision 3 rejected a broadly-drafted "financial hardship" beneficiary class in favour of the layered terminal-illness class. The Marriage Guidance failure mode is precisely the failure mode LWD's tight class definition is designed to avoid.
The Tribunal upheld the ACNC's decision that Global Citizen was not a public benevolent institution, on the basis that its predominant activity was fundraising and advocacy rather than the direct provision of benevolent relief; the "institution" limb was not made out because the substantive benevolent activity was undertaken by grantee entities, not by Global Citizen itself.
The most important recent case on the "institution" limb. It confirms the ATO CIS position: a body that mainly writes cheques to others is not a PBI unless it can prove that its own substantive activity is benevolent relief.
The direct reason Decision 2 rejected Option B (funder-only) and adopted Option C (hybrid). Cl. 4(b) enumerates four substantive activities that keep LWD firmly inside "institution" territory rather than "fund" territory.
The Court imposed civil penalties on a debt collection business that had engaged in credit activities without holding an Australian credit licence, contrary to s.29 NCCP Act, and that had engaged in undue harassment and coercion contrary to s.12DJ ASIC Act. The decision confirms that "credit activity" is broadly defined and that engaging in it for a fee without a licence attracts serious penalties.
The touchstone case on the unlicensed-credit-activity trap and on undue-harassment liability. Both s.29 NCCP and s.12DJ ASIC Act are actively enforced.
The precise regulatory precedent behind Decision 2's Option C. LWD's operating model is engineered so that no LWD activity constitutes "credit activity" for a fee — the fee-charged intermediation is done by properly licensed third parties engaged by LWD.
The Tribunal considered whether an entity whose purposes included substantial advocacy could nevertheless be registered as a charity (and as a PBI). Held: advocacy purposes that are in aid of another charitable purpose (Charities Act s.12(l)) are permissible; a charity does not lose its status because it engages in advocacy, provided that advocacy is genuinely ancillary to its primary charitable purpose.
LWD can lawfully engage in systemic advocacy (e.g. pushing for stronger RG 96 enforcement, strengthening the Banking Code, changing HELP treatment on terminal diagnosis) provided that advocacy remains in aid of the primary purpose of relieving terminally ill Australians' debt distress. Advocacy cannot become the primary purpose.
Cl. 4(b)(iv) authorises "systemic advocacy in aid of" the primary purpose. Cl. 4(c)(ii) expressly prohibits advocacy that is not so aided or that becomes party-political — closing the s.5(c) "disqualifying purpose" risk.
Starke J: "A 'public benevolent institution', in my judgment, means an institution organized for the relief of poverty, sickness, destitution or helplessness. And I use the word 'organized' as meaning a body or association of persons acting together to some common end."
The 1931 High Court statement that has framed every Australian PBI case since. A PBI is an organised body relieving poverty, sickness, destitution or helplessness. The word "organized" prefigures the modern "institution" limb.
LWD's beneficiary class is defined in terms of sickness (terminal illness) and helplessness (inability to negotiate creditors while dying), and LWD is an organised body (a CLG with directors, members, staff and structured activities). The Perpetual Trustee formulation is directly cited in the Public Benefit Memo.
Part IVTraceability Matrix
Each row below maps one Constitution clause to (a) the design decision from Part II that produced it, (b) the legal source in Part III that requires or enables it, and (c) the specific risk the clause is designed to avoid. A director who wants to interrogate any clause of the Constitution can start from this table and follow the chain in either direction.
| Constitution clause | Content (in one line) | Decision (Part II) | Legal source (Part III) | Risk avoided |
|---|---|---|---|---|
| cl. 1 | Name & type — public CLG | §1 | Corp Act s.112, s.117, s.150 | Wrong form (Pty Ltd; state IA; trust) → PBI disqualification |
| cl. 2 | Purposes — charitable + PBI | §3 | Charities Act s.5, s.11, s.12; ACNC s.25-5 | Non-charitable / non-PBI purpose |
| cl. 3 | NFP + no distribution + precedence rule | §1, §11 | Charities Act s.6 | Loss of NFP status; latent inconsistency erodes paramount clauses |
| cl. 4(a) | Beneficiary class (3 pathways) | §3 | SIS reg 6.01A; Cairnmillar; PBI CIS ¶32 | Class too broad → fails Cairnmillar; too narrow → mission strangulation |
| cl. 4(b) | Four relief categories | §2, §3 | PBI CIS ¶¶44–46, 100–108; Global Citizen | "Funder-only" characterisation → PBI denial |
| cl. 4(c) | Anti-drift prohibitions | §2 | NCCP s.29; RG 96; ASIC v ACM (No 2) | Unlicensed credit activity; reputational drag |
| cll. 6–8 | Membership — restricted Founding Members | §4 | Corp Act s.203D; ACNC GS 2, 4 | Board capture; loss of s.203D removal power |
| cl. 9 | $10 guarantee — nominal, wind-up only | §6 | Corp Act s.516; s.117(2)(m) | Guarantee mistaken for subscription; unlimited liability |
| cll. 11–12 | Board — min 3, target 5, majority independent | §5 | Corp Act s.201A, s.204A; ACNC GS 5 | Sub-statutory floor; no independent voice on related-party matters |
| cl. 13 | Directors' duties (restatement) | §5, §8 | Corp Act ss.180–184; ACNC GS 5 | Directors unaware of statutory duties |
| cl. 14 | Conflicts — Register + disclosure + recusal | §8 | Corp Act s.191, s.195 | Undisclosed material personal interest |
| cl. 15 | Related-party arm's-length framework | §8 | Corp Act s.208, s.211, s.228; AASB 124 | Chapter 2E breach; CEO-remuneration scrutiny failure |
| cl. 16 | Direct-relief principle + mandated Policy | §9 | Corp Act s.180; PBI CIS ¶¶44–46 | Ad-hoc relief; uncapped pool consumes activity budget |
| cl. 20 | Gift Fund block (5 rules + transfer-on-revocation) | §10 | ITAA s.30-125; s.30-130 | Gift Fund co-mingling; missing transfer clause → DGR denied |
| cll. 22 | AGM + members' voice | §4 | ACNC GS 2 | Members not accountable |
| cl. 25 | Secretary — Australian resident | §5 | Corp Act s.204A | No AU secretary → breach |
| cl. 26 | Financial year — 30 June | §7 | Corp Act s.323D; ACNC s.205-25 | Substituted year → ACNC approval hassle; missed deadlines |
| cl. 27 | Lodgement calendar | §7 | ACNC Act s.40-5 | Late AIS → deregistration risk (s.35-10) |
| cl. 29 | Financial records + audit + AASB 124 KMP note | §7, §8 | Corp Act s.286; AASB 124 | Records not true & fair; KMP transparency failure |
| cl. 33 | Alteration — 75% + ACNC + ATO non-objection | §11 | Corp Act s.136(3); ITAA s.30-125 | Purpose migration after donations; paramount-clause erosion |
| cl. 34 | Winding-up — no member distribution; charity + DGR gates | §12 | ITAA s.30-125(6); ACNC s.40-5; Corp Act s.516 | Assets to members → NFP + DGR + charity all destroyed |
- Solicitor review: work through the table row-by-row. Every "why is this clause here?" question has an answer in three columns.
- ACNC / ATO reviewer response: if the ACNC or ATO reviewer queries any clause, the Board (via the Secretary) has an immediate cited answer.
- Future Board amendment consideration: any Board considering an amendment to a clause can see, at a glance, which decision must be re-opened and which laws must be re-checked. This makes the alteration lock at cl. 33 into an operational reality, not merely a formal barrier.
- Directors' induction: new directors receive this paper (with the matrix) as their induction pack — an evidenced answer to "am I signing something I understand?"
§Close-out
A summary the Board can sign off in one page
This Constitution is engineered — not chosen from a template — to satisfy simultaneously the Corporations Act 2001, the ACNC Act 2012 and its six Governance Standards, the Charities Act 2013, the DGR conditions in Division 30 of the ITAA 1997, the ATO's PBI Commissioner's Interpretation Statement of 29 September 2025, and the operational reality of running a hybrid case-management-plus-direct-relief service for terminally ill Australians in debt distress.
Twelve major design decisions were made. Every one is documented in Part II with its full option-set, the pitfalls each option carries, and the mitigations the chosen wording adopts. Twenty-plus statutory, regulatory, code and case sources are quoted verbatim in Part III, translated into plain English, and applied to LWD's specific facts. Twenty-one Constitution clauses are traced through the matrix in Part IV to show which decision, which law, and which risk each clause exists to answer.
The Constitution is presented for solicitor review with the express expectation that the solicitor will not have to reconstruct the reasoning — the reasoning is here.
- This paper is not legal advice. A charity-law-specialist solicitor must sign off on the final text of the Constitution before it is lodged with ASIC.
- Each Founding Member must physically sign the final Constitution and the ASIC Form 201 member-consent block before lodgement (s.117 Corporations Act).
- Each Founding Director must sign a Consent to Act (Form 201 director-consent block) and an initial Register-of-Interests disclosure before lodgement (ss.117, 201D Corporations Act).
- Post-ASIC, the ACNC application must be lodged within 60 days along with the PBI subtype election (s.25-5 ACNC Act) and a copy of the adopted Constitution.
- The DGR application (Item 4.1.1) is lodged with the ATO once ACNC registration + PBI subtype confirmation is issued.
This paper synthesises published Australian legislation, regulator instruments, industry codes and case law as at the date of preparation. It is intended as a considered, evidenced basis for Board decision-making and for solicitor review. It is not legal advice to LWD or to any individual director, member or beneficiary, and no filing or operational step should be taken purely on the basis of this paper without file-specific advice from a suitably qualified Australian legal practitioner accepting professional responsibility for that step.
Constitutional Design Paper v1.0 · Life Without Debt Ltd (in formation) · Prepared for the Board · Not legal advice
Following Board direction (2026-08-06), the beneficiary-depiction rule has been re-framed as a two-tier guardrail rather than a blanket no-faces prohibition. The revision preserves the beneficiary safety hard-line whilst enabling storyline imagery for donor-, partner- and clinician-facing acquisition content (Rooms A, B, C, F).
- Tier 1 — Beneficiary safety (hard-line, non-negotiable): No depiction, likeness, identifying detail or reconstructed testimony of any actual or plausible LWD beneficiary. Applies to every surface, forever.
- Tier 2 — Acquisition storyline (required for awareness & consideration kits): Donor-, partner- and clinician-facing content must carry storyline imagery that communicates the LWD purpose. Faces of stock donors, partners and clinicians are permitted; emotional register is calibrated per room (A: dignified philanthropy · B: professional partnership · C: warm humanity · F: clinical trust).
- Tier 3 — Craft standards: CC-licensed sources only (Unsplash / Pexels / Wikimedia Commons); credit + licence URL captured per asset; no misrepresentation; no bait-and-switch between image and copy.
Full text and per-room combination guide: Beneficiary Depiction Guardrails v1.1. This cross-reference is authoritative for Board minute purposes; the linked document is the operating source of truth.