Related-Party Transactions Policy
Policy adopted by the Board of Life Without Debt Ltd governing all transactions between the Company and related parties, including remuneration of Directors and executive employees, and the CoSai CFO Services engagement. Aligns with Part 2E of the Corporations Act 2001 (Cth), ACNC Governance Standard 5, and AASB 124 Related Party Disclosures.
DRAFT v1.0 · For Board adoption at First Directors' Meeting
1. Purpose
Related-party transactions in a charity, if not properly controlled, are one of the most common sources of loss of ACNC registration, DGR endorsement and public trust. This Policy ensures every related-party transaction is:
- on arm's-length terms or terms more favourable to the Company;
- documented in writing before it is entered into;
- approved by the non-conflicted Directors on the basis of full disclosure;
- consistent with the Company's charitable purposes and the ACNC Governance Standards;
- recorded in the Conflicts Register and, where required, disclosed to the ACNC and in the Company's financial statements.
2. Who is a "related party"?
For the purposes of this Policy, a "related party" of the Company includes:
- a Director of the Company;
- a Company Secretary or senior executive;
- a spouse, de facto partner, parent, child, sibling, or other close family member of any of the above;
- an entity controlled by any of the above (including CoSai CFO Services Pty Ltd);
- any other party defined as "related party" under section 228 of the Corporations Act or AASB 124.
Identified related parties at commencement include: Laurence Hugo; Lisa Hugo; Carla Oliver; CoSai CFO Services Pty Ltd; and any other body corporate controlled by any of them.
3. Categories of related-party transaction
| Category | Examples | Approval pathway |
|---|---|---|
| A. Executive remuneration | CEO (Laurence Hugo) executive services agreement; salary of Lisa Hugo as Community & Medical Liaison | Approved by Board excluding the conflicted Director. Remuneration must be reasonable and market-based, evidenced by external benchmarking. Approved before the person commences. |
| B. Directors' fees | Non-executive Directors' fees (if any) | Approved by ordinary resolution of Members at a General Meeting (Constitution clause 23.1). Any change requires Members' approval. |
| C. Services from a related entity | CoSai CFO Services in-kind advisory arrangement; future paid CoSai engagement (if any) | Written engagement letter approved by Board excluding Carla Oliver and any conflicted Director. Terms must be at, or more favourable to the Company than, arm's length. Renewed annually. |
| D. Reimbursements | Travel, telecommunications, IT and out-of-pocket expenses incurred in the Company's business | Approved under standard expense policy. Only actual, reasonable expenses. Full documentation retained. |
| E. Direct-relief-type payments to related parties | Any direct financial relief that could benefit a related party | Prohibited — no direct-relief payment under the Direct Relief Policy may be made to a related party or to any beneficiary who is a related party or a close family member of a related party. |
4. Executive remuneration — market benchmarks
- 4.1 Before the Board approves executive remuneration for a Covered Person, the Board must obtain external evidence of comparable market rates. Acceptable sources include:
- the AICD Not-for-Profit Governance & Performance Study and NFP Salary Survey;
- McCrindle / Australian Charities Report benchmarks;
- Justice Connect / Not-for-profit Law published rate cards;
- engagement of an independent HR / remuneration consultant.
- 4.2 The Board records in the minutes: (a) the benchmark data considered; (b) the proposed remuneration; (c) the rationale for its reasonableness; and (d) the vote of non-conflicted Directors.
- 4.3 The Company complies with the ACNC's Key Management Personnel reporting requirements for large charities where applicable.
5. The CoSai CFO Services engagement — specific arrangements
- 5.1 In Year 1, CoSai CFO Services provides advisory, governance, financial-model and compliance-uplift support to the Company on an in-kind (unpaid) basis. The arrangement is documented in a written Engagement Letter approved by the Board excluding Carla Oliver.
- 5.2 In Year 2 and beyond, if the Company wishes to engage CoSai on a paid basis (for example, for outsourced CFO services or ACL-compliance uplift work), the Board must:
- obtain competitive quotes from at least two arm's-length providers;
- satisfy itself that CoSai's engagement is on terms at, or more favourable to the Company than, the arm's-length quotes;
- document the decision and the comparative analysis;
- Carla Oliver must not vote or be present during the decision;
- the engagement must be time-limited and renewable only on the same conditions;
- the engagement and the aggregate amount must be disclosed in the Company's financial statements under AASB 124.
- 5.3 The Company will not become dependent on CoSai for services that could be delivered by unrelated providers on comparable terms. As the Company grows, in-house capacity (via the Compliance Officer role and, in due course, an in-house CFO or Finance Manager) will replace CoSai's operational contributions.
6. Disclosure to Members, ACNC and the public
- 6.1 All material related-party transactions are disclosed:
- to Members in the annual report to the AGM;
- to the ACNC in the Annual Information Statement;
- in the notes to the financial statements as required by AASB 124;
- in the public Charity Register entry (through the ACNC filing).
7. Prohibitions
Notwithstanding any other provision of this Policy, the Company must not:
- make a loan to a related party (other than a reimbursement advance in the ordinary course);
- give a guarantee or security for a related party's obligation;
- transfer, gift or lease Company property to a related party otherwise than on arm's-length terms;
- make a direct-relief payment (under the Direct Relief Policy) to a related party or to a beneficiary who is a close family member of a related party;
- use the Company's DGR endorsement to receive tax-deductible donations that will benefit a related party disproportionately.
8. Review
This Policy is reviewed at least annually by the Board and immediately following any material change in the related-party landscape (for example, appointment of a new Director with existing business interests).