In March 2024, the Australian Charities and Not-for-Profits Commission (ACNC) published its compliance and enforcement focus areas for 2024-25. Among the emerging focus areas was the use of complex structures by charities, particularly where those arrangements lack the systems needed to meet heightened governance complexities and compliance obligations associated with a complex structure, or where they may be used to obscure non-compliance with the ACNC Act or Regulations. The ACNC also identified cybersecurity as a key compliance and enforcement priority for 2024-25. For more information on managing cyber threats, see our Not-For-Profit Cyber Security Best Practice Guide.

On 5 August 2025, the ACNC released a new guide, Governance Practices for Complex Structures (Guide), designed to help charities using complex structures strengthen their governance frameworks and meet regulatory requirements.

The Guide emphasises the importance of charities using a complex structure developing a robust governance framework, implementing tailored policies and procedures, maintaining clear and comprehensive records, defining roles and delegations across entities and managing conflicts of interest and related party transactions with care and transparency.

ACNC Commissioner Sue Woodward AM noted:

'While operating within a complex structure is not in itself a problem – and the ACNC recognises there are often good and legitimate reasons for charities to do so – it is important that any charity operating within such a structure takes extra care.’

The Guide reflects the ACNC’s education-first regulatory approach and aims to equip charities with tools to achieve good governance and comply with the ACNC Governance Standards. Development of robust governance systems is essential for charities to operate sustainably in the long-term and effectively deliver on their mission.

This article summarises the key takeaways from the Guide and offers practical tips for developing a strong governance framework tailored to the unique challenges of complex charity structures.

What is a complex structure?

The term complex structure is not defined in the ACNC Act or Regulations. Instead, the ACNC uses it as a descriptive label for charities that operate within structures featuring one or more of the characteristics outlined in the Guide. These characteristics include:

• A mix of charitable and non-charitable entities, including for-profit organisations
• A variety of legal entity types, such as trusts, incorporated associations, unincorporated bodies, companies limited by guarantee and private companies
• Charities within the structure that have different charitable purposes or deliver distinct services
• Entities operating across multiple jurisdictions, including both in Australia and overseas
• Uncertainty or lack of transparency around who controls specific entities within the structure
• The use of shared directors, boards or committees across multiple entities
• Entities that share assets, resources or personnel, including employees

Many of these features are commonly associated with what is generally referred to as a hybrid structure. While not a technical legal term, a hybrid structure is often used to describe a structure comprising one or more not-for-profit and for-profit entities operating alongside one another, where those entities are connected in some way including through forming part of the same corporate group, having common directors or boards and/or sharing personnel, resources or other services. Hybrid structures are facing increased regulatory scrutiny, particularly to ensure they are not being misused or structured in a way that confers private benefits on for-profit entities.

Key takeaways from the Guide

The ACNC acknowledged that there are legitimate reasons for charities to adopt complex structures, including to manage risk, separate distinct programs and services or facilitate operations across different jurisdictions. However, these structures give rise to increased governance, regulatory and operational complexity and can result in confusion regarding roles, responsibilities and obligations within the structure.

The Governance Practices for Complex Structures Guide offers practical tips to help charities navigate these challenges and strengthen their governance frameworks. Key takeaways include:

1. Policies and Procedures

• Clear, robust policies and procedures are essential for meeting governance and compliance obligations.
• Charities should assess whether common policies across entities are appropriate, or whether bespoke policies are needed. Common policies and procedures may not be appropriate in certain circumstances, including where entities in the structure provide different services, have different purposes or where the structure includes one or more for-profit entities.
• Each policy must be tailored to the specific needs and circumstances of the relevant entity.
• Policies should be regularly reviewed and updated to remain effective and relevant.

2. Record-Keeping

• Each charity within a complex structure must meet its own record-keeping obligations under the ACNC Act.
• Records should be maintained carefully, especially when they relate to multiple entities.
• Good record-keeping promotes transparency and accountability across the structure.
• The ACNC has further guidance to support charities meet their record-keeping obligations.

3. Common Boards and Directorships

• Where there are shared directors or boards among entities in a complex structure, directors must understand which entity they are acting for at a particular point in time so they can properly discharge their duties – including assessing what is in that entity's best interests.
• Common boards or directorships can make it harder to comply with ACNC Governance Standard 5 (regarding the duties of Responsible Persons, including that Responsible Persons act in good faith in the charity's best interests and disclose conflicts of interest).
• Challenges in meeting the requirements of ACNC Governance Standard 5 may arise when duties of shared Responsible Persons to one entity conflict with duties to another, particularly in transactions between entities within the structure or decisions affecting multiple entities.
• To address these challenges, charities should implement strong conflict management practices, including a Conflict of Interest Policy that addresses conflicts of duty.
• Boards should clearly document all decisions, ensure directors understand their obligations and seek professional advice when needed to assist in navigating these governance challenges.

4. Board Meetings

• Each entity within a complex structure should hold separate board meetings to reflect its unique circumstances and ensure Responsible Persons consider the best interests of the entity in respect of which they are acting at the relevant time.
• Meetings may be scheduled consecutively for convenience, but agendas and minutes must clearly show that separate meetings were held.

5. Roles and Responsibilities

• Charities should maintain an accurate up-to-date organisational chart showing each entity’s place within the structure to clarify roles and reporting lines.
• If entities in the structure share staff or other personnel, it must be clear which entity they work for and who they are responsible to.
• It must be clear which entity any shared Responsible Persons are representing or making a decision for at any relevant time.
• Governance training and handover processes should include information on the corporate structure, reporting lines and key responsibilities.

6. Conflicts of Interest

• Complex structures increase the likelihood of actual or perceived conflicts of interest.
• The Guide states that conflicts of interest are common and should not be a problem if they are appropriately managed through good governance processes and policies.

Charities should:

• develop and implement a tailored Conflict of Interest Policy;
• add conflicts of interest as a standing agenda item at meetings; and
• ensure there are clear processes in place to encourage disclosure of conflicts of interest.

7. Related party transactions

• Complex structures can increase the likelihood of related party transactions.
• The Guide states that related party transactions are common and should not be a problem if charities manage them properly (and that they may be beneficial to charities, such as through access to discounted goods or services from a related party).
• Charities should ensure related party transactions are appropriately identified and managed including by:

• ensuring decisions to enter into related party transactions are made in the best interests of the charity and in furtherance of its charitable purposes;
• conducting a transparent process when selecting a party to transact with, for example by conducting a tender process;
• ensuring the transaction is on arm's length terms, or on terms more favourable to the charity;
• keeping accurate records of related party transactions; and
• ensuring related party transactions are reported to the ACNC where required.

• Charities should maintain a Related Party Transaction Policy and a register of related party transactions.
• Extra care is needed where related party transactions intersect with conflicts of interest.

Best practice tips

Complex charity structures, including the use of a hybrid structure, introduce additional layers of governance, regulatory and operational complexity. Key challenges include:

• Ensuring clarity around the roles and interactions of different entities, which should be appropriately documented to support accountability and transparency
• Managing the additional administrative and regulatory requirements of operating multiple entities, often subject to different regulators
• Developing systems to identify and manage conflicts of interest and related party transactions
• Ensuring related party transactions are handled transparently, appropriately and in the best interests of any charity within the structure, on terms that are arm’s length or more favourable to the charity
• Ensuring that any charity uses all funds and assets in furtherance of its purpose and is not used as a conduit to move funds into any for-profit entity in the structure or to create a private benefit.

Practical tips to assist charities in managing these complexities include:

• Documentation – Preparing an agreement between the entities, such as a Memorandum of Understanding or Shared Services Agreement, to document the role of each entity and any agreed sharing of services, including how any fees for those services will be transparently determined and benchmarked against market rates.
• Operationalising policies – Ensuring governance policies are not just adopted but are actively implemented, including by:

• providing training to those subject to the policies;
• establishing clear channels for raising questions or reporting concerns related to the policies; and
• creating a review schedule to ensure policies are regularly reviewed and amended as required so they remain fit for purpose.

• Registers – Maintaining up-to-date registers of any conflicts of interest and related party transactions. These tools assist in the identification, disclosure and management of conflicts of interest and related party transactions – including those arising from shared Responsible Persons, personnel or resources.
• Independent directors – Appointing one or more independent directors to entities within the structure can assist in strengthening governance, supporting compliance with the duties of Responsible Persons and managing any conflicts of interest.
• Review – Developing systems to periodically review complex structures to assess whether they remain appropriate and identify areas for improvement to support ongoing compliance and operational efficiency.
• Board meeting minutes – The minutes of each board meeting at which related party transactions are explored should describe considerations discussed when deciding whether to enter into the related party transaction (including whether the transaction is in the charity's best interests, if it is on arm's length terms of terms more favourable to the charity), any alternatives explored and, where the related party transaction is approved, reasons for the approval.
• Delegations – Entities in a complex structure should develop a clear framework for delegations and ensure all delegations are validly made and documented as part of broader record-keeping practices. A Delegations Policy can support consistency and accountability.
• Committees – Board committees can be used in a complex structure to access independent or specialist expertise, manage conflicts of interest and provide additional oversight and support to the board in fulfilling its duties.

How MinterEllison can assist

MinterEllison’s dedicated Social Impact team has deep expertise in advising charities on governance, compliance and risk management – including in the context of complex structures.

We support charities in developing robust governance and compliance frameworks, including:

• drafting and reviewing constitutions, inter-entity agreements and risk management systems; and
• preparing and reviewing policies aligned with the ACNC Governance Standards, including a Conflict of Interest Policy, Related Party Transaction Policy, Board Charter and Code of Conduct and Delegations Policy.

Our broader services include:

• Social Impact Sector Support: We provide end-to-end legal support across the social impact sector - from structuring and start-up advice to charity registration, governance, financing, contracting, compliance and risk management.
• Restructuring and M&A: We also advsise on restructuring, mergers and acquisitions, strategic alliances, joint ventures and winding up of entities.
• Cybersecurity: In addition to complex charity structures, the ACNC listed cybersecurity as another key compliance and enforcement priority for 2024-25. Our Cybersecurity Practice can assist charities develop a Cybersecurity Policy and manage cybersecurity and data management concerns. See our Not-For-Profit Cyber Security Best Practice Guide for more information.

Please reach out if you have questions about charity governance or need support managing compliance within a complex structure.