Incorporated Association

 

This article discusses key issues regarding incorporated associations in Australia. It is important to note that although state or territory incorporated associations legislation is mostly similar, there are some variations and you should consult with a legal practitioner to clarify the legal requirements in your particular state or territory.

What is an incorporated association?

An incorporated association in Australia is an organisation that has obtained legal recognition under state or territory laws. This recognition grants the association a distinct legal identity, separate from its individual members.

One key way to identify such an organisation is by the inclusion of the word ‘Incorporated’ or the abbreviation ‘Inc’ in its name.

When an association incorporates, it gains the ability to conduct various activities in its own name, such as owning property, borrowing money, and entering into contracts.

Each incorporated association is established with a specific purpose or objective, which is detailed in its rules, often referred to as the constitution. These rules provide a structured framework for how the association is to be operated and managed by its members.

Typically, incorporated associations are created for purposes such as recreation, culture, or charity. Any profits it generates are reinvested into the organisation’s activities rather than distributed to individual members.

In essence, an incorporated association is a legally recognized entity that exists to pursue specific goals while operating within a defined legal framework.

See our unincorporated association article for information about unincorporated associations.

Eligibility criteria for incorporation

Powers of an incorporated association

An incorporated association is granted a set of powers that enable it to effectively work towards its objectives and purposes. These powers encompass a wide range of actions and activities, including:

Property Transactions: The association can buy, own, manage, and sell both real property (like land) and personal property (such as goods or shares). This means it can acquire assets it needs and dispose of them when necessary.

Banking Operations: It can establish and operate bank accounts, allowing it to handle financial transactions and securely manage its funds.

Investment: The association has the authority to invest its money, potentially generating returns or furthering its goals through sound financial management.

Borrowing: When required, the association can borrow money, with flexibility in setting terms and conditions, enabling it to manage its finances effectively.

Appointment of Agents: The association can appoint representatives to conduct business on its behalf, delegating specific tasks or responsibilities.

Contractual Agreements: It’s empowered to enter into various contracts that it deems necessary or beneficial to achieve its objectives.

Moreover, an incorporated association isn’t limited solely to these specific powers. It has the freedom to engage in nearly any lawful activity that is considered necessary or convenient for the pursuit of its stated goals and purposes.

This broad range of authority provides the association with the flexibility to adapt and take appropriate actions while operating within the bounds of the law.

MANDATORY PROVISIONS IN THE ASSOCIATION’S RULES

The management body within an association is typically referred to as the committee. However, it can also be known by other names such as the board, council, governing body, or as specified in the association’s rules.

The association’s rules (constitution) need to clearly outline the committee’s powers and the functions it is authorized to carry out.

The rules (constitution) of the association must include specific provisions regarding the following matters:

Election or Appointment: Procedures for the election or appointment of committee members.

Terms of Office: The duration of committee members’ terms in office.

Vacancies: The process for how a committee member’s office becomes vacant and how these vacancies will be filled.

Quorum and Meeting Procedures: Requirements for the minimum number of committee members needed to conduct meetings (quorum) and the procedures to be followed during committee meetings.

Meeting Records: Guidelines for creating and maintaining records of committee meetings.

If the association’s rules do not adequately cover these matters, the relevant clauses from the prescribed model rules are considered applicable until necessary action is taken to amend and improve the association’s rules.

Key responsibilities of the management committee

The management committee plays a central role in the functioning of an incorporated association. Here’s a breakdown of the key responsibilities and points to consider:

Overall Management: The primary duty of the management committee is to oversee and manage the affairs of the incorporated association. This includes making decisions, setting policies, and ensuring the organisation operates in accordance with the law.

Legal Compliance: The committee must ensure that the association complies with the requirements of the relevant legislation (the Act), its own rules (constitution), and any other legal obligations that apply to the association.

Duty of Care: Each individual member of the committee has a duty to act honestly, in good faith, and in the best interests of the association. They must exercise reasonable care, skill, and diligence in carrying out their responsibilities.

Records requirements for incorporated associations

The Act mandates that every incorporated club or association must maintain specific records, including:

• Member Register: An up to date list of all members.
• Rules (Constitution): An up to date copy of the association’s rules, often referred to as the constitution.
• List of Office Holders: An up to date list of the names and addresses of individuals holding office positions within the association as per its rules.
• Accounting Records: Records that accurately record and explain the financial transactions and financial position of the association.
• Disclosure of Interest: Documentation of any disclosure of interest made by a committee member during meetings, recorded in the minutes.

Other records to be maintained include:

• Certificate of Incorporation
• Financial Records
• Minutes: Meeting minutes serve as official records and should be maintained for all meetings, including the annual general meeting (AGM) and management committee meetings. Minutes should clearly state the decisions made, responsible parties, implementation timelines, review processes, and notification procedures.
• Annual Report: Many associations prepare an annual report summarizing achievements, statistics, financial reports, and other highlights of the past year. It is often presented to members at the AGM and may serve as a public relations tool or a requirement for certain funding agreements.
• Employment Records: Associations may maintain employment related records, including recruitment records, performance reviews, grievance documentation, training records, and correspondence related to employment conditions.
• Safety Records: Health and safety records should be kept separately and may include complaints, incidents, risk assessments, training details, safety committee minutes, and relevant resolutions.
• Insurance Records: Copies of all insurance policies should be securely stored, and any changes to policies should be promptly updated. Associations must notify insurers of events such as accidents, theft, or fire and keep records of notifications and correspondence.
• Service Delivery Records: Some associations maintain service delivery records, which can include statistic sheets, case files, or employee reports. These records serve various purposes, including acknowledging achievements, minimizing professional negligence risks, meeting industry requirements, and facilitating evaluations and planning. Funding arrangements may also dictate specific record keeping and reporting requirements.