Incorporation as an Association
For a group of people who want to form a community organisation, the first question they need to answer is what sort of organisation they want to form.
Community organisations is a general term including sporting and social groups, action groups, and welfare organisations.
The most important legislation is the Associations Incorporation Act 1964 (Tas) (the Act).
The Consumer, Building and Occupational Services provides comprehensive information on the process of incorporation.
The following is a brief summary of the process. To be eligible to incorporate as an association under the Associations Incorporation Act 1964 (Tas), a group must have a set of objectives and rules, at least five members and be for a purpose permitted by the Act.
Section 2(1)(a) of the Act states that the types of associations which may be incorporated under the Act include those associations which are formed for the purpose of:
- religious, educational, benevolent or charitable benefit;
- providing medical treatment or attention;
- promoting or encouraging literature, science or art;
- recreation or amusement;
- establishing, managing, carrying on or beautifying a community centre;
- administering superannuation or retirement benefits schemes;
- promoting any of the above or similar purposes.
The primary purpose of the association must not be to earn profit for the association’s members. This does not mean that the association cannot provide facilities or services to its members for social, recreational, educational or other purposes. Nor does it prevent members from receiving a fair payment for services to, or on behalf of, the association, or on money lent to the association.
Payments of wages and interest must be incidental to the running of the association. An association cannot have as an object the paying of wages, salary, interest or any other financial gain to its members.
Many organisations such as ‘Meal on Wheels’ or child care centres have, as their primary activity, the provision of goods or services for which they charge. Such organisations are eligible to incorporate if their primary function is charitable, that is, if their aim is to provide relief or assistance to the public or a defined section of the public.
An association may conduct trade which helps to support its principal non-trade object. There is no problem with an association having trading or fundraising activities which are not substantial in number or value in relation to the association’s other activities, and so long as profits of those activities are not distributed to members.
Some groups that would otherwise be eligible to incorporate under the Act may have their applications refused because of their large size, or the nature of the activities.
This is to ensure that groups in positions of great trust, or who are responsible for large amounts of money or property, will have greater duties to audit and to disclose than those required under the Act. Such groups would have to seek incorporation under the Corporations Act 2001 (Cth).
How to apply for Incorporation
To apply for incorporation an existing group must hold a general meeting of members, for which the following things must be done:
- all members must be given reasonable notice of the meeting (generally 21 days), and of the fact that two special resolutions are to be considered by the meeting;
- in the notice, members must be informed that those ‘special resolutions’ are that a constitution suitable for incorporation be adopted, and that a person be authorised to apply for incorporation.
- Members should be given access to the constitution prior to the meeting. At the meeting, a quorum (as defined by any existing rule of the association, if any) should be present, and at least three-quarters of those who vote must approve a set of rules and objects for incorporation and authorise a person to apply for incorporation.
- The constitution adopted should cover all the rule requirements provided for in Schedule 1 ‘Model Rules for an Association’ of the Associations Incorporation (Model Rules) Regulations 2007 (Tas). Many groups find it convenient to adopt a constitution in the form of the ‘Model Rules’.
- Once the group has resolved to incorporate, and has authorised a person to apply for incorporation, the next step is to apply for incorporation.
The relevant form ‘Application for Incorporation of an Association’ must be lodged with Consumer, Building and Occupational Services. The forms are available at Service Tasmania or online.
See Consumer, Building and Occupational Services for more information on incorporation.
An association may not be incorporated under:
- a name that is identical or similar to the name of an existing company, friendly society, building society, cooperative or an existing registered business name; or
- except with the consent of the Minister, a name that in the opinion of the Commissioner is undesirable, or of a kind that the Minister has directed the Commissioner not to accept.
The Act requires an incorporated association to have the word ‘incorporated’ or the abbreviation ‘Inc’ at the end of its name. The Act also requires every notice, advertisement, cheque, receipt, or other document given or issued by the association to contain the name of the association in legible characters.
The Consumer, Building and Occupational Services website provides a table of costs. There is an ongoing yearly cost, which is the fee payable on lodgement of the annual return. The Commissioner may waive these fees if the association can establish that they cannot pay these fees. A waiver must be applied for, in writing, to the Commissioner.
Rules of the Association
If the Model Rules are adopted, there is no need to supply a copy when applying for incorporation. Groups who find the Model Rules too complex or inappropriate for their needs can draft their own rules. In this case, a copy of the rules must be lodged with the application.
The association should seek legal advice to ensure the legality of their constitution, as any rule which is contrary to the Act will be overridden by the Model Rules. Also, unless expressly excluded, the provisions of the Model Rules are deemed to form part of the rules of the association in relation to those matters which are not dealt with by the association’s own rules.
The Public Officer
Every incorporated association is required to have a ‘public officer’ who must be 18 years or older and a resident of Tasmania (s14). The public officer is the person tasked with keeping Consumer, Building and Occupational Services informed of changes in the association and its financial situation by filing the Annual Return.
It is the responsibility of the committee (not the members) to appoint a person to this position. Unless the rules of the association say otherwise, the committee is free to select whoever they think is best for the job. That person may be a committee member, a member of the association, or even an interested outsider. Before an application for incorporation is lodged, the committee of the association must appoint a person to be public officer. Details must be provided on the application form.
The public officer’s address is the official address for the service of legal documents on the association.
- It is the public officer’s duty to bring all documents received to the attention of the committee.
- It is possible for the association to stipulate a postal address different to that of the public officer.
- If the public officer changes address, a form notifying this change must be lodged with the Commissioner within 14 days.
It is also the Public Officer’s duty to notify the Commissioner of any changes in the rules of the association and the passing of special resolutions and may have other duties specified in the rules/constitution. The position of public officer will become vacant if they resign, are removed from office, die, become bankrupt, develop a mental illness, or change residency to outside of Tasmania. If the office of public officer at any time becomes vacant, it is the responsibility of the committee to appoint a new public officer. This should be done within 14 days of the vacancy occurring. The new public officer must lodge a form notifying Consumer, Building and Occupational Services of their appointment within 14 days of the appointment.
Annual General Meetings
The holding of Annual General and other meetings of the association is governed by the rules of the association. The timing of the annual general meeting will be dependent upon the statutory requirements for lodging annual returns.
Limits to Limited Liability
Questions of liability and insurance should be discussed with the association’s legal adviser and insurer.
The Effect of Incorporation on Property, Debt and Contract
Incorporation has the effect of automatically transferring ownership of all property, liabilities and contracts from the members and trustees of an unincorporated organisation to the new incorporated association. After incorporation, all money and debts that were owed to (or by) the organisation’s members in relation to the activities of the organisation immediately before incorporation become owed to (or by) the incorporated association. All contracts and arrangements that were lawfully made prior to incorporation become the contracts and arrangements of the incorporated association. The right to sue and be sued is transferred. Property held in the name of trustees on behalf of an unincorporated organisation passes automatically to the association upon incorporation.
However, it is still necessary for some forms to be filled out so that names on the title deeds or other official documents can be changed from the trustee’s name to the Association’s name. For general law land the public officer must, after incorporation, deliver a memorial in writing to the Registrar of Deeds setting out:
- a description of the land or a reference to a plan on which the land is shown;
- the name of the association in which the land is to be vested;
- particulars of the nature of the interest in that land that is to be vested;
- the name of each person who appears by the register to hold that land or interest;
- a statement that upon registration of the memorial, that land or interest becomes vested in the association by virtue of section 13 of the Act.
For land under the Land Titles Act 1980 (Tas) the public officer must, after incorporation, deliver to the Recorder of Titles notice in writing (on a blank instrument form available from the Land Titles Office) setting out:
- the title reference of the land to which the notice relates;
- the name of the association to which the land is to be vested;
- particulars of the nature of the interest in that land that is to be vested in the association;
- the name of each person who appears by the register book to hold that land or interest;
- a statement that, upon the entry by the Recorder upon the grant or certificate of title of that land the land becomes vested in the association.
This notice should also be accompanied by:
- the certificate of title;
- the certificate of incorporation of the association (or a certified copy);
- a certificate of the Commissioner stating the name of the public officer of the association; and
- a statutory declaration of the public officer and of one of the registered proprietors of the land.
If an Association wishes to make a decision, it may do so by passing a resolution at a meeting of the members. Because some decisions are of particular importance (for instance, changing the rules or changing the association’s name), the Act demands that this must be done by passing a ‘special resolution’. A special resolution is one which is passed in the following manner:
- notice must be given to members specifying that a decision requiring a special resolution is to be made;
- the notice must include details of the proposed resolution and give appropriate notice of the meeting, as outlined in the associations current constitution;
- a quorum must be present at the meeting; and
- at least three-quarters of those present must vote in favour of the resolution for it to be passed.
The rules of an association may indicate situations in which a special resolution is required. Regardless of what an association’s rules say, passing a special resolution is always required:
- to change the association’s name;
- to change its rules;
- to change its objects;
- to amalgamate with another incorporated association;
- to voluntarily wind itself up and distribute its property;
- to apply for registration as a company or a cooperative.
Where a special resolution is passed, the public officer must lodge a notice with Consumer, Building and Occupational Services within one month of the passing of that resolution.