Winding Up and Deregistering of Incorporation

The provisions of the Corporations Act 2001 (Cth) relating to the winding up of bodies other than companies apply so far as applicable to the winding up of an association. See the Consumer Affairs site for information on deregistering.

Voluntarily Winding Up

If an association decides that it no longer wishes to continue to exist it may pass a special resolution that it be wound up. An Association contemplating winding up may need to consult a solicitor or an accountant with expertise in that area. Voluntary winding up is an option only for those associations which are able to pay all their debts and the costs of winding up. The cost of winding up will depend upon the complexity of the association’s financial affairs.

Winding Up By The Court

Should a creditor or member of the association wish to have the Association wound up, they may apply to a court, usually the Magistrates Court, to do so. This may be done if the Association is unable to pay its debts, if it has acted inconsistently with its objects, or if it has not operated for at least one year. Individual members will be liable to pay creditors whatever sum is specified in the rules on winding up where liabilities exceed assets. Usually such a sum will be nominal (that is, $1, $2 or $5).

Cancellation of Incorporation

An association may wish to have its incorporation cancelled. If so, it must pass a special resolution to cancel its incorporation. An application for cancellation should be accompanied by the prescribed notice of the passing of the special resolution together with details of the financial position of the association and any other relevant facts. Consumer Affairs may notify an association that it proposes to cancel its incorporation for the following reasons:

• that it is not in operation;
• non-lodgement of required documentation;
• that it is engaged in trade or securing pecuniary gain for its members.

The association has three months from the date on which the notice of intended cancellation is gazetted to object to the proposed cancellation.
When an association is wound up or has its incorporation cancelled, its property must firstly go to pay the liquidator and all outstanding debts.
The association may determine how any surplus assets are to be distributed by passing a special resolution.

Where no such resolution has been passed, a court will order the distribution of those assets as it considers just, having regard to the objects and purposes of the association being wound up.

Penalties

An association, its committee members, members and employees may be liable to certain penalties under the Associations Incorporation Act 1964 (Tas). Enforcement of these penalties takes place in the Small Claims Court of the Magistrates Court.

In most cases, where an offence or breach occurs, the public officer and each member of the committee will be found guilty unless they can show that:

• they had no knowledge of the breach;
• they were not in a position to influence the conduct of the association; or
• they used ‘all due diligence’ to prevent the breach.