Are you thinking of incorporating a not-for-profit association? Whether you’re thinking of starting a sporting or music group, an arts centre, environment organisation or you already run an unincorporated association, incorporating the association is definitely worth considering.
Just like incorporating a company, incorporating an association creates a separate legal entity which protects the members from being held personally liable for the association’s legal transactions.
An incorporated association must have a minimum of 5 members and must not provide monetary gain to its members.
Benefits of an incorporated association:
- It is a separate legal entity
- Can enter into contracts in its own name
- Can open a bank account
- Can hold and deal with property in its own name
- Can sue or be sued
- Continues to exist even when its members change
Steps for setting up an incorporated association in NSW:
STEP 1: Check the name of your association: You should check the name of your association to make sure it is not similar to another registered name by searching Organisation and Business Names on the ASIC website and NSW incorporated associations online register.
STEP 2: Reserving a name: If you don’t think you will register your association for a period of time and you would like to reserve your name. It is possible to do this by filing: Form A1 Application for reservation of name. It costs $53 to register a name.
STEP 3: Constitution and Objects: You will need to write up the objects of your association as well as a constitution. Incorporated associations must have a constitution which addresses all of the matters in Schedule 1 of the Associations Incorporation Act 2009. If an association does not have its own constitution it can adopt the model constitution in the registration application. It is important to clearly understand the constitution as it creates obligations for the members.
STEP 4: Authorise registration application: The registration application must be authorised.
New association: For new associations, all 5 or more individuals proposing the registration must authorise the first public officer to apply for registration.
Existing unincorporated association: For existing unincorporated associations, authorisation must be received by a special resolution. A copy of the special resolution must be included in the registration application.
STEP 5: Registration application: The association’s first public officer lodges the Application for registration of an incorporated association with Fair Trading NSW. If the association has not reserved its name, registration costs $176. If the association has reserved its name, registration costs $137.
It is worth noting that with incorporation comes significant legal obligations. Key obligations include:
- The establishment of a management committee:
- An incorporated association must have a management committee of 3 or more members.
- The committee members have a number of obligations, including an obligation to carry out functions with due care and diligence, an obligation to disclose any interests which conflict with their ability to perform their duties and an obligation to not use their position or information acquired by their position dishonestly.
- Obligation to keep records and maintain registers:
- A register of committee members
- A record of any disclosures of interest by a committee member
- A record of the association’s financial transactions and position
- Minutes of the committee and general meetings
- A register of members
- Financial reporting obligations
- Obligation to hold annual general meetings
Incorporating your association may be a great option for you as it creates a separate legal entity and it means that the association can enter into contracts and have its own bank account among other benefits. There are five key steps to follow to incorporate an association. A crucial step is understanding and tailoring the company’s constitution. Finally, it’s important to remember that incorporating an association creates a number of legal obligations which require compliance.
If you have any enquiries related to incorporating an association, get in contact with us on 1300 337 997.