1. INCORPORATED ASSOCIATIONS
INFORMATION SEMINAR
Greet and welcome participants.
Briefly outline the housekeeping requirements attached to the venue.

2. INTRODUCTION 136,000 incorporated associations in Australia
35,000 incorporated associations in NSW
It is worth noting that there are 136,000 incorporated associations across Australia.
35,000 of these associations are incorporated in NSW and Fair Trading is responsible for regulating these NSW based organisations.

3. What we will cover in this session
Why incorporate?
How to incorporate?
Running an incorporated association
During this session we will consider the reasons why groups choose to incorporate. This is relevant if you are a member of an unincorporated group and it may have been suggested or recommended to you that your group incorporate.
We will briefly review the process involved in incorporating and then spend time on what you should know which may help you in running an incorporated association.

4. Why incorporate? incorporation is a choice separate legal entity
own property in own right
enter into enforceable contracts
sue or be sued
continues regardless of changes to membership
limited liability for members
Incorporation is a choice. Why do groups choose to incorporate?
Because there are benefits that come with incorporation.
When you incorporate you are creating a legal entity that exists in its own right. A legal entity is separate to its members. As a legal entity an incorporated association can own property in its own name. It can enter into contracts and it can sue or be sued in its own name. The entity continues even though there are changes to its membership and management committee.
When an association is incorporated the liability of individual members to the association is limited. This means the liability of the members towards the debts of the association is limited to any amount that an individual member may owe the association eg. a membership fee.

5. The legislation: Associations Incorporation Act 2009 and Associations Incorporation Regulation 2010
Introduces objects:
small scale
not for profit
non-commercial activities
Associations have been able to incorporate in NSW since 1985 and on 1 July 2010 updated legislation governing incorporated associations was introduced. This legislation consists of the Associations Incorporation Act 2009 and the Associations Incorporation Regulation 2010.
The Act includes an objects section which makes it clear that incorporated associations in New South Wales must be engaging in “small-scale, non-profit and non-commercial activities”.
What is small scale? Fair Trading has a policy which limits the size of incorporated associations to those organisations with assets or income of less than $2 million. This is important when considering incorporation in the first place and also helps us, and the organisation, to assess if it is appropriate for an association to remain incorporated under the Act.
It is inappropriate for incorporated associations to engage in commercial activities and most importantly an incorporated association cannot be used to secure a direct monetary gain for members. If you are uncertain about what may or may not be commercial activity, then contact the Registry of Co-operatives & Associations.

6. Steps to incorporate an association
registration process
five members
objects
constitution
reserve the name
application for incorporation
appoint a public officer
The legislation sets out a registration process by which you create a legal entity. You must have a minimum of 5 members to form an incorporated association and there is no upper limit for the number of members.
The association must have objects which is its purpose (or philosophy) and it must have a constitution which sets out how the association will be managed. I will look at the constitution in more detail shortly in the presentation.
The process involves completing relevant forms, which are available from any Fair Trading Centre or on our website.
I encourage you to look at our website as it contains a series of fact sheets which provide more detailed information on registering the association and in deed on running incorporated associations. If you don’t have access to the internet just give us a call and we will be happy to send the information to you.
The first step in the registration process is to reserve the name. The name must be available and considered acceptable. The name will not be acceptable if it is identical or similar to another name that is registered. The name will be reserved for a period of 3 months.
The second step is to apply for registration of the association. This is is where you provide specific information about the proposed incorporated association. You will have to provide a copy of your own constitution or adopt the model constitution. You must appoint a public officer who will be the point of contact for Fair Trading. I will spend time on the public officer position a little later in the presentation.
Once registered, the association will be issued with a certificate of incorporation in the name of the association, together with a registration number. It is important to note that once incorporated the full name of the association must appear on all official documents and publications, including a website.

7. Running an association
Responsibilities
attached to
incorporation
With the benefit of incorporation come a number of responsibilities which must be met in running an incorporated association. We call them statutory obligations, as they are matters that the statute, or legislation, says the association must do.

8. Statutory obligations
official address, objects and a constitution
committee to manage affairs
appoint a public officer
annual general meeting
financial reporting
must not secure monetary gain for members
What are these statutory obligations?
Committee members and the public officer are primarily responsible for ensuring an incorporated association complies with its statutory and reporting obligations.
Briefly, these obligations include the need for an association to have an official address. This may be the association’s actual premises, or the public officer’s residential address or place of employment or business. I have already spoken about the need for an association to have clear objects and a constitution.
The association must have a committee to manage its affairs on behalf of the members and those affairs must be managed in accordance with its constitution. The committee must appoint a public officer. An annual general meeting must be held within six months of the end of the association’s financial year.
Records must be kept, which I will talk about a little later, but in particular, records of the association’s financial transactions must be kept to enable information to be presented to the members at the AGM and then in turn lodged with Fair Trading.
Individual members cannot receive a direct pecuniary gain from the association.
Failure to comply with these obligations may lead to the issue of a penalty notice, prosecution or cancellation of the association’s incorporation.

9. Constitution managing the association
contract between members and association
schedule 1 of the Act
model constitution
changes only effective upon registration
The constitution sets out how the association will be managed. It must serve the association and therefore should be regularly reviewed and updated to meet any changing needs of the association.
The constitution is a contract between members and the association.
Schedule 1 of the Act sets out 16 matters that must be addressed in the association’s constitution. These are the basic matters that must be included but an association may provide for other matters. The association should address these matters in a way that serves the association or is best for the individual association.
Fair Trading has developed a model constitution which an association may adopt as is. If it does, then it must run the organisation in accordance with the model constitution.
If an association does not address any of the matters set out in Schedule 1 then the relevant provision in the model constitution will apply to the association. The model constitution operates as a safety net.
A constitution may only be changed by way of a special resolution. This requires 21 days’ notice to be given to the members and then 75% of members voting must pass the resolution for it to be adopted.
As at 1 July 2010, which was when the new legislation was introduced, every incorporated association in NSW was deemed to be operating in accordance with its own constitution. If you were operating under the ‘old model rules’ the new model constitution does not automatically apply to you. You need to go through the process to formally adopt the new model constitution, once again, by passing a special resolution to do so.
Any change to a constitution is not valid unless it is registered with Fair Trading and it is only valid from the date of registration. The resolution wording is important and it is the resolution passed by the members that must be included on the form registering the change in the constitution.

10. Schedule 1 membership qualifications (if any) register of members
fees and subscriptions (if any)
members’ liabilities
disciplinary procedures and appeals mechanism
internal disputes
constitution and function of the committee (elections, terms of office etc.)
calling of general meetings
These are the matters that the Act says must be provided for in the constitution.
Firstly, the qualifications for membership, if there are any.
The association must have a register of members.
Include any entrance fees, subscriptions and other amounts to be paid to the association by the members.
Spell out the liability (if any) of members towards debts of the association or the costs, charges and expenses concerned with winding up the association.
The procedure (if any) for the disciplining of members and the mechanism for appeals by members in respect of disciplinary action and also, the mechanism for resolving disputes between members themselves and between members and the association. These two matters are sometimes not given the consideration they should be and if a procedure is not clearly set out, may become problematic for an association when endeavouring to resolve disputes.
The constitution must be about how the committee members are elected or appointed, the terms of their office, the grounds or reasons for which an office of a committee member will become vacant; should provide for filling casual vacancies and importantly include the quorum requirement and the procedure to be followed at meetings of the committee.
The intervals between general meetings of the association and how they will be called should be included.

11. Schedule 1 (continued)
time and manner in which notice of meetings to be given
procedures to be followed at general meetings and if able to vote by proxy
kinds of resolutions that may be voted on by means of a postal ballot
sources of funds (donations, grants etc.)
management of funds (drawing and signing cheques)
custody and inspection of books and records
the association’s financial year
Make sure the constitution provides for the time and the manner in which notices of general meetings and notices of motion are to be given, published or circulated.
Specify the quorum requirement and procedure at general meetings and also whether members are able to vote by proxy at general meetings. If you are using the model constitution then proxy voting is not permitted.
A constitution should also include the kinds of resolutions that may be voted on by means of a postal ballot. For example, the model constitution says that a postal ballot may be used to determine any issue.
The sources of income for the association should be included and how those funds will be managed in particular how cheques will be drawn and who will be signing them on behalf of the association.
Ensure that you provide for the records of the association that is, who will hold them and address the issue of inspecting those records by the association members.
An association must specify the end of its financial year in the constitution.
The model constitution sets the 30 June as the end of the financial year which means if you adopt the model constitution then the end of the financial year for your association will be the 30th June.
So these are the matters that every association must address in its constitution and how they are addressed is entirely up to the association. The association can include any other matter or matters that it chooses to. We just encourage groups to ensure that when including a matter in the rules that it is easy to read and understand.

12. Financial reporting Tier 1 – larger associations
gross receipts exceed $250,000 or
current assets exceed $500,000
audited accounts to be submitted to members
lodge copy of audited accounts with Registry
Tier 2 – small associations
summary of financial affairs submitted to members
lodge annual summary of financial affairs with Registry
Incorporated associations must lodge an Annual summary of financial affairs (form A12) with Fair Trading. This form should be lodged within a month of the AGM and the AGM should be held within 6 months of the end of the association’s financial year.
Greater reporting requirements are required of larger associations. Larger associations, or Tier 1 associations are those organisations that have income in excess of $250,000 or current assets in excess of $500,000. These associations are required to submit audited accounts to the members at the AGM and then lodge a copy of the audited accounts with Fair Trading when they submit the Annual summary of financial affairs. The accounts are required to be prepared in accordance with the Australian Accounting Standards and the audit is required to be conducted in accordance with the Australian Auditing Standards
The smaller associations, or Tier 2 associations, must still present their members with financial information. However these smaller associations are only required to lodge the Annual summary of financial affairs form (form A12) with Fair Trading. The financial information presented to the members should include an income and expenditure statement and a balance sheet setting out individual sources of income and expenses and the assets and liabilities of the association.
It is important to note that if an individual association’s constitution specifies that an audit must be undertaken, then the association must act in accordance with its constitution. This may also apply to association’s that administer grant money in that the granting body may require the association to provide audited accounts.
If you have any specific questions concerning the financial reporting requirements then please contact the Registry of Co-operatives & Associations. I will give you the Registry’s contact details at the end of the presentation. There is also a specific fact sheet on the reporting requirements available on Fair Trading’s website.

13. Management Committee
three or more members over 18 and resident in Australia
manage day to day running of association
appoint a public officer and authorised signatories
maintain records/registers
hand over records/documents to public officer
The association’s constitution will determine the membership of the committee and how those members will be elected or appointed. The legislation requires that the committee has 3 or more members, each over the age of 18 years and 3 of whom reside in Australia.
The committee is usually responsible for the day to day running of the association. The constitution should set out the committee’s authority. The members may want to have a greater say in some matters in which case the constitution may require that certain matters must be put the full membership. Alternatively it may give the committee full authority to determine all or any matter.
As previously mentioned the committee must appoint a public officer. An association must also have at least two authorised signatories and the public officer is, by virtue of that position, an authorised signatory. The committee may appoint additional authorised signatories. An authorised signatory is a person who has authority to sign official documents on behalf of the association. Any official documents must be signed by two authorised signatories.
Under the legislation a common seal is not required, but associations may certainly have one.
The committee must ensure that all records and appropriate registers are maintained. I will go through the records that must be kept shortly.
Former committee members must ensure that all documents that belong to the association are delivered to the public officer within 14 days of vacating office. These documents belong to the association and not an individual.
Generally speaking committee members:
should be aware of their own duties, obligations and responsibilities
should be aware of the duties of the public officer and ensure they are carried out
use reasonable care and skill in the performance of their duties
act in good faith and in the best interest of the association, and
ensure new committee members are aware of their obligations and responsibilities.

14. Public officer appointed by the committee over 18 and resident of NSW
authorised signatory
point of contact (public register)
notifying a change to an official address
lodging annual statement
receiving/handing over records
The public officer is appointed by the committee. The person must be over the age of 18 years and residing in NSW. As I mentioned earlier the public officer is an authorised signatory by virtue of that position.
The public officer is the point of contact for Fair Trading and is the person whose name appears on the public register. The public officer must provide a physical address. This address may be the person’s residential address, place of employment or business, or the association’s official address. It should be an address where the public officer will be found.
The public officer is responsible for notifying Fair Trading of a change to an association’s official address and is responsible for receiving and handing over records held by former committee members which belong to the association.
The public officer must also hand over association documents within 14 days to a committee member when he or she vacates the position of public officer.

15. Records copy must be kept in the English language
financial affairs/transactions
minutes of all meetings
registers
committee members
authorised signatories
disclosed interests
association members
hand over documents within 14 days
The committee must maintain records and if kept in a language other than English, a copy in English must also be kept. The committee must ensure that sufficient records are maintained that explain the association’s financial transactions and enable financial statements to be prepared and presented to members at the AGM.
Minutes of all meetings must be kept. The style is a matter for the association, however they should accurately record the matters discussed or issues which may have arisen and any decision that was made. Recording this information ensures future committees are able to track decision making and where necessary provide an understanding for what may have been controversial or unpopular decisions.
A number of registers must also be kept. These are:
committee members – name, date of birth and residential address, date commenced office and date office vacated. The Act requires that this register is available for inspection by any person and kept at the association’s official address.
authorised signatories. As previously mentioned the authorised signatories are the people appointed to sign official documents on behalf of the association, and the association is required to have at least 2, one of whom will be the public officer. The association can appoint additional authorised signatories and whom may or may not be the same people able to sign cheques on behalf of the association.
disclosed interests. If a committee member has a direct or indirect interest in any matter that is being considered by the committee and it appears that it may lead to a conflict of interest, then the interest must be disclosed and recorded in a book (or register) kept for this purpose. The committee member, having disclosed an interest, should then remove him or herself from decision making in relation to that matter. This register must be kept with the register of committee members. This register must also be available for inspection by any member of the association.
And of course, a register of the association’s members must be maintained.
Once again, all records which belong to the association must stay with the association and when a committee member ceases to be a committee member then the records must be given to the public officer within 14 days of vacating the position. The public officer is then responsible for ensuring those documents are in turn given to the new committee member/s.

16. Meetings held at two or more venues
annual general meeting/special general meetings
committee meetings
voting
ordinary resolutions
special resolutions
proxy voting
postal ballot
If an association provides for it in its constitution, meetings may be held across two or more venues using technology that enable members to participate eg. video conference or teleconference.
An annual general meeting must be held within 6 months after the close of the association’s financial year at which regular annual business is conducted such as presenting the annual statements and electing committee members. Any general meeting that is not an AGM is a special general meeting.
Usually the manner of calling, the quorum and procedure of a special general meeting are the same as for an AGM
The constitution is required to specify the number of general meetings and the procedures for calling the meetings.
The management committee should meet as often as necessary to properly manage the affairs of the association. The constitution should set out how often this will happen. The Model constitution stipulates that the committee must meet at least 3 times a year.
The constitution should specify the eligibility of members in relation to voting which is how decisions will usually be made. The Model constitution says one member, one vote which must be given personally. If you wish to have proxy voting then you must provide for this in your constitution.
Most decisions will be passed by way of an ordinary resolution – a simple majority of those eligible to vote.
A special resolution is required for any structural changes to the association (eg. changing constitution; name; cancellation; amalgamation) ¾ of those eligible to vote are required to vote in favour of a special resolution for it to be passed. Where a special resolution is required then it must be lodged with Fair Trading within 28 days of being passed to take effect. Note that 21 days notice must be given to the members if a special resolution is being considered.
The constitution should also specify the kinds of resolutions that may be voted on by means of a postal ballot. The Model constitution provides for any decision to be determined by means of a postal ballot and if an association is conducting a postal ballot then it must be conducted in accordance with the procedure set out in the Associations Regulation – schedule 3 of the regulation.

17. Meeting procedure Notice of meeting Agenda Chair Quorum
Conduct of meeting
Motions and resolutions
Voting
Minutes
After the meeting
We frequently get asked about meeting procedures, what should happen and when. This really is up to the association and relates directly to a number of the matters that are required to be addressed in the association’s constitution.
You may come across terms such as “standing orders” which are the rules ensuring continuity of the meeting (the procedures to be followed) and “points of order” which usually highlights an irregularity in the proceedings and may require the chair to make a ruling. However you don’t need to use these specific terms. The formality attached to the procedures will vary from association to association depending on the nature of its activities, the size of the organisation etc. and what is in the constitution.
We know that a notice of meeting must be given to the members. For example the secretary may send a notice to each member specifying the place, date and time of the meeting and the nature of the business to be conducted, this will usually be the agenda for the meeting. At an AGM the business will normally be:
Confirming the minutes of the previous AGM and of any special general meeting held since the last meeting
Receive reports on the various activities
Receive the financial statements
Elect officer bearers and ordinary members
Any other business of which notice has been given to the members.
Every meeting needs a Chair who presides at the meeting. This person exercises control as needed and enables the function and purpose of the meeting to be fulfilled in an orderly manner.
The Chair should ensure the stipulated quorum requirements are met before the meeting may commence or validly transact business. The Chair declares the meeting open and proceeds to deal with the items on the agenda in the presented order. The involvement of members in discussion may come from the association’s constitution or maybe its own conventions. The smaller the association the greater the individual participation may be in the course of a meeting. The larger association may depend on more formal procedures and rules of debate to enable business to be transacted.
Motions and resolutions should be clear. Motions are proposals put to a meeting that usually require a vote for the proposal to be acted upon. A resolution is a motion that has been passed. Remember that in an association certain matters require a special resolution to be passed by the members. Notice and voting requirements must be met for special resolutions to be passed.
Members should know exactly what it is they are voting on and the association and members should be clear on who is eligible to vote and how the vote will occur. You know that records must be kept. The outcome of any motion, that is, the resolution, should be recorded. The records reflect the procedures followed at a meeting by way of minutes. The secretary is usually responsible for taking the minutes or recording what happens at the meeting. It is important after the meeting to sort out what needs to be done and by whom as a result of the meeting and the priority to be given to the items requiring action.
There are publications available specifically dealing with meeting procedure. You can find these through a search of the internet or a visit to your local library. Again it is up to the association to determine how it wants its meetings to be conducted and the formality attached to the procedures.

18. Frequently asked questions
resolving disputes – how?
reviewing decisions – for?
penalty notices – why?
cancelling the association – when?
searching the public register – information?
Disputes
We often receive calls from people concerned about the way the association is operating. It frequently involves a dispute about the constitution. However we do not have the authority to intervene in disputes concerning the association’s constitution. The constitution is a contract between the association and its members. The association through the committee and its members must ensure it is operating appropriately. It is a matter for the association to interpret the constitution and if it becomes apparent that a particular part of the constitution may be ambiguous, then it is up to the association to resolve it.
It is important to ensure that changes to the association’s constitution have been registered as changes are only valid upon registration.
The first thing should be to refer to the constitution for direction and/or clarification. Consider the problem and ramifications of acting or not acting. Communicate with other members and seek their support. Communicate with the committee in the correct format to give them the opportunity to resolve the problem. Seek mediation (this is part of the constitution). Ultimately it may be necessary to seek legal advice. Or it may result in you leaving the association.
Decisions by Fair Trading
Associations are now able to seek a review of certain decisions (eg. refusing an application to change the association’s name) through the Administrative Appeals Tribunal. An internal review may be requested in the first instance, and if appropriate it may be possible to appeal to the Administrative Appeals Tribunal.
Penalty Notices
Committee members and the public officer are primarily responsible for ensuring an incorporated association complies with its statutory and reporting obligations. Failure to comply with these obligations may lead to the issue of a penalty notice, prosecution, or in some instances, cancellation of the association’s incorporation.
Cancellation
An association may come to the end of its life for many reasons. Fair Trading may cancel an association if statutory obligations aren’t met or the most likely outcome is that the members may decide to cancel incorporation. Just remember that you went through a process to form the incorporated association and therefore must go through a process to cancel incorporation. The Registry of Co-operatives & Associations will provide you with the information you need if you decide to cancel incorporation.
Public Register
Documents lodged with Fair Trading are kept on a public register and for a fee will be made available to interested parties. This information includes details of the public officer, the incorporation documents, the constitution and the association’s annual statements.

19. Further information available from: Registry of Co-operatives & Associations – Fair Trading Centres – Salmat Print on Demand –
Information is available at Fair Trading’s website. More detailed information on the topics presented to day is available by way of a series of fact sheets which you can access. If you don’t have access to the internet please call our 13 number or contact the Registry of Co-operatives & Associations and the staff will be only too happy to help you.
All the forms you need during the life of your association are also available on the website or at a Fair Trading Centre.
If you would like to obtain a copy of the Act itself, it is available on the NSW legislation website or you may purchase a hardcopy of the Act by contacting Salmat on
Thank you for listening and I will be happy to answer any questions.