| The information given below should be viewed as a guide only and should not be used as a substitute for professional legal advice.
What is incorporation?
Incorporation is a system of State Government or Territory registration that gives an association or community groups certain legal advantages in return for accepting certain legal responsibilities. An incorporated association receives recognition as a legal entity separate from its members and offers some protection for office holders from any debts or liabilities incurred by the group as long as the association doesn't make a profit for its members.
Incorporation is voluntary. Once incorporated groups have to abide by relevant legislation (Read on for details).
Why Incorporate?
Not-for-profit community groups can be unregistered and unrecognised bodies acting under their own rules, or they can be formally recognised bodies with a legal personality of their own.
If you're the honorary treasurer of an unregistered non-profit organisation called Better Community, for example, and you're renting premises for your organisation, you will have to make the lease in your own name (acting as a trustee for Better Community).
If your organisation has registered itself under the Associations Act and has a legal personality, you can have the lease in the name of Better Community Inc.
There are advantages and disadvantages to each approach. The advantages of being an informal group are; that you don't have to pay the costs associated with incorporation and you don't have to comply with many of the requirements nor fill out the forms imposed on corporations.
This doesn't mean, of course, that you can deal with the business or the property of Better Communityas you like -you'll basically have the obligation to act as a trustee for the organisation's purposes -but you can be more flexible about what you do and how you do it. If you're organising a one-off or short-term activity this may be your best choice.
The disadvantage is that if anything goes wrong - if the Better Communityoffice burns down, or if people fall over the mat and injure themselves and sue - it's possible that as the lessee and as a committee member you may be held personally liable. In that case if there isn't enough money in the Better Community cashbox to cover the payout you may have to pay for it yourself.
There can also be difficulties with opening bank accounts, problems with insurance, and confusions about who owns what property. If you stop being a member of Better Communitybut your name is still on the contracts there may be difficulties transferring your responsibilities to the new Treasurer.
Furthermore, most foundations and most government departments will only fund incorporated organisations.
If you're an incorporated association then the lease can be in the name of Better Community, and as an incorporated association Better Communitywill have limited liability; that is to say, if someone falls over in the office and sues and the cashbox doesn't have enough money to pay them then you are not personally liable.
Formal structures
If you want legal status, you have a number of options:You can become
- a co-operative society
- a company limited by guarantee
- an incorporated association or society under the Associations Incorporation Act 1985
- an incorporated association or council under the Commonwealth Aboriginal Councils and Associations Act 1976.
Co-operative societies are suitable only for some purposes, and most community groups don't fit the profile.
Some Aboriginal associations are able to gain legal status under different rules under the Federal Government's Aboriginal Councils and Associations Act 1976. Further information is available from:
For most organisations, the choice is between company status and incorporation.
Limited companies are highly regulated; incorporated associations are lightly regulated. Setting up a company is complicated and expensive; incorporating as an association is comparatively cheap and simple. Unless your organisation is very big indeed, your best option will probably be to become an incorporated association.
Incorporating is not the same thing as registering as a charity or getting entitlement to tax exemption. That has to be done separately.
How to Incorporate
You need to prepare
A name for the association
You probably already have a name, but you now have to check the name you've chosen to make sure that it hasn't already been taken by another organisation. Not only can you not use a name if it's already been taken, you can't use it if it's a name that could be confused with an existing organisation. For that reason, it's sensible to have some names in reserve in case you're not allowed to use the one you want.
The aims and objectives of the organisation
It's not so important for getting incorporation, but you should be aware that you may need to consider your written objectives carefully if you have any ambitions to gain tax exempt status later. An association can do almost anything, but a charity is a good deal more restrictive.
A draft set of rules of the association (the constitution)
You may have a constitution already. Whether you do or not, you need to look at the Model Rules for Associations set out in the Act. These aren't compulsory, and you don't have to adopt them as a whole, but you need to make sure that your constitution covers all the topics that are in the Model Rules - that is to say, if the quorum for the Committee of Management in the model rules is three you can still set your own Committee's quorum at five if you want to, but you can't do without a clause saying what the quorum is.
The Queensland Model Rules are available on-line at
www.fairtrading.qld.gov.au/AssociationsAndNonprofits/Model_rules.doc
Unless you have special reasons to want different procedures, it's a lot quicker and easier to adopt the Model Rules.
Public Meeting
Before the meeting you will have to identify people interested in being members and office bearers in the new association.
Type out the formal motions -
"I move that the [name of Association] be formed, and that the [name of Association] rules be those attached'"
"I move that the [name of Association] incorporate as an incorporated association under the provisions of the Associations Incorporation Act."
Arrange for one person to move each motion and another to second it.
Print out copies of the Agenda, the Motions and the Constitution for as many people as you think will come.
Give at least four weeks notice of the meeting by putting an advertisement in a paper circulating in your area.
Making an application for Incorporation
Once the meeting has passed the resolutions to incorporate and approved the rules of the association, you have to lodge your application form with:
Office of Fair Trading
GPO Box 3111
Brisbane, Qld, 4001.
Incorporation application forms are available here: www.fairtrading.qld.gov.au/.
Include with your application
- The names and addresses of the Committee of Management.
- The name of the organisation's auditor
- A copy of the advertisement of the meeting
- A copy of the minutes of the meeting
- A copy of the rules/constitution adopted at the meeting, with any differences between the constitution and the Queensland Model Rules highlighted
- The lodgement fee
Check out the usual timeline for approval when you lodge your application, and follow up on progress if it takes any longer than anticipated.
After incorporation
Once your application has been approved and you have received your certificate of incorporation, there are other duties to be done:
- Your new name (including the word 'incorporated' or 'Inc') must appear on all your documents and publications.
- You will need a common seal (available from any maker of rubber stamps).
- You must have a registered address.
- You must open a bank account in the name of the association.
- Just in case someone does trip over the mat, you must maintain a public liability insurance policy for at least $ 1,100,000 from an approved insurer.
- keep a set of books to record the financial transactions of the association and a register of members and committee members.
A folder or book to keep minutes of committee meetings and general meetings must also be kept.
- arrange with the Registrar of Titles for property which is registered in the name of trustees to be transferred to the association.
inform the regulator on the appropriate form (see below) if you change your name or your registered address, if you become a trustee, or if you're winding up
Annual General Meeting
Incorporated associations must hold a General Meeting every year.
Forms
Forms are on-line at www.fairtrading.qld.gov.au/fair-trading-forms.htm
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