If you’re setting up a not-for-profit organisation, an Incorporated Association may be a suitable structure for your organisation.
What Are Your Options?
If you’re considering setting up a not-for-profit, charity or social organisation, there are several different structures that may fit your objectives:
- a Public Company Limited by Guarantee;
- an Incorporated Association; or
- a Proprietary Company (a for-profit company with a social purpose).
This article will discuss the factors to consider when looking to set up an Incorporated Association, and what type of organisations this structure is generally suited to.
What Is An Incorporated Association?
An Incorporated Association is a legal structure that is relatively simple to set up. It’s also more cost-effective than registering as a company.
Incorporated Associations are regulated at the state or territory level, so they’re usually best suited to organisations that operate primarily within their state or territory. For this reason, this structure is often chosen by smaller, not-for-profit community organisations, such as sporting clubs.
An Incorporated Association has a separate legal identity, meaning that it can legally enter into contracts, be sued and own property in its own name.
Key Factors To Consider When Thinking About Setting Up An Incorporated Association
The following factors generally determine whether or not an Incorporated Association is appropriate for your organisation:
- Geographic Operation: Incorporated Associations are regulated by the relevant state and territory legislation. They can only carry on most of their business in their state, so if the organisation is intending to have a nation-wide reach, an Incorporated Association may not be the most suitable structure. Another alternative is a Company Limited by Guarantee (“CLG”), which can operate throughout Australia.
- Limited Liability: Instead of shareholders, the “owners” of an Incorporated Association are called “members”. The members are only liable for the amount they have agreed to contribute to the Incorporated Association (i.e. subscription fees), so their personal assets are not at risk in the event that something goes wrong.
- Members Required: As Incorporated Associations are regulated by the relevant state or territory in which they register, the number of members required may vary between states & territories. For example, in New South Wales, NSW Fair Trading requires incorporated associations to have a minimum of 5 members and does not have a maximum limit.
Incorporated Associations In Different States And Territories
As mentioned above, different states and territories have varying requirements when it comes to setting up an Incorporated Association.
The table below sets out which authority regulates Incorporated Associations for each state and territory.
|Australian Capital Territory||Access Canberra|
|New South Wales||Office of Fair Trading|
|Northern Territory||Consumer and Business Affairs|
|Queensland||Office of Fair Trading|
|South Australia||Consumer and Business Services|
|Tasmania||Office of Consumer Affairs & Fair Trading|
|Western Australia||Consumer and Employment Protection|
The obligations of Incorporated Associations vary between states and territories, so it is important to check the rules of the relevant state or territory when registering an Incorporated Association.
Factors that may vary from state to state include reporting and accounting obligations, minimum and maximum number of members and directors, registered office requirements, and ongoing annual fees that apply.
We’ve written about the steps needed to set up an Incorporated Association in our article here.
If you’re not sure whether an Incorporated Association is the right choice for your organisation, you can read a bit more about the various not-for-profit structures in our article here. Feel free to get in touch with us to discuss your options or for help setting up your Incorporated Association! You can reach us on 1800 730 617 or at firstname.lastname@example.org.
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