Setting up an incorporated association in Queensland

Posted by: Australian Centre for Philanthropy and Nonprofit Studies
Queensland University of Technology

The information on this page is for people involved in a Queensland-based community organisation that want to become an incorporated association.

In Queensland, the process of setting up an incorporated association is set out in the Associations Incorporation Act 1981 (Qld). This Act also sets out what your organisation must do to maintain its status as an incorporated organisation. To view the Act go to:  http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/A/AssocIncorpA81.pdf

The government body responsible for administering the Associations Incorporation Act is the Office of Fair Trading Queensland. To become an incorporated association you must apply to the ‘Registrar of Incorporated Associations’ at Fair Trading at http://www.fairtrading.qld.gov.au

While setting up an incorporated association is relatively simple process, there are a few important decisions that your organisation will need to make (and may need to get advice about). In particular, the wording of your organisation’s ‘objectives’ and ‘rules’ needs to be chosen carefully so that your organisation can apply for tax concessions, fundraising registration and other benefits in the future. It is worth getting these documents right at the start, as it can be time-consuming and difficult to change them later on.

Steps to incorporate - as an incorporated association

Step 1: Can your association legally incorporate?

i) To incorporate an association in Queensland, you must be a:

 

  •  
    •  
      • Already an association with at least seven members and three committee members 
      • nonprofit association
      • be formed for a lawful purpose

 

ii) The following organisations cannot incorporate under the Associations Incorporation Act 1981 (Qld): 

      • a corporation;
      • a partnership under the Partnership Act 1891;
      • an industrial organisation under the Industrial Relations Act 1999;
      • a school council or parents and citizens association formed under the Education (General Provisions) Act 2006;
      • a body which raises money by subscription and loans that money to the members;
      • an association which is under a special Act of Parliament; and
      • an association whose principal purpose is to hold property in which the association’s members may divide amongst themselves, dispose of their interest, or distribute income or the use of the property among members or nominees of the members.

 

An exception to these general prohibitions gives the Registrar of the Office of Fair Trading a discretion whether to allow incorporation of an association in situations where the association is holding property to meet the medical costs of an individual who is suffering a serious medical condition or injury. (see section 5 (2) of the Associations Incorporation Act 1981 (Qld).

Step 2: Hold a general meeting

To incorporate, an association needs to convene a general meeting.  At this meeting, several decisions must be made.

An association must:

 

  • pass a motion to incorporate by resolution 
  • choose an appropriate name 
  • adopt a set of operating rules 
  • elect a President, Secretary and Treasurer (two different people must hold the President and Treasurer positions) 

 

A. Decision to incorporate
a. For an established association

If your association is already established then you would hold a general meeting in accordance with the rules and give notice that a proposed special resolution to incorporate will be moved at that meeting. An association must pass a motion to incorporate by resolution and the resolution needs a three-quarters majority vote to pass.

What needs to be in the special notice of this meeting is not set out in the Act but should include:

 

  • the time and place of the meeting; and
  • the proposed resolution to incorporate eg.

 

That the ABC club incorporate as an incorporated association under the provisions of the Associations Incorporation Act 1981 (Qld); and

 

  • a proposed resolution to either adopt the model rules as set out in the Associations Incorporation Act 1981 (Qld) or adoption of the associations own rules for the purposes of incorporation. The rules need to be attached to the resolution; and
  • details of any other business for the meeting such as the preferred name of the association and appointment of a person to prepare the application to incorporate and selection of interim officers.

 

For an example of a meeting notices and agenda see
https://wiki.qut.edu.au/display/CPNS/Incorporated+Associations+Manual+%2...

b. Not yet an association but are planning an inaugural meeting and wish to incorporate

B. The name of the association

Incorporated association names must:

 

  • contain only English characters 
  • not be easily mistaken for the name of another incorporated association, business name, cooperative name or identical to an Australian organisation name have the word ‘Incorporated’ or the abbreviation ‘Inc.’ at the end of the name.

For restrictions on the use of certain names, see the Associations Incorporation Act 1981 and the Associations Incorporation Regulation 1999. You can also search the Australian Securities and Investments Commission’s National Names Index at  www2.search.asic.gov.au.

Once your organisation is incorporated, you will need to use the word 'Incorporated' or 'Inc.' afteryour name. This indicates to other organisations and businesses that your organisation is incorporated and has limited liability. The Act requires that you use the full name on all business documents. There is a penalty if you don’t use Incorporated or Inc after your name unless you have applied for and received an exemption not to use Incorporated.  The Act provides that an association may, by resolution of its members, decide to apply to the registrar for exemption from having to use the word Incorporated or Inc after its name either —

 

(a) at the time of incorporation of the association; or

(b) if it is an incorporated association—at another time.

The application must be in the approved form and be accompanied by the information, documents and fees.  For a copy of the form go to:
http://www.fairtrading.qld.gov.au/Forms/Exemption_naming_form.pdf

After considering the application, the registrar may grant or refuse the application.

C. Rules of the Association

 All incorporated associations must have a set of operating rules. These rules are sometimes known as the incorporated association’s constitution. This written set of rules outlines the incorporated association’s operations, its members’ rights, how the management committee works and how meetings will be run.

You may use either the model rules or you can write your own rules.

Model rules

The model rules are a standard set of rules that an incorporated association can use instead of writing their own. The model rules are suitable for many associations but careful consideration should be given to whether any amendments need to be made to meet the needs of your association.  This would avoid having to amend the rules later on.

Model rules (PDF, 85 KB)

You may wish to check the following rules to see if you are happy with the terms set out:

 

  • Clause 38(2)  - Each member present and eligible to vote is entitled to 1 vote only and, if the votes are equal, the chairperson has a casting vote as well as a primary vote. Do you wish all types of members to have a vote?
  • Clause 18 - The management committee of the association consists of a president, treasurer, and any other members the association members elect at a general meeting. Are the terms ‘president’; ‘secretary and ‘treasurer’ appropriate for your association?
  • Clause 18 (3) At each annual general meeting of the association, the members of the management committee must retire from office, but are eligible, on nomination, for reelection. Do you wish to elect a new committee each year or perhaps it would better suit your association to have a rotating committee which allows for two or three year terms?
  • Clause 22 (3) requires members’ approval to borrow or invest moneys.  
  • Clauses 24 and 36 are the quorum provisions – check to see if your association is comfortable with these provisions.
  • Clause 37 – is the rule in relation to proxies – are you comfortable with this rule?
  • Clause 49 – provides for the distribution of surplus assets on winding up – are you comfortable with this rule?

 

Also if you will be applying for grants or funding from government or other funding bodies they may have stipulations relating to an association’s rules/constitution.  

If you use the model rules, the only details you can change are:

 

  • the name of the incorporated association 
  • the name of the unincorporated association 
  • the objects of the incorporated association 
  • the financial year of the incorporated association 
  • the classes of membership.

 

Own rules

If you have your own set of rules prior and wish to keep these rules then check to see if they comply with the requirements of the Associations Incorporation Act.  The requirements are set out in Schedule 3 to the regulations – which can be found at http://www.legislation.qld.gov.au/LEGISLTN/CURRENT/A/AssocIncorpR99.pdf

If your own rules do not cover all matters as required by the Act or as set out in the model rules then the Act implies there is an omission and the model rule will be applied.  If you do not intend for a rule to apply e.g. the rule in respect of proxies then it must be expressly stated that proxy voting is not permitted.  The Act also provides that if a rule of an association is inconsistent with the Act then the Act prevails to the extent of the inconsistency.

It would be best to get legal advice on the drafting of specific rules to ensure that they meet the requirements of the Act.  Care also should be taken when drafting rules as your appointed person needs to sign a Statutory Declaration that the rules comply with the Act and regulations.

If your association plans to use the model rules, you must complete Appendix B on the application for incorporation. If your association writes its own rules, you must complete Appendix A.

The rules become effective once your association is incorporated.

[Also note for future reference :- Changes to rules -  Your incorporated association can apply to register amendments to its rules, or adopt the latest version of the model rules, at any time. A special resolution at a general meeting must be passed. Within three months of passing the special resolution, the Secretary must complete and lodge a change of rules form. This form is available from www.fairtrading.qld.gov.au. Lodgement details and fees are included on the form.]

D. Elect a management committee

In accordance with the rules, your association should elect its committee members. The management committee will usually consist of, at minimum, a President, Treasurer and Secretary.

Your rules must set out provisions for electing the management committee including:

 

  • how committee members are elected and appointed 
  • terms of office of committee members 
  • grounds or reasons for which a committee position may become vacant 
  • filling casual vacancies occurring on the committee

E. Appointing a person to lodge the applications

After passing the incorporation resolutions, the association must, by resolution of its members, appoint an individual (the appointed person) to prepare and make an application for the association to be incorporated.  This only needs to be by a simple majority vote. The person appointed has the power to do anything necessary or desirable to obtain the incorporation of the association.

Step 3  Lodging the Application

 

The Application needs to be lodged by an appointed person who will be the contact person for the Office of Fair Trading.

The form is completed and then lodged with the Office of Fair Trading together with accompanying documents and the set fee.  The form is available online at Association Incorporation Form 1 - Application for incorporation of an association (PDF, 337 KB)

The fee at present in 2010 is $120.45 but this is subject to CPI increases.

You will also need to have an address in Queensland where documents can be personally served.

The normal processing time for an application is 3-4 weeks.

 

Step 4  Tasks immediately after incorporation

Common Seal

Your association must have a common seal made.  A common seal is a rubber stamp used to legally stamp documents signed by the officers of the association. The words ‘common seal’ and your associations full name as it appears on the certificate of incorporation must be on the seal This includes the word Incorporated or the acceptable abbreviation Inc.

Bank Account

You will need to set up a new bank account in the name of the incorporated association as this is a new legal entity.  The bank may wish to sight the original certificate of incorporation and a copy of your rules.  You will need to appoint two signatories to the account.  All incorporated association cheques must feature two signatures with at least one being an office bearer.

If operating outside of Queensland

If the association is going to operate outside of Queensland you will also need to register as an Australian body .  Details about registering as an Australian body can be found on the Australian Securities and Investments Commission (ASIC) website at http://www.asic.gov.au

Public Liability Insurance

If your association owns or leases land or holds land in trust then it is compulsory to have public liability insurance.  In all other cases the management committee has to make an assessment and decide how much insurance it needs, if any.

Transfer of motor vehicle registration and property

If the unincorporated association held property (which would have been on trust) prior to incorporation then this should be transferred to the incorporated association. For information and forms to transfer property go to: http://www.derm.qld.gov.au

Motor vehicles owned by the previous group should have their registration transferred to the incorporated association.

Put record keeping systems to be put in place. If you do not already have record keeping systems in place now is the time to do it. For information about putting in place records systems go to; https://wiki.qut.edu.au/display/CPNS/Keeping+Records

Other tasks:

  • Appoint an auditor if your association is required to;
  • Advise the debtors and creditors of the unincorporated association of the association’s incorporation
  • Record dates of membership for the purposes of Rule 6 of the Model Rules.