Many community groups decide to become incorporated so their organisation will be recognised as legally separate from the members. This means that members have some protection from any debts or liabilities of the organisation.
It also means that the organisation, separate to the members, can:
- continue even if the members change
- accept gifts and donations
- buy and sell property
- enter into legal contracts
- sue and be sued
There are a number of good reasons for a community group to become incorporated but before you begin this process, you will need to find out about all the legal obligations and costs involved, and whether your group can legally incorporate.
To help you make these decisions, you will first need to consider the different ways to incorporate and decide which one might be best for your group.
What are the different ways to incorporate?
In Queensland, a community group can incorporate or become a corporation in a number of different ways.
Depending on the needs of the group it can incorporate as:
- an association
- a company limited by guarantee
- a cooperative
- an Aboriginal or Torres Strait Islander organisation
Each of these different ways to incorporate will have advantages and disadvantages. For example, a company is more complicated to start and run than an association but may have benefits for larger organisations, especially if you do business in other States or Territories. Cooperatives are often not suitable for community groups.
To find out more about these ways of incorporating including the costs and legal requirements, there is further information provided below and in the following sections. You might also want to talk to other community organisations about their experiences.
Many smaller organisations decide to become an incorporated association but you might want to ask for advice from a solicitor and/or an accountant before making any decisions. This is important because after your group decides to incorporate in a particular way, it may be very expensive and involve a lot of work to make any changes.
What is the Associations Incorporation Act?
If you decide to become an incorporated association, you will need to be sure that your organisation can be legally incorporated and you follow the rules outlined in the legislation. In Queensland, the Associations Incorporation Act is the legislation that covers incorporated associations. This Act outlines the type of groups that can legally incorporate.
Under the Act, any group that would like to incorporate must:
- be formed and carried on for any lawful purpose,
- have seven (7) or more members, and,
- not be for the purpose of providing financial gain for its members.
This does not mean that your organisation cannot employ someone who is a member or make a financial gain but these things need to be for the object or purpose of the group, not for individual profit. There are also other types of organisations listed under the Act that cannot legally incorporate and further information is provided below and in the following sections.
The Act is changed from time to time so you might want to check with the Office of Fair Trading or ask for advice from a solicitor and/or an accountant.
How to register as an incorporated association
Once your group has decided to become an incorporated association there are a number of things that you will need to do under the Associations Incorporation Act. If your group does not already have a committee or small group of members who can help to do the work required, you might want to ask for people to volunteer.
The role of this committee will be to organise a meeting with all the members to formally decide to form an association, agree on how it will be run and appoint someone to apply for incorporation.
Before the meeting, the committee will need to decide on a name for the association. Under the Act, the organisation name must be provided in English. Your group might already have a name but you will need to check that it is not being used by or similar to another organisation. If you are unsure about how to do this, you can contact the Office of Fair Trading.
The committee will need to make sure that the aims and objectives or ‘objects’ of the organisation is accurate because they will guide the work of your organisation. Your committee will also need to draft the rules of the association or constitution that describe how your organisation will run to meet its legal obligations. These rules may also affect the tax exemption and charitable status of the organisation.
The Office of Fair Trading can provide an example of model rules or constitution that your group can use as is or you can make changes to suit your organisation. If your group already has rules or you want to make changes to the model rules, you will need to ensure that you still provide all the information required in the model rules. Under the Act, all rules must be provided in English.
The committee will also need to identify other people who might be interested in being elected to the management committee. You might look for members with particular skills to take on roles of the Secretary, President, vice-President and Treasurer but it is also a good idea to have other committee members who are interested in helping with other activities.
Under the Act, you will need to elect a President and Treasurer during the meeting. You will need to elect a Chairperson to run the meeting but someone else can be elected as the chair after the meeting is opened. After incorporation, the President usually acts as the Chairperson. You might also elect a Secretary to take the minutes of the meeting. The minutes of the meeting are a written record of the decisions made at the meeting. The people in these positions are known as interim office holders and can hold their positions until the association becomes incorporated and other people are elected or appointed according to the Act and the association’s rules.
There are rules about providing notice of your meeting, who you will need to invite, the process for making decisions at the meeting and who can become a member of the organisation and/or the management committee. You might want to check with the Office of Fair Trading or ask for advice from a solicitor.
If the decision to incorporate the association is passed and the association approves the rules, your organisation can now complete an application form to incorporate. This will need to be done by the person who was appointed to do so at the meeting.
Application forms for incorporation of an association can be obtained from the Office of Fair Trading and they will also process the application. Unless there are any problems, after you have sent your application form and paid the required fee, your organisation will become registered and will receive a certificate of incorporation.
After becoming incorporated, you will need to do certain activities within a given amount of time to comply with your new legal obligations. The Office of Fair Trading and the Australian Taxation Office will be able to give you the most accurate information.