Last updated 16 August 2016
Name of the association
An association will not be permitted to incorporate under a name that is unsuitable (s 43 Associations Incorporation Act 1981 (Qld) (Associations Incorporation Act)). The name must contain Inc. or Incorporated and must be in English characters (s 29 Associations Incorporation Act). There are some minor exemptions to these two requirements, which are discussed below.
Section 32 of the Associations Incorporation Act requires that the association’s name appear in legible English characters on all of its documents, including advertising material. The name must also appear on its common seal and be legible (s 31). Section 29(2) permits an association to use Inc. or Incorporated interchangeably.
The Associations Incorporation Act also seeks to regulate the name that an association can use (ss 43-45). The main policy objective of the provisions is to minimise any public confusion about different associations or confusion between an association and some other body.
An unsuitable name, as declared in the Associations Incorporation Regulation 1999 (Qld) (Associations Incorporation Regulation) (regs 3, 5), includes a name:
- of another incorporated association
- of an incorporated association that a reasonable individual may mistake for another association
- registered or reserved under the Act
- registered or reserved under the Business Names Registration Act 2011 (Cth)
- that would cause a reasonable individual to be offended
- that would cause a reasonable individual to be deceived about the nature and identity of the association.
It also includes specific names that:
- suggest a connection with a federal, state or local government, department or authority
- use words such as ANZAC, Bank, Red Cross or United Nations without written agreement from the appropriate government authority
- suggest a connection with the Royal family or Royal patronage if no such connection exists
- suggest an ex-serviceman’s organisation or that an association’s members are incapacitated, when this is not the case.
It is recommended that careful consideration of the terms of sch 1 of the Associations Incorporation Act be undertaken when determining a name for the association. Further, it is often prudent to conduct a search of the various name registers to ensure that the name for the intended association is available for registration and will not be declared unsuitable by the chief executive. A search can be undertaken through the Australian Securities and Investments Commission or the Trademark Register.
Once the application to incorporate is filed with the Office of Fair Trading, the chief executive of the department will give written notice to the association if the chief executive believes that the name chosen is unsuitable (s 44 Associations Incorporation Act). Within 40 days of receiving the notice, the association should choose a new name that is not unsuitable, seek the chief executive’s consent to use an unsuitable name under s 45 of the Associations Incorporation Act or appeal the chief executive’s decision to the Queensland Civil and Administrative Tribunal (s 113).
Rules of the new association
Drafting the rules of the association is one of the most important tasks in incorporating an association. It may take some time, expertise, thought and consultation.
In particular, care needs to be taken:
- if the association expects to receive taxation exemption, government licences and/or funds from governments, to be listed as an organisation to which donations will qualify as tax deductions or to be recognised as a charity
- to ensure that the rules that will govern the internal life of the association are suitable and will not be the cause of internal dispute or confusion in the future
- that the appointed persons make a statutory declaration that the rules comply with the Act and the Regulation. It is a serious matter in law to swear a false declaration.
The Associations Incorporation Act permits an incorporated association to adopt either a set of model rules (set out in sch 4 of the Associations Incorporation Regulation) or its own rules, provided that those rules do not conflict with the Act and contain matters provided for in sch 3 of the Associations Incorporation Regulation.
Adopting the model rules
Section 6 of the Associations Incorporation Act permits an association to adopt all of the model rules that are contained in sch 4 of the Associations Incorporation Regulation.
The model rules are suitable for many associations, but careful consideration should be given to determine whether any amendments need to be made.
In particular, the suitability of the following model rule clauses for an association should be considered before deciding to adopt the model rules:
- clause 38(2)—whether your association wishes all types of members to have a vote
- clause 18—whether the terms ‘president’, ‘treasurer’ and ‘secretary’ are appropriate
- clause 18(3)—whether a new committee is elected each year, rather than a rotating board which allows a three-year term for committee members, with a third of the board being elected each year
- clause 22(3)—whether borrowing or investing small amounts should require members’ approval
- clauses 24, 36—whether the quorum provisions are appropriate
- clause 37—whether the association is comfortable with proxy votes
- clause 49—whether the association is comfortable with the distribution of surplus assets on winding up, and whether this clause will satisfy taxation authorities for any exemptions that the association may seek.
In addition, the new association needs to ensure that any stipulations of government or funding bodies relating to an association’s constitution are met by the rules (e.g. rules governing tax, poker machines, liquor licensing, art unions, public collections and registration with the Australian Charities and Not-For-Profits Commission (ACNC)).
Even if the rules are adopted as they appear in sch 4 of the Associations Incorporation Regulation, there are still a few matters to be considered. These are:
- the association’s name, including Inc. or Incorporated (cl 2)
- the association’s objects (cl 3); care should be taken as often the wording of these objects is crucial for tax exemption, tax deductibility or charitable status through the ACNC
- the date on which the association’s financial year ends (cl 48); associations ought to consider this date carefully. If associations use the standard end of the financial year (30 June), it is often difficult to obtain services from their auditors, as it is the busiest time of the year for them. Some sporting clubs will find that the end of the financial year is out of their season, and it is difficult to obtain a quorum at an annual general meeting. Some government funding authorities stipulate a certain financial year as a condition of funding.
These matters must be inserted in the application for incorporation, which is discussed below.
Having ‘own rules’
If the existing association already has a workable set of rules, these rules can be adopted if they comply with the provisions of (s 9(3)(b) Associations Incorporation Act) and Associations Incorporation Regulation (sch 3). Section 46(3) of the Associations Incorporation Act refers to these rules as the association’s own rules.
The schedule is in two parts: one contains matters that must appear in the rules; and the other provides examples of matters from the model rules (sch 4 Associations Incorporation Regulation) that are to be provided for in the rules. Matters raised in both parts of the schedule must be provided for in the association’s own rules and identified as part of the application for incorporation. There are other requirements outside these schedules, such as the accounting rules in sch 5, which should also be considered.
Section 47(1) of the Associations Incorporation Act may imply certain model rules into an own rule association, where the association’s own rules do not provide for the matter, and the own rules do not provide that s 47(1) does not apply to the association.
If an association does not cover all matters contained in the model rules, then s 47(1) will imply the omission into the association’s own rules. For example, an own rule association may not wish to allow proxy voting and hence leave any reference to it out of their rules. As the model rules include proxies, it would be implied into the own rules, and proxy voting would be permitted in accordance with the model rules. If the own rule association does not wish this to occur, it would either need to state explicitly in its own rules that proxy voting is not permitted or that s 47(1) does not apply to the association.
Section 1B of the Associations Incorporation Act declares that if a rule of an association is inconsistent with the Act, then the Act prevails to the extent of the inconsistency. Note that under s 7 of the Acts Interpretation Act 1954 (Qld), the word ‘Act’ includes statutory instruments made or in force under the Act. Thus the association’s rules must also be consistent with the Regulation.
It is often necessary to obtain legal assistance with drafting clauses for the rules of an association to ensure that they properly mesh with the provisions of any previous rules, and they satisfy the constitutional requirements of other government departments for exemptions, licences or funds. In particular, care needs to be taken because the appointed persons must make a statutory declaration that the rules comply with the Associations Incorporation Act and Regulation.
Completing the application form
An application form (Form 1) can be downloaded from the Office of Fair Trading website or posted by the Office of Fair Trading upon request. Attention to detail in the preparation of this form will ensure its speedy processing. Again, it is important to remember that a declaration must be sworn that states that the Associations Incorporation Act has been complied with in all respects. It is a serious matter in law to swear a false declaration.
The completed application is lodged, together with a fee, at the Office of Fair Trading.