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Changes to the laws governing incorporated associations

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Changes to the laws governing incorporated associations

Caroline Foster

Important changes have been proposed to the laws governing incorporated associations. It is expected that the Associations Incorporation Act 2015 (WA) (Act) will replace the Associations Incorporation Act 1987 (WA) (1987 Act) as of 1 July 2016.

The Act proposes a wide range of changes to the 1987 Act, which aim to codify general common law duties and bring the legislation in line with Corporations Act 2001 (Cth).

The Act will require associations to update their rules as well as introducing a number of changes to their management and reporting procedures.

Summary of changes

  • Management committee members and office holders of the association have increased accountability and duties including: a duty to act with care and diligence; to act in good faith for the best interests of the association; to act for a proper purpose; to not make improper use of information; to not use their position for personal gain; to not cause detriment to the association; and to avoid conflicts of interests.
     
  • Members of the management committee are ineligible to hold office if they are facing insolvency, bankruptcy or convicted of an indictable offence.
     
  • A new tiered system of financial reporting has been introduced based upon the association’s revenue. Associations with revenue above one million dollars are required to provide audited financial reports at annual general meetings and ensure that they comply with accounting standards.
     
  • Privacy provisions in relation to register of membership have been improved and there are limits on how the information be used.
     
  • Incorporated associations will be required to update their rules of association by either adopting the draft Model Rules or adapting their own rules to include new Schedule 1 requirements.
     
  • The Commissioner has increased powers to order an audit of financial records or review the proceedings of an association.
     
  • Dispute resolution processes must be included in the rules and if unresolved a dispute between members or between the association and members, may be determined by the State Administrative Tribunal.
     
  • The new act has increased the penalties for failure to comply with the Act.
     
  • Amalgamation procedures for the joining of two or more associations into a new incorporated association have been improved through an application process to the Commissioner.
     
  • Winding up provisions have been bought into line with the Corporations Act 2001 (Cth) to allow for the appointment of a liquidator or a cancellation of incorporation (without a liquidator).

The current requirements of the 1987 Act will continue to apply to all incorporated associations until the commencement date.

After commencement of the Act, associations will have a 3 year period in which to update their constitutions to comply with the Act, however the majority of the provisions will come into effect on the commencement date.