The most significant legal overhaul in decades has been proposed for incorporated associations in the form of the Associations Incorporations Bill 2014. These changes reflect an attempt to modernise and standardise the arrangements relating to incorporated associations throughout Western Australia.
Incorporated associations have distinct legal benefits from other structures such as partnerships, corporations or joint ventures. Given their reduced reporting requirements, they have traditionally been seen as attractive for small not-for-profit community groups wishing to maintain a separate and distinct legal identity when carrying out their activities.
The changes propose an overhaul of the current system in a number of fundamental ways:
- Introducing a set of “Model Rules” that associations can either choose to adopt or modify to suit their particular requirements (provided any modified rules also comply with the new laws);
- Implementing a three-tiered system of financial reporting that varies in terms of its requirements depending on the relative size and revenue of an incorporated association;
- Bringing a flexible approach to the information that a member must provide to the association and introducing safeguards with respect to that information’s privacy and accessibility;
- Providing a more modern statement of the duties required of committee members and officers, reflecting the duties currently imposed by law;
- Requiring an internal dispute resolution process be implemented within each association, codified in its constitution, with a referral procedure for any unresolved disputes to the State Administrative Tribunal;
- Removing the traditional restrictions on incorporated associations “trading”, provided that this meets with the objects of that particular association and individual members do not profit from such activities;
- Allowing a three-year transition period to enable these changes to be implemented; and,
- Introducing a streamlined process for associations to wind up their affairs and bring their incorporation to an end.
Further submissions regarding the proposed Model Rules closed in November 2014. The Bill is now scheduled for further debate in the Parliament of Western Australia.
For advice and information about how these changes could impact upon your incorporated association, contact Robert Ross, director of Composite Law for advice.