Incorporation in Western Australia

The information given below should be viewed as a guide only and should not be used as a substitute for professional legal advice. When in doubt, consult the Department of Commerce, which is responsible for Associations in this state. You can ring them on 1300 30 40 54 or e-mail them at consumer@commerce.wa.gov.au

What is incorporation?

Incorporation is a system of State Government or Territory registration that gives an association or community groups certain legal advantages in return for accepting certain legal responsibilities. An incorporated association receives recognition as a legal entity separate from its members and offers some protection for office holders from any debts or liabilities incurred by the group as long as the association doesn't make a profit for its members.

Incorporation is voluntary. Once incorporated groups have to abide by relevant legislation (Read on for details).

Why Incorporate?

Not-for-profit community groups can be unregistered and unrecognised bodies acting under their own rules, or they can be formally recognised bodies with a legal personality of their own.

If you're the honorary treasurer of an unregistered non-profit organisation called Better Community, for example, and you're renting premises for your organisation, you will have to make the lease in your own name (acting as a trustee for Better Community).

If your organisation has registered itself under the Associations Act and has a legal personality, you can have the lease in the name of Better Community Inc.

There are advantages and disadvantages to each approach. The advantages of being an informal group are that you don't have to pay the costs associated with incorporation and you don't have to comply with many of the requirements nor fill out the forms imposed on corporations.

This doesn't mean, of course, that you can deal with the business or the property of Better Communityas you like - you'll basically have the obligation to act as a trustee for the organisation's purposes - but you can be more flexible about what you do and how you do it. If you're organising a one-off or short-term activity this may be your best choice.

The disadvantage is that if anything goes wrong - if the Better Community office burns down, or if people fall over the mat and injure themselves and sue - it's possible that as the lessee and as a committee member you may be held personally liable. In that case if there isn't enough money in the Better Community cashbox to cover the payout you may have to pay for it yourself.

There can also be difficulties with opening bank accounts, problems with insurance, and confusions about who owns what property. If you stop being a member of Better Community but your name is still on the contracts there may be difficulties transferring your responsibilities to the new Treasurer.

Furthermore, most foundations and most government departments will only fund incorporated organisations.

If you're an incorporated association then the lease can be in the name of Better Community, and as an incorporated association Better Community will have limited liability; that is to say, if someone falls over in the office and sues and the cashbox doesn't have enough money to pay them then you are not personally liable.

Formal structures

If you want legal status, you have a number of options - you can become:

a co-operative society
a company limited by guarantee
an incorporated association or society under the Western Australian Associations Incorporation Act 2015.
an incorporated association or council under the Commonwealth Aboriginal Councils and Associations Act 1976.

Co-operative societies are suitable only for some purposes, and most community groups don't fit the profile.

Some Aboriginal associations are able to gain legal status under different rules under the Federal Government's Aboriginal Councils and Associations Act 1976. An incorporation kit and further information is available from:

http://www.oric.gov.au/Content.aspx?content=startCorporation/default.htm&menu=start&class=start&selected=Registration%20options.

For most organisations, the choice is between company status and incorporation.

Limited companies are highly regulated; incorporated associations are lightly regulated. Setting up a company is complicated and expensive; incorporating as an association is comparatively cheap and simple. Unless your organisation is very big indeed, your best option will probably be to become an incorporated association.

Incorporating is not the same thing as registering as a charity or getting entitlement to tax exemption. That has to be done separately. See http://www.commerce.wa.gov.au

Eligibility

In order to be eligible to be an incorporated association in WA you must have more than five members, you must be a not-for-profit organisation, and you must have as your objectives:

religious, educational, charitable or benevolent purposes;
promoting or encouraging literature, science or the arts;
sport, recreation or amusement;
establishing or carrying on or improving a community, social or cultural centre
promoting the interests of a local community
political purposes.

These are fairly broad headings and take in most things, and if you don't fit under them there is a catch-all provision that allows "any other purpose approved by the Commissioner". Remember, again, that these are requirements for incorporation, not charitable status. Political purposes, for example, are non-profit but not charitable.

How to incorporate in Western Australia

You need to prepare:

A name for the association
You probably already have a name, but you now have to check the name you've chosen to make sure that it hasn't already been taken by another organisation. You will need to check the public register of names held by the Department of Fair Trading. You should also check the register of names held at the Australian Securities and Investments Commission.
You can do this on-line at www.asic.gov.au
You can also check with:
Not only can you not use a name if it's already been taken, you can't use it if it's a name that could be confused with an existing organisation. For that reason, it's sensible to have some names in reserve in case you're not allowed to use the one you want.
The aims and objectives of the organisation

You presumably already know the things you're trying to achieve, but you are now recording them formally and it is worth thinking carefully about how you set them out. It's not so important for getting incorporation, but you should be aware that you need to consider your written objectives carefully if you have any ambitions to gain tax exempt status later. An association can do almost anything, but a charity is a good deal more restrictive. Check with the tax office or get legal advice from a specialist.
A draft set of rules of the association (the constitution)

You may have a constitution already. Whether you do or not, you need to look at the "matters to be set out in the rules of an incorporated association" set out in the Act. You need to make sure that your constitution covers all the topics that are in there. That is to say, you can set your Committee's quorum at three, five, or ten - that's optional - but you must have a clause saying what the quorum is -that's compulsory.

These matters are:
1. The name of the incorporated association.
2. The objects or purposes of the incorporated association, including a provision in, or substantially in, the following terms; The property and income of the association shall be applied solely towards the promotion of the objects or purposes of the association and no part of that properly or income may be paid or otherwise distributed, directly or indirectly, to members of the association, except in good faith in the promotion of those objects or purposes.
3. The qualifications (if any) for membership of the incorporated association.
4. The register of members of the incorporated association.
5. The entrance fees, subscriptions and other amounts (if any) to be paid by members of the incorporated association.
6. The name, constitution, membership and powers of the committee or other body having the management of the incorporated association (in this clause referred to as "the committee") and provision for:
  -the election or appointment of members of the committee;
  -the terms of office of members of the committee;
  -the grounds on which, or reasons for which, the office of a member of the committee shall become vacant;
  -the filling of casual vacancies occurring on the committee;
  -the quorum and procedure at meetings of the committee.
7. The quorum and procedure at general meetings of members of the incorporated association.
8. The time within which, and manner in which, notices of general meetings and notices of motion are to be given, published or circulated.
9. The manner in which the funds of the association are to be controlled.
10. The intervals between general meetings of members of the incorporated association and the manner of calling general meetings.
11. The manner of altering and rescinding the rules and of making additional rules of the incorporated association.
12. Provisions for the custody and use of the common seal of the incorporated association.
13. The custody of records, books, documents and securities of the incorporated association.
14. The inspection by members of the incorporated association of records and documents of the incorporated association.
Of course, if your organisation hasn't got any particular special needs it's simpler just to adopt the Standard Rules. These are available from the Business Names Branch.
Meeting

When you have all these pieces of paper you will need to organise a meeting of the organisation to approve the Incorporation and adopt the new constitution/rules. Before the meeting you will have to identify people interested in being members and office bearers in the new association.
Type out the formal motions -
"I move that the [name of Association] be formed, and that the [name of Association] constitution and rules be those circulated at this meeting."
Moved &&&&&&&&. Seconded &&&&&&&&
"I move that the [name of Association] incorporate as an incorporated association under the provisions of the Associations Incorporation Act." Moved &&&&&&&&. Seconded &&&&&&&&.
"I move that the [name of the new Association] be [first preference intended name], or if that name is not approved [second preference intended name], or if that name is not approved [third preference intended name]."
Moved &&&&&&&&. Seconded &&&&&&&&.
Arrange for one person to move each motion and another to second it.
Print out copies of the Agenda, the Motions and the Constitution for as many people as you think will come.
You must also elect a committee to run the organisation.
An application for incorporation

Once you've done all this, apply on the prescribed form with one copy of the Rules of the Association and the Applicant's Certificate to the Business Names Branch along with the appropriate fee of $100.

Check out the usual timeline for approval when you lodge your application, and follow up on progress if it takes any longer than anticipated.

Incorporation - other duties

Once your application has been approved and you have received your certificate of incorporation, there are other duties to be done.

If you want to change your name, your objects, or your rules/constitution, you will have to hold a special meeting to pass a special resolution, which will then have to be sent in to the Ministry of Fair Trading on a special form with an attached fee.
You don't have to submit annual returns, but you do have to keep adequate financial records and submit them to the members at the annual general meeting. You also have to keep a register of members.
You will need a common seal, which can be bought from any maker of rubber stamps.
You will need to put the association's full name (including the "Inc.") on all your stationery.

Forms and Fees

Forms are available to be downloaded from:

www.commerce.wa.gov.au/ConsumerProtection/Content/Business/Associations/Forms_and_Publications.html

or from:

consumer@commerce.wa.gov.au

Fees applicable to Incorporated Bodies are available at:

www.commerce.wa.gov.au/ConsumerProtection/Content/Business/Associations/Fees.html