Many Western Australian non-for profit organisations, such as sport and recreation clubs, societies and community groups choose to become incorporated associations. Their incorporation pursuant to theAssociations Incorporation Act 1987 (WA) enables them to become legal entities so they are authorised to pursue their objects and be managed by their members. Unfortunately, recent community consultations indicate that many incorporated associations find the current Act and subsequent regulations difficult to navigate. Parliamentary debate regarding the Associations Incorporation Bill has been adjourned until February 2015 and if enacted will significantly amend incorporated association regulations. The Bill is intended to simplify compliance concerns, streamline various processes and otherwise align our legislation with other Australian jurisdictions.
Some of the most significant proposed amendments include:
- All incorporated associations will in addition to their current financial reporting requirements need to lodge a basic financial statement to the Public Sector Commission.
- Incorporated associations will be categorised into three tiers of financial reporting requirements according to their total annual revenue. The first tier of incorporated associations (revenue less than $250,000) will have the least financial reporting requirements. Tier two (revenue between $250,000 and $1 million) and the third tier (revenue over $1 million) will be subject to further regulations commensurate with their comparatively higher exposure to financial risks.
- There are a number of amendments proposed to improve incorporated association member privacy. For example, members’ addresses will no longer need to appear on the register and there will be explicit prohibitions on the improper use of information on the register.
- Incorporated associations will be clearly allowed to trade as long as all profits are used to further their objects and purposes. This is intended to facilitate initiatives that allow incorporated associations to be self-sustaining.
- There will be more options for incorporated associations which need to resolve their affairs. Some examples of the options available include the appointment of a statutory manager, voluntary administration, voluntary wind-up procedures and cancellation.
If the Bill comes law, incorporated associations will need to review and potentially update their rules or constitution to ensure compliance with the new regulations. Some incorporated associations may need to include legal and accounting expenses in their financial budget to accommodate the costs of these changes. For legal advice regarding these amendments or to review your incorporated association rules or constitution please contact us.