Law

Incorporated associations deadline fast approaching: have you transitioned yet?

By 23 May, 2019 No Comments

 

As foreshadowed in our earlier article, the new requirements for associations incorporated under the Associations Incorporation Act 2015 (WA) (Act) must be complied with by 1 July 2019. Incorporated associations (Associations) must ensure they update their existing rules (or adopt the model rules) in accordance with Schedule 1 of the Act. The new rules must then be lodged with the Department of Commerce within one month of being passed by a special resolution of members.

Failure to comply with the requirements under the Act may attract fines of up to $10,000. We have set out below some of the key reforms you should be aware of.

Major reforms

Financial Reporting

The Act now prescribes financial reporting responsibilities of Associations, separating entities and their responsibilities by tier based on the annual revenue of that entity. The tiers are as follows:

1. Tier 1: less than $250,000 in revenue;

2. Tier 2: $250,000 – $1,000,000 in revenue; and

3. Tier 3: more than $1,000,000 in revenue.

The aim of the tiered reporting system is to reduce the reporting burden on smaller associations while holding larger associations accountable for the significant financial resources they manage.

Dispute Resolution

Incorporated Associations are required to adopt an internal dispute resolution process in their rules, with unresolved disputes between members and the association to be heard by the State Administrative Tribunal.

Formalisation of member duties

The Act now comprehensively sets out the duties of an officer of an Association largely in line with those existing duties applicable to directors and officers of corporations under the Corporations Act 2001 (Cth). The definition of ‘officer’ under the Act includes a member of the management committee of the Association, a person who makes or participates in making decisions that affect the operation of the Association and a person who has the capacity to significantly affect the Association’s financial standing.

The duties set out in the Act include duties of:
– care and diligence;
– good faith and proper purpose;
– use of position; and
– use of information.

A breach of any of the duties can attract fines of $10,000.

Voluntary administration and winding up

A more simplified process for incorporated Associations seeking to cancel or wind up the entity has been introduced under the Act.

Protection of information of members

There are now more stringent restrictions on the way in which personal information of members of the Association can be used or distributed. Improper use of information contained in the Association’s register of members can attract a fine of $10,000.

If you are unsure of your obligations under the Act or need assistance implementing the changes required by the Act, contact us at hello@pragma.law.

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