Incorporated. Associations. Good Business Guide. From the Office of Fair Trading

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1 Incorporated Associations Good Business Guide From the Office of Fair Trading

2 Introduction Incorporated associations are a vital part of Queensland s non-profit sector, with nearly 20,000 incorporated associations registered with the Office of Fair Trading. Many important facets of our community are represented through incorporated associations including industry groups, sporting clubs, social or hobby-based activities and cause-related community groups. If you are involved in operating an incorporated association in Queensland, this guide will help you understand your rights and responsibilities. It will also assist in making sure your associaton s operations comply with both the Associations Incorporation Act 1981 and Associations Incorporation Regulation i

3 Acknowledgements The Office of Fair Trading would like to acknowledge the contribution of the following organisations towards the development of this guide: Caxton Legal Centre Clubs Queensland Qld Community Arts Network Qld Council of Social Services Qld University of Technology, and Sports Federation of Qld. Feedback Your feedback can help the Office of Fair Trading to improve future editions of this guide. Please make a comment through the Fair Trading website at or write to us at: The Editor Incorporated Associations Good Business Guide Marketplace Strategy Division Office of Fair Trading GPO Box 3111 Brisbane QLD 4001 Contents What is incorporation?... 1 Incorporating your association... 2 Choosing a name... 2 Adopting rules for the association... 3 Registering your rules... 4 Cancellation of incorporation... 5 Services provided by OFT... 6 First things first... 7 Hold a general meeting... 8 Obtaining your common seal... 8 Opening a financial account... 9 Obtaining public liability insurance...9 Recording financial transactions Register of members Minute book...12 Transferring property Your management committee Management committee members Accountability of the management committee Electing your management committee Responsibilities of management committee members Office bearers...20 President...20 Secretary Treasurer...23 Your day-to-day operations Membership...24 Record keeping...25 Minutes...25 Meetings...27 Management committee meetings...27 General meetings...28 Annual General Meeting (AGM)...34 ii iii

4 Voting...38 Change of name...40 Change of rules Amalgamation Winding-up...42 Managing your association s finances...43 Cash book and receipt book...44 Bank statements and petty cash book Journals and ledgers...45 Asset register Annual return and audit...46 Why audit?...46 What is in an annual return?.48 Handling disputes...49 Managing complaints...49 What is mediation? Reporting obligations...53 Reporting to members...53 Reporting to OFT...54 Notification of public liability insurance cover...54 Application for approval of auditor...54 Annual return of association Change of details Change of rules Change of association name Voluntary winding-up Draft Model Rules Useful contacts Glossary of terms Index What is incorporation? Incorporation is a system of registration that gives an association certain legal advantages in return for accepting certain legal responsibilities. The Office of Fair Trading (OFT) registers all incorporated associations in Queensland, under the Associations Incorporation Act 1981 (the Act) and Associations Incorporation Regulation 1999 (the Regulation). Generally, incorporation is available to any nonprofit association with more than seven members that is formed or carried on for any lawful purpose. Associations designed for the purpose of financial gain for members are not eligible for incorporation (Section 5). An incorporated association receives recognition as a legal entity separate from its members. Once incorporated, an association has all the powers of an individual and is legally able to do things in its own name, such as own land, sign a lease, apply for grants or appear in court. It may also give some protection to the management committee from personal liability for actions of the association carried out in good faith and due diligence. However, with these benefits come obligations and responsibilities. Your incorporated association must comply with the provisions of the Act and Regulation. This means your association must meet a number of reporting obligations (see page 53). iv 1

5 Incorporating your association To incorporate an association in Queensland, you must first form a group of at least seven members (Section 5). Your association must appoint a President, Secretary and Treasurer (with positions of President and Treasurer held by two different people) (Section 61). To make the decision to incorporate, the association must vote by special resolution (see page 39) and lodge the association s application (Form 1 - Application for Incorporation of an Association). Choosing a name Part of becoming incorporated is choosing a suitable name. All associations must have the word Incorporated or the abbreviation Inc. as part of and at the end of their name. Under the Act and Regulation, certain names have restrictions and are considered unsuitable. For example, an unsuitable name for an incorporated association is: a name that may be mistaken for the name of another association incorporated under and Act a registered business name, or a name that is identical to a name reserved or registered under the Corporations Law. Adopting rules for the association An association must establish its rules prior to incorporation. The rules of an association govern its day to day operations, including membership rights and fees, management committee operations and meeting procedures. The Regulation (Schedule 3) details what your rules must cover. Associations have the choice to adopt the Model Rules or their own rules. The Regulation (Schedule 4) provides a standard template for an association s rules called Model Rules which can be used to govern an association in accordance with the necessary legal requirements. A full copy of the Model Rules is provided in the back of this guide (see page 58). The only permissible changes to the Model Rules are: the name of the incorporated association the name of the unincorporated association the objects of the association the financial year of the association, and classes of membership. Any other changes mean the rules are no longer the Model Rules but become the association s own rules. Your association may adopt the Model Rules exclusively, adopt them in part or make them more specific to your needs. If your association wishes to make changes to the Model Rules (other than those allowed), the rules with the changes, no matter how minor, are considered your own rules. 2 3

6 Registering your rules Once your proposed rules are registered with OFT (be they the Model Rules or your own rules), they become your association s rules often called your constitution. Once your rules have been registered, they stay exactly the same unless you register amendments with OFT. For example, even if there were changes to the Model Rules, these changes would not be made automatically to your rules as it would be up to the association to decide whether they wanted to make these amendments. You can register amendments to your rules at any time by following the process on page 56. The rules will be discussed throughout this Guide in all instances, you should refer to the rules your association has registered with OFT. As you re probably beginning to appreciate, it s important to carefully consider the decision to incorporate, because it may not be the most appropriate option for your association. There are numerous reporting and management obligations under the Act, which your members should be aware of before voting to incorporate. These obligations are discussed throughout the Guide. For more information about how to incorporate or a copy of Form 1, contact OFT on or visit Cancellation of incorporation Associations should be aware that OFT has power under the Act to cancel your incorporation (Section 93) if there is reasonable cause to believe that: your association is operating beyond the scope of its objectives your association has ceased to exist your association breaches its obligations under the Act your association has less than seven members, or circumstances exist which, in the public interest, justify the cancellation of the incorporation of an association (at OFT s discretion). Cancelling of an association s incorporation An association receiving public money through a grants program was found to be misusing assets. The funding body found that the association was using assets bought with the grant money for personal use instead of their intended purpose. This was outside the funding guidelines because the grant money was public funds. This was grounds for cancellation of incorporation by OFT in the public interest. If OFT decides there is reasonable cause to cancel incorporation of an association, your association will be served with a show cause notice explaining the grounds for the proposed cancellation. You will be given one month to provide reasons why incorporation should not be cancelled, and these reasons will be reviewed and a decision made. 4 5

7 Services provided by OFT The Office of Fair Trading registers incorporated associations and maintains a public register of these associations containing current, relevant information. For a fee, any member of the public can obtain certain documents relating to your association, including your rules, annual returns and financial statements. By law, your association must report a range of information to OFT. This is discussed in detail later in the guide (see page 53) but includes: advising of public liability insurance cover applying for approval of your auditor submitting your annual return and financial statements changing your details, including your association s name changing your rules, and notifying of voluntary winding-up. You can contact the Office of Fair Trading by calling , visiting or in person at one of our offices (for contact details, see page 83). All forms relating to incorporated associations (except the annual return which is sent automatically) can be downloaded from the website (forms page). Full copies of the Act and Regulation can be obtained from: (legislation page) or Goprint (hard copy purchases) by calling or outside Brisbane. OFT provides information about the requirements of the Act and Regulations but cannot provide legal advice relating to a particular organisation or situation. One of the most common enquiries made to OFT seeks assistance in resolving internal disputes that arise between members. It is important for your association to understand that OFT cannot play a role in resolving disputes within an incorporated association, nor can it provide you with legal or financial advice in relation to the Act and Regulation. This is because associations are bound by their own rules. While OFT can assist you to ensure your incorporated association operates effectively and in compliance with the Act, there are other options to help you resolve disputes. See page 49 for more on dispute resolution. First things first As a newly incorporated association, there are a number of things you need to address straight away. You will need to: hold a general meeting to advise members of incorporation and rules obtain a common seal (rubber stamp) open a financial account in the association s name obtain public liability insurance for damage to property, death or bodily injury occurring upon the property of the incorporated 6 7

8 association (the minimum amount of insurance cover is $1,100,000) keep a set of books to record financial transactions keep a register of association members keep a book to record minutes of committee meetings and general meetings, and arrange for any property held by the unincorporated association (generally by trustees) to be transferred to the incorporated association. Hold a general meeting One of the first steps is to hold a general meeting to discuss incorporation and rules with members to make sure agreement on these important issues is reached. For more information on general meetings, see page 28. Obtaining your common seal Under the Act (Section 21), an incorporated association s common seal (a rubber stamp) is used to legally identify the association on all documentation from the association. This seal is usually used to provide proof of association name on legal documents. You can order your common seal from most newsagencies or rubber stamp suppliers. It must feature your association s full name as it appears on your certificate of incorporation, including the word Incorporated or Inc. ) and the words Common Seal. Opening a financial account As a separate legal entity, your association s finances must be operated under the incorporated name. You will need to open an account in the registered name and your account must be kept in Queensland. The bank, building society or credit union may require a copy of your association s rules (see page 3) and/or wish to sight the original certificate of incorporation. You will also need to appoint signatories to the account. Under the Regulation (Schedule 5), all association cheques must feature two signatures, with at least one of these being an office bearer (President, Secretary or Treasurer), so OFT recommends you appoint at least four signatories, with three of these being office bearers. This will ensure you have enough suitable signatories should someone be away or difficult to reach at a particular time. Obtaining public liability insurance The Act (Section 70) requires any incorporated association to hold public liability insurance if the association owns any property. This may not be limited to real property (eg. land or dwellings) so OFT recommends that all incorporated associations seek legal advice on this issue. The minimum amount required is 8 9

9 $1,100,000 and must be kept current at all times, but it s important your association carefully considers what level of cover is adequate. Again, this is something you should seek legal advice on. You must notify OFT of your association s public liability insurance within one month of obtaining a policy (see page 54). The Queensland Government has entered into an arrangement with AON Risk Services to provide brokerage services and general insurance advice to Queensland s community-based, notfor-profit organisations. AON will provide assistance to associations under these arrangements, except where: the association has assets with a gross value (before liabilities) exceeding $1,000,000 the association has annual gross revenue (before expenses) exceeding $500,000 the association charges for services, activities or events, or offers prize money (aside from membership fees, fundraising or activities pursuing its main objective), or the association holds a statutory licence to conduct commercial activity. AON Risk Services can be contacted on or via to If you need general advice or help with handling a dispute with an insurance company, you may wish to contact the independent national external dispute resolution body approved by the Australian Securities and Investments Commission. This body is called Insurance Enquiries and Complaints Limited and can be contacted by calling or visiting Recording financial transactions To ensure sound financial management of the association, the Act (Section 59) requires an annual audit be carried out by an independent auditor each year (see page 36). You must keep a receipt book, bank statements, a register of assets and a petty cash book for recording financial transactions. This is a fundamental management responsibility and is generally coordinated by the Treasurer. An association should be guided by the auditor about the appropriate records to be maintained. For more information on what needs to be recorded, please see page 43. Register of members Under the Regulation (Part 3, Section 9), you are required to keep a register of your members, including their names and addresses. To protect your members privacy, OFT recommends this register be kept with other confidential documents for viewing at the discretion of the management committee. It is also recommended you keep a register of committee members as part of your records. Under privacy laws, any person has the right to inspect records kept about them (eg. membership details) and seek correction if they believe they are inaccurate. For more information, visit or call Note, some associations may be exempt from the requirements of the Privacy Act

10 Minute book The minute book is generally managed by the Secretary and should contain the minutes of all association meetings. This book will serve as an accurate record of association proceedings and your rules should include if, when and how the minutes will be made available to members for inspection. Transferring property Upon incorporation, any assets, rights and liabilities of the unincorporated association become the assets, rights and liabilities of the incorporated association. Contact the Department of Natural Resources, Mines and Energy s Titles Registration Customer Advisory Service (see Useful Contacts, on page 83) to arrange to have any property owned by the unincorporated association (generally held by trustees) transferred to the incorporated association. This may not apply to assets registered under another Act, eg. licence under the Gaming Machine Act 1991 or permit under the Liquor Act If you are unsure, contact the licensing agency for more information. Your management committee The management committee is ultimately responsible for the operation of the association. This includes following, interpreting and enforcing the association s rules and making sure the association complies with the Act and Regulation. The management committee may exercise the powers and functions of the association, subject to the Act, the Regulation and the rules of the association. The management committee also needs to ensure the association complies with any other relevant laws. The rules of an incorporated association must set out the membership and powers of the committee. The rules of the association must also set out provisions for the management committee including the: election or appointment of committee members terms of office of committee members grounds or reasons for which the office of a member of the committee become vacant filling of casual vacancies occurring on the committee quorum (ie. minimum number of committee members who must be present to conduct a committee meeting), and procedure at committee meetings (see page 27). The management committee must have at least three members, who are elected at the Annual General Meeting or any general meeting of the association (see page 16 for electing members and page 27 for conducting meetings)

11 One member of the management committee must hold the office of President and another must hold the office of Treasurer (ie. one person cannot be both President and Treasurer). Every incorporated association must have a Secretary who is 18 years or older and resides in Queensland, or if a resident in another State, resides within 65km from the Queensland border. The positions of President, Secretary and Treasurer must not remain vacant for more than one month. You must notify OFT of any changes to these positions within one month of the vacancy occurring (see page 55). Management committee members Under the Act (Section 61), all members of the management committee must be adults. The Act expressly requires that the Secretary be a resident of Queensland, however there is no requirement that other committee members live in Queensland. However many associations prefer that all or at least a majority of the committee members live in Queensland. Number of management committee members Under the Act (Section 61), the management committee must have at least three members. Under the Model Rules, the management committee will consist of the President, Vice-President, Treasurer and any number of ordinary members. However, one member cannot hold the office of both President and Treasurer. Accountability of the management committee One of the advantages of being incorporated is that personal liability is limited; however, management committee members still have a duty to the association. This means they may be held accountable if they: deliberately fail to act in the best interests of the association abuse their powers as committee members fail to avoid conflict of interests, or fail to exercise due care, skill and diligence. Some associations may choose to implement a voluntary code of conduct to guide the activities of management committee members, however this is not required under the Act. If a management committee does not fulfil its reporting requirements, OFT will request that the requirements are met. If this is not done, OFT may issue a show cause notice asking the association to provide reasons why its incorporation should not be cancelled. If management committee members fail to meet the requirements of the Act, penalties may apply. Criminal charges may apply if fraud or misappropriation is involved. However, the Act does not cover a management committee breaching the rules of the association. OFT has little jurisdiction in this instance and the association will need to resolve its own internal dispute (see page 49 for more information on dispute resolution)

12 Management committee not following the rules A management committee expelled a member and did not follow the process stipulated in the association s rules. Under the Model Rules, that member, or any member, would have the right to appeal that decision at a special general meeting. If the situation could not be resolved in this manner, the former member could seek mediation or take the matter to court. Members of the management committee should also consider their personal liability under other relevant laws. Electing your management committee Electing your management committee is possibly the most important process for your association. The committee is ultimately responsible for managing the association and for meeting the requirements under the Act. A person is ineligible for election to the management committee if they have been convicted, imprisoned or are bankrupt for specific details, refer to Section 61(a) of the Act. In recognition of the importance of this process, the Act (Section 62) specifies that the management committee must be elected at the Annual General Meeting (or any general meeting) and in accordance with the association s rules. Members of the management committee must be adults however, minors can be members of the association (Section 61). If your association wishes to restrict the membership and privileges of minors, this must be set out in the rules. Questions about the rights of minors can be complex and associations should obtain specific legal advice on this issue. Unless the association s rules expressly state otherwise, members who have not paid their membership fee are still members and are entitled to stand for election and nominate others. However, these members may not be entitled to vote, again depending on the rules of your association. Election of the office-bearers occurs at the Annual General Meeting (in most cases) and may be by show of hands or by written ballot. Ballot papers should be collected and counted by two members who are not nominated, and the results announced to the meeting. Should an office bearer s position become vacant, the management committee may either hold an election or choose an individual to act in this position until the next AGM where an election must be called to fill the vacancy permanently. Management committee membership Joe is the President of an incorporated bowling club. When Debora, the Association s Treasurer, resigned her membership, the management committee held a meeting to appoint an Acting Treasurer, Anne. Any member could be appointed to this casual position on the management committee, including all current committee members, except Joe because he already held the position of President. Anne will remain the Acting Treasurer until the next AGM, when elections for a new management committee are held

13 Responsibilities of management committee members The management committee is responsible for managing the affairs of an association according to the Act, Regulation, rules and any other relevant laws. The rules of the association may set out additional obligations and specific restrictions on the power of the committee. As a result, each member of the committee should be familiar with the association s rules and statutory obligations of the association. The statutory obligations of the management committee include: General having a registered office for the association for documents to be served (this must be a physical address where documents can be served, not a PO Box) (Section 17) registering land or interests in land (Secretary) (Section 24) ensuring the association s name appears on the common seal (Section 31) ensuring the association s full name appears in legible characters on all official documents such as advertising, business letters, accounts, official notices, publications, cheques and receipts (Section 32) ensuring financial affairs are audited annually (Section 59) controlling the business and operations of the association (Section 60) obtaining public liability insurance and keeping it current (Section 70) ensuring proper accounting records are kept which correctly record and explain the transactions of the association and its financial position (Regulation 9) lodging an annual return with OFT (Form 12 Annual Return of Association) (see page 46) notifying OFT of change of details including the association s postal address, Secretary s residential address and change of President, Treasurer or Secretary within one month of appointment or change (Form 10a Change of Details relating to an Incorporated Association) (see page 55). To members ensuring a copy of the association s rules is available to all members (Section 53) ensuring the audited financial statements of the accounts of the association are submitted to members at the AGM (Section 59), and ensuring an appropriate Secretary is appointed (Section 66) Meetings ensuring that an AGM is held each year within six months after the end of the association s financial year (Section 56) ensuring the association complies with its rules on calling and holding meetings (Section 57) ensuring minutes of all committee and general meetings are kept (Regulation 9) ensuring any special resolution is carried out in accordance with the Act (Section 3). In addition, members of the committee should: be aware of the duties of the Secretary and ensure they are properly carried out 18 19

14 use reasonable care and skill in the performance of their duties act in good faith advise the committee of any conflict that may arise between their own interests and the interests of the association (eg. advise if any association activities might result in a financial gain to themselves) ensure any documents addressed to the association are brought to the attention of the committee as soon as practicable after receipt, and ensure documents provided to OFT, or submitted to members, do not contain false or misleading statements and make sure documents do not omit anything that would make the document misleading. If these obligations are not met, cancellation of incorporation may result. Office bearers President The President should be aware of the requirements under the Act, Regulation and rules, and who is responsible for what duties. The President chairs the management committee, and also plays a major role in the association s meetings. Under the Model Rules, the President is required to chair all meetings they attend. If the President cannot attend a meeting for any given reason, either the Vice- President or another member of the management committee can be nominated as chair. Please note, the position of Vice-President is optional. Secretary The Secretary is arguably the most fundamental and busiest position on the management committee. The Secretary has specific obligations under the Act and rules so it is important that whoever is nominated and/or appointed to this position is fully aware of these obligations before accepting. The Secretary may be: a member of the incorporated association elected by the association as Secretary, or a member of the incorporated association's management committee appointed by the committee, or a member or non-member appointed by the management committee (Note: a non-member would not have any voting rights). Under the Act, the Secretary is primarily responsible for managing the records of the association (see page 22). If these records are not completed appropriately, it is possible the association will be breaching the Act or misleading members, and the management committee could be held liable. The Secretary s obligations under the Act include: being a resident of Queensland, or residing within 65km of the Queensland border (Section 44) advising OFT of their appointment within one month (Form 10a Change of Details relating to an Incorporated Association) 20 21

15 notifying OFT within one month of taking out public liability insurance (Form 22 Notification of Insurance Cover) (see page 54), and notifying OFT of any changes to the office bearers of the management committee within one month of the change occurring (for casual vacancies, Form 10a Change of Details relating to an Incorporated Association, for election at AGM, Form 12 Annual Return of Association). Under the Model Rules, the Secretary s obligations include: taking and keeping appropriate minutes for the association (see page 25) keeping the register of members and making it available to members to inspect (see page 11) taking nominations for the management committee at least 14 days before the AGM providing appropriate notice to members of all general meetings (see page 29) providing members with at least 14 days notice of any special management committee meeting, and responsibility for calling and convening special general meetings for the association (see page 28). The Secretary generally manages other housekeeping duties of the association or the management committee may delegate them to other members of the association. Some of these duties might include: arranging the meeting venue and preparing the agenda coordinating any correspondence or reports to be presented at meetings circulating the minutes to members completing any actions arising from the meeting that require correspondence, and receiving all association correspondence, and bringing urgent matters to the attention of the President or Treasurer if necessary. A more detailed manual explaining the Secretary s role is available for purchase from the Caxton Legal Centre (see page 87). Treasurer The Treasurer, or another authorised officer, usually manages the following tasks: keeping and maintaining an asset register for the association managing the petty cash balance and ensuring the petty cash book is kept up-to-date keeping all documentation for payments made including receipts, invoices and statements keeping a carbon duplicate receipt book, and a receipt book register, and keeping and maintaining the association s deposit and cheque books. The Treasurer usually ensures all payments are approved by the management committee and that they are recorded in the minutes (Regulation Schedule 5). All financial records must be kept in Queensland

16 Your day-to-day operations Membership The rules of the association should specify who can be a member. If the rules do not specify membership criteria, the relevant provisions of the Model Rules will apply (Regulation Schedule 3). In general terms, the Model Rules state that a person is qualified to be a member of the incorporated association if that person was a member of the association before it incorporated. It is possible for the rules of an association to allow other incorporated bodies to be members, however specific legal advice may need to be obtained in order to draft these rules. The rules of an association should also set out the circumstances in which a member ceases to be a member of the association. For example, if failure to pay an annual membership fee will result in the termination of a membership, this must be specified in the rules. Where the Model Rules apply, the management committee must determine when and how membership fees are payable. Membership fees A member did not pay their annual membership fee. As a result, the management committee decided to cancel the membership under the association s rules. Because payment of membership fees is not covered under the Act, the management committee needed to refer to its rules for guidance on this decision. Record keeping Keeping an accurate record of your association s business is the only way to establish accountability, transparency and an ongoing record of association transactions for your members. Under the Regulation (Part 3), you are required to keep all association records in English. Minutes Under the Act, your association must keep a minute book where records of all meetings of the association are kept, including management committee meetings, general meetings and the AGM. Minutes can be recorded electronically as long as there is a hard copy version that is kept in a book. If governed under the Model Rules, the Secretary is ultimately responsible for ensuring the association s minutes are maintained accurately. The minutes of meetings provide a permanent official record of the business transacted. They should form a clear and concise summary of the proceedings of the meeting. While not required under the Act, the minutes would normally include: details of the day, date and place of the meeting and the time of commencement the names of those present and details of any apologies received 24 25

17 that the chair announced a quorum was present and that the meeting was duly constituted (if this announcement was made) a reference to minutes of the previous general meeting and the signing of them as a correct record details of every resolution put to members and whether it was passed with the required majority details of persons voting against a motion or abstaining from voting if those persons request that this be recorded details of any appointments made, persons elected to office and any leave of absence granted to a member overview of discussions concerning decisions made at the meeting decisions made at management committee meetings the date and time for the next meeting, if this is determined during the meeting the time that the meeting closed, and details of election of committee members (if applicable). Minutes of the previous meeting should be circulated to committee members for authorisation or amendment at the next meeting of the committee. The minutes of each meeting must be entered in a book kept specifically for that purpose. Your association s rules must stipulate whether or not documents (ie. including the minutes of general meetings) will be available for members to inspect. Meetings The purpose of your association and the nature and amount of business it conducts will determine how frequently meetings should be held and who should attend. Under the Act, your members are required to meet at least once a year (at the association s AGM), and the management committee must meet at least once in every four calendar months (management committee meetings). Other meetings might include special general meetings and subcommittee meetings. Management committee meetings The management committee should meet as often as necessary to properly manage the affairs of the association, but at least as often as once every four calendar months (Section 63). Management committee meetings must be held according to the association s rules, at a place and time the committee determines. Calling a management committee meeting Under the Model Rules, notice of a management committee meeting is to be given in a way determined by the committee. In the case of a special management committee meeting, 14 days notice must be given, however this can vary if the members of the committee unanimously agree before the time appointed for the meeting. Conducting a management committee meeting For a committee meeting to take place, a quorum must be present. A quorum is the number of committee members who must be present to conduct a committee meeting. The rules of each association should specify the quorum for committee meetings and the procedure to be followed if a quorum is not present

18 Where the Model Rules apply, a simple majority of committee members comprise a quorum for a committee meeting. Under the Model Rules if, within half-an-hour of the time appointed for the management committee meeting, a quorum is not present: if the meeting was convened at the request of committee members, the meeting lapses in any other case, the meeting is to stand adjourned to the same day, time and place in the following week. The format of the meeting is at the discretion of the association, however the President is required to chair any committee meeting they attend. If the President cannot attend, the Vice- President or any other member can be nominated to chair. Generally, committee meetings are the most informal of the association s meetings because they are smaller in size. To ensure the smooth running of the meeting, we recommend you follow a similar format to a general meeting (see below) and adapt it to suit the business to be addressed. Minutes must be kept of all committee meetings (see page 25). General meetings General meetings can be held at any time and the frequency will depend on the activities of your association. Under the Model Rules, the first general meeting for a newly incorporated association must occur between one and three months after the date of incorporation. From then on, general meetings can be called at any time in accordance with the rules. However, the Act requires the first AGM to be held within 18 months of incorporation, or six months after the end of the association s financial year, whichever comes first. The AGM is an opportunity for your association to officially elect office bearers, and to present audited statements to your members. Calling a general meeting Under the Model Rules, the Secretary may call a general meeting by giving each member notice of the meeting in accordance with the rules OR within 14 days of: being directed to call the meeting by the management committee, or being given a written request signed by: m at least a third of the members of the association presently on the management committee, or m by a number of ordinary members equal to double the number of management committee members plus one. The Secretary may also call a special general meeting within 14 days of receiving written notice of an intention to appeal against a decision made by the committee regarding the rejection or termination of association membership. If the meeting will hear and determine an appeal of a member, or if it will determine a special resolution (see page 39), notice of the meeting must be in writing

19 The rules of each association must specify: the manner of calling general meetings the quorum for general meetings the procedure at general meetings whether members are entitled to vote by proxy at general meetings and through what method the time within which and the manner in which notices of general meetings are to be given, and the time within which and the manner in which notices of motion are to be given, published or circulated. Conducting a general meeting A quorum must be present to conduct a general meeting. No business is to be transacted at any meeting unless a quorum is present. The rules of the association should specify the procedure if a quorum is not present at a meeting. The rules of the association must specify what the quorum is. If the Model Rules apply, the quorum is double the number of committee members plus one. Under the Model Rules if, within half-an-hour of the time appointed for the general meeting, a quorum is not present: if the meeting was convened at the request of management committee members, the meeting lapses in any other case, the meeting is to stand adjourned to the same day, time and place in the following week. If at the adjourned meeting, a quorum is not present within half an hour of the time appointed for the meeting, the members present will constitute a quorum. The format of your association s general meetings will vary depending on the type of business that needs to be addressed. Below, however, is an example of a common meeting agenda. Your association may adapt this to suit your individual needs, but this will give you an idea of what may need to be covered. Achieving a quorum The Lollipop Association Inc. has a management committee consisting of eight members. Under the Model Rules, to achieve a quorum at a general meeting, they must have a total of 17 members present (8x2+1=17)

20 XYZ Association Inc General Meeting Agenda 24 September 2005 President s welcome This is the President s opportunity to welcome members and guests. Present The Secretary notes members who are present at the meeting. Apologies The Secretary announces any apologies received and asks members to do the same. All apologies should be noted in the minutes. Minutes of previous meeting These may have been circulated to members after the last meeting or with the notice for the current meeting. If not, the Secretary should read out the minutes from the last meeting and the members must confirm they are accurate. This is usually done by a member moving that the minutes be confirmed as accurate, and another member seconding that motion. The President should then sign and date the previous minutes. Business from previous minutes The last meeting will have required actions on certain matters for which members would have been given responsibility. This part of the meeting provides members with the opportunity to report on the status of these actions. President s report This is an opportunity for the President to address the members regarding any matters that the committee has dealt with since the previous meeting. Treasurer s report The Treasurer provides members with a report on expenditure since the last meeting, including the tabling of receipts. The Treasurer moves for the report to be received, another member must second the motion, then the report can be discussed. Special business This part of the meeting addresses any issues placed on the agenda by the management committee or Secretary. This is also where special resolution matters are discussed see page 39. General business This provides members with the opportunity to raise a question or move a motion. Members raising complex issues need to advise the committee of these intentions before the meeting takes place. Date of next meeting The date, place and time for the next meeting is discussed and agreed. Close The Chairperson closes the meeting, thanks members for attendance and acknowledges any guests. Correspondence The Secretary provides a report on the association s correspondence since the last meeting. This report is usually formatted as ingoing and outgoing. Generally, the Secretary moves for the correspondence to be approved, and another member seconds the motion

21 Annual General Meeting (AGM) The AGM is the most important event your association will hold and is attended by the management committee, members and other invited guests. This meeting is a public statement about your association s financial position and the activities and achievements of the previous year, and also serves as a yearly update to members by the management committee. It is similar to other general meetings held by the association. Under the Act, the committee must present the audited financial statements to members for adoption (Section 59 (1) (c)). If these obligations are not met, OFT will request appropriate action. An incorporated association must hold an AGM at least once in each calendar year. The first AGM must be held within 18 months of the date of incorporation and within six months after the end of the first financial year of the association. (Note: If the association is incorporated within three months of the end of its financial year, a different time period will apply. Contact the Office of Fair Trading for more information.) The second and any subsequent AGMs must be held within six months after the end of the incorporated association s financial year. It is possible to obtain an extension of time to hold the AGM from the Office of Fair Trading. You must apply before the expiry of the six month period in which the AGM would otherwise be required to be held. Calling an AGM The rules of the association must specify the way the meeting is called, and the way the notice of the AGM is to be given. The notice convening the meeting should specify that the meeting is the AGM. If special resolutions to be proposed at the AGM, see page 39. Preparing for an AGM The management committee plays an integral part in preparing for the AGM. Under the direction of the committee, the Secretary will generally take responsibility for coordinating the meeting, and the Treasurer and President will also be involved, particularly in the reporting of financial matters (see page 43). The rules of the association must include what business is to be covered at the AGM. However, if the Model Rules apply, the following business must be conducted: receiving the statement of income and expenditure, assets, liabilities and mortgages, charges and securities affecting the property of the association for the last financial year (see page 43) receiving the auditor s report (see page 46) on the financial affairs of the association for the last financial year presenting the audited statement to the meeting for adoption electing members of the management committee, and appointing an auditor

22 The format of the meeting will be similar to that of a general meeting (see page 29), however the previous minutes will be from the previous AGM, not the previous general meeting. The minutes kept must state specifically that they are minutes of the AGM. Appointing an auditor All associations are required to appoint an independent auditor under the Regulation (Schedule 4). This is usually done at the AGM. To comply with the Act, the appointed auditor must be: a person registered as an auditor under the Corporations Act, or a member of CPA Australia or the Institute of Chartered Accountants Australia, or a member of the National Institute of Accountants, other than an associate, who has completed an auditing component of a course of at least three years duration at a recognised university or tertiary institution. An application may be made to OFT for approval of a person who does not have the above qualifications to carry out the audit if the person is competent in auditing. If the auditor does not meet the criteria provided in the Act, you must apply to OFT for approval of this auditor by completing Form 21- Application for Approval of Auditor. This form requires an office bearer (President, Secretary or Treasurer) to formally apply for approval of the auditor, and for the auditor to note their qualifications and experience. You will also need to supply figures for your association s approximate gross income and the value of current assets. However, the Act specifies that certain people cannot carry out the annual audit of an association (Section 59). This includes: any members of the management committee an employee of the incorporated association, or a partner, employer, or employee of the management committee. It is recommended you send a letter of engagement to your auditor after appointment at the AGM to clearly outline the association s expectations and to ensure you have written evidence of the appointment. Annual audit At the end of your financial year, the management committee must arrange to have the association s financial statements audited. Your auditor will need a variety of documents from you (see page 47). After your AGM, you must submit your annual return (Form 12) and a copy of your audited financial statements to OFT. A signed report from your appointed auditor (auditor s report) must also be provided as evidence that the association s financial statements have been audited. If this report contains concerns or questions about the association s finances, OFT will ask you to provide justification for this. If your association fails to provide this, or OFT is not satisfied with the justification, you may be served a show cause notice and cancellation of incorporation could result (Section 93)

23 Voting The Chairperson of any meeting is responsible for supervising and administering the voting. This voting can be done by voices (ie. judging the number of yes versus no), but it is recommended voting be carried out by show of hands. This is a far more accountable and less subjective way for your association to decide business matters, and will therefore help to avoid disputes. If an association s membership is large (eg. more than 500), it may consider introducing a rule allowing for a secret ballot or poll to decide close votes on issues which may be contentious. Proxy voting While not required, many associations choose to specify whether proxy voting is allowed in their rules and, where appropriate, any requirements, restrictions and procedures relating to proxy voting. Where the association s rules provide, a member unable to attend a meeting is able to appoint another person to vote on their behalf. This proxy will be required to produce documented evidence that they have been authorised to vote on the absent member s behalf, and can be a member or non-member. Postal votes Postal votes can be used for voting, but cannot be counted for special resolution matters. The format and process for postal voting is at the discretion of the incorporated association and should be set out in the rules. Special resolutions A special resolution is a resolution that is passed at a general meeting (including the AGM) of an incorporated association by the votes of 75% of the members who are present and entitled to vote (Section 3). Written notice of a proposed special resolution, and the time and place of the general meeting, must be given as required by the rules to each member who is entitled to vote (Section 3). Under the Act, matters that must be decided via special resolution are: the decision to incorporate (Section 6) a change of name for the incorporated association (Section 35) a change to the association s rules (Section 48), and the decision to wind up the association (Section 89). Postal voting is not allowed for special resolutions (Section 3 (4)). Ordinary resolutions The association s rules should set out the manner in which notice of motions are to be given. A member who wishes to bring any business before a general meeting should give notice to the association as per the association s rules. Members should ensure that the notice is given to the association in sufficient time to allow the 38 39

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