5 things to consider when preparing or updating your incorporated association’s rules

5 things to consider when preparing or updating your incorporated association’s rules

An incorporated association’s rules determine how the association operates and set out the rights and responsibilities of the association’s members and office holders.

The rules are also sometimes called a constitution or articles.

The rules form a contract between the members and the association. The members and the association are bound to follow the rules.

Considering an incorporated association structure for your organisation? Chances are you have already come across the term ‘model rules’.

But did you know that you do not have to use the model rules? Incorporated associations can choose to write their own rules.

Here are 5 things to consider when writing or amending your rules:

1. Tailored to objects and activities

If your constitution is not tailored to the particular objects, purposes and activities of your organisation, you can miss out on opportunities, including access to funding.

An association can alter its objects (see #5 below), but if you get these things right from the get-go, your organisation can hit the ground running.

We can help you to carefully draft or amend your objects to ensure greatest impact. Call us on 1300 654 590 or email us.

2. Comply with the law

Writing your own rules provides a great opportunity to ensure that your constitution suits your organisation. But remember, the law says you must address certain matters in the constitution. These matters differ from state to state and change from time to time.

In addition, the constitution cannot be inconsistent with the incorporated associations legislation in your state.

If the constitution does not address the minimum requirements set out in the legislation, the governing body in your state (Consumer and Business Services in South Australia, Consumer Affairs Victoria, NSW Fair Trading, etc.) will not approve the constitution or the amendments to the constitution. It is worth getting this right.

3. Disputes, complaints and grievances

Disputes happen. Sometimes a particular member or faction of members may be causing trouble, leading to instability within the organisation.  Spend time now to work out how your association will deal with any disputes that arise. You will save yourself a headache when someone makes a complaint down the track.

Your dispute resolution procedure should be clearly set out in your constitution.

We can suggest different options and help you to work out how to deal with disputes within your organisation. Call us on 1300 654 590 or email us to discuss your options.

4. When the association ends

An incorporated association may be wound up and its remaining assets distributed.

In most cases, the constitution will require the organisation to pay the assets to non-profit organisations with identical or similar purposes and objects and will prohibit payment to members on winding up.

If you tailor your constitution, you can name particular organisations to be first in line to receive your organisation’s assets in the event that your organisation is wound up or provide certain criteria that must be met by any entities that receive the organisation’s assets.

Call us on 1300 654 590 or email us to find out how we can help you make sure your organisation’s assets end up in the right hands.

5. Changing the rules

To change the constitution of your incorporated association, you will need to pass a special resolution of members. Usually this means that 75% of members who attend a general meeting need to vote in favour of changing the constitution. There are also specific notice requirements to meet.

The governing body in your State must approve the change before it takes effect.

In all cases, you should look carefully at your constitution before trying to change any part of it. For example, your constitution may require a longer notice period, a higher majority to vote in favour of the change, or the consent of a third party before adopting a change.

How can we help?

We can help you to make sure that your organisation’s affairs are kept in top shape, putting you in the best position to attract funding, maintain your reputation, operate smoothly and ultimately pursue the activities and purposes that the organisation was established to support in the first place.  We can help to step you through:

  • Preparing a new constitution that is tailored to your organisation and complies with all legal requirements;
  • Review and update your existing constitution to make sure it is kept up to date both with the law and in how your organisation runs from day to day; and
  • The process that your organisation must follow to adopt the new constitution and any amendments.

Call us on 1300 654 590 or email us for help to prepare or update your incorporated association’s constitution.

 

The information contained in this post is current at the date of editing – 6 July 2023.

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