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Every incorporated association has a set of rules (often called the constitution) which outlines how the association is operated and managed by its members. The Associations Incorporation Act 2015 (the Act) includes 19 matters (known as the Schedule 1 requirements) that need to be addressed in the rules of the association. Associations have a choice of writing their own rules, or using the Prescribed Model Rules which are set out in Schedule 2 of the Associations Incorporation Regulations 2016 (the Regulations).
This publication has been prepared to assist incorporated associations in developing a set of appropriate rules by explaining each of the Schedule 1 requirements that need to be addressed and how these matters have been addressed in the model rules.
The rules should clearly state the name of the association. An association’s name should reflect its objects and purposes. The Commissioner for Consumer Protection can reject a name if it is:
An association can do its own name availability check using AssociationsOnline prior to submitting its application.
The model rules (as set out in the Regulations) do not contain a space for the association’s name however it is included on the application form submitted to Consumer Protection.
For practical purposes the version of the model rules available on Consumer Protection’s website includes a space on the front page for this information to be inserted.
This section of the rules should include a summary of the purposes, aims or activities the association has been incorporated to undertake.
The Repealed Act required a “not for profit clause” to be included as part of the objects section of the rules. The Act still requires the rules to include this information but it does not need to form part of the objects clause anymore.
If an association decides to remove this clause from its objects it must make sure that the following statement is included somewhere else in the rules:
The property and income of the association must be applied solely towards the promotion of the objects or purposes of the association and no part of that property or income may be paid or otherwise distributed, directly or indirectly, to any member of the association, except in good faith in the promotion of those objects or purposes.
The model rules (as set out in the Regulations) do not contain a space for the association’s objects however it is included on the application form submitted to Consumer Protection.
For practical purposes the version of the model rules available on Consumer Protection’s website includes a space on the front page for this information to be inserted.
The not-for-profit clause is included as rule 3.
It is up to the association to decide who membership will be open to and if there will be any conditions or qualifications that need to be met before a person can join.
The rules must include information about who can be a member, how they apply for membership and the circumstances in which they cease to be a member.
The model rules break this topic up into three separate sections:
The Act requires an association to maintain a register of members that includes the name and residential, postal or email address of each member. This register must be made available for a member to inspect upon request.
To meet Schedule 1 the rules simply need to confirm that the association maintains a register of members.
It is up to the association to decide whether it will include information about:
If the committee would like the option of requiring a statutory declaration to be completed by a member before access to the member register is given this needs to be included in the rules.
Rule 13 states that the Secretary (or another person authorised by the committee) will be responsible for keeping the record.
The clause explains what information is kept in the register and confirms that it is available for inspection.
Rule 13(5) provides flexibility to request a statutory declaration before the register is made available for a member to copy.
An association can charge a fee for a person to join the association or to renew their membership each year if it wants to.
The rules need to include information about whether there will be any fees for members. Options for addressing this matter include:
Rule 12 is a flexible clause that allows the association to charge a fee if it wants to.
If there will be a fee it is to be set by the committee.
The rules must identify the name by which the governing body for the association will be known; for example the Management Committee or the Board; and who its members will be.
The association can decide how many committee members it will have and what the office bearers will be called, for example president, vice president, treasurer or secretary.
The rules should also include details of any eligibility criteria that a person must meet to be a committee member. For example a particular class or member or someone who has been a member of the association for a specific period of time.
Rule 26 explains that the association will be managed by a committee.
This committee consists of:
To be eligible to sit on the committee the person must be an ordinary member who is at least 18 years old.
It is important to set out in the rules how the members of the committee will be selected. The most common approach is for members to elect their chosen committee at a general meeting.
The rules will need to include information which explains:
Note: The Act states that a person will be prohibited from sitting on the management committee of an incorporated association (without prior approval by the Commissioner for Consumer Protection) if they:
Where a person is prohibited because they have been convicted of an offence they cannot be a committee member for a period of five years from their conviction, except where the conviction resulted in imprisonment, in which case they cannot be a committee member for five years from their release from custody.
The process for electing a committee member is set out in rules 31-34.
A person can become a committee member if they are elected at a general meeting or appointed by the committee to fill a casual vacancy.
Nomination forms are to be submitted to the Secretary at least 28 days before the Annual General Meeting (AGM) with the election to be conducted at the AGM.
The rules need to clearly state how long a member of the committee can hold the position.
According to rule 35 the committee member’s term begins when the member is elected at the AGM and ends when the position is declared vacant at the next AGM.
An association will need to decide under what circumstances a person will cease to be a member of the committee.
Generally these circumstances include:
Rule 37 outlines the situations where a committee position becomes vacant and include:
It is important that the association is able to replace a committee member in a situation where they leave the position before their term ends and so the rules need to include details of the process to be followed to fill an empty position until the term ends.
It is common for these appointments to be done by the committee but the rules could involve the members in the decision if the association wants to.
Rule 38 allows the committee to appoint an eligible member (an ordinary member who is at least 18 years old).
In a situation where there are not enough committee members remaining to form a quorum, the model rules also allow the committee to act to appoint committee members to fill the vacancies or call a general meeting so the members can make the appointments.
A “quorum” is the minimum number of members who must be present for a meeting to be legally effective.
If an association make the number of committee members for a quorum too high it may be difficult for the committee to be effective. At the same time, if the quorum is too low, it may leave the management of the association without an adequate spread of responsibility, experience and representation.
The quorum can be expressed as whole number, percentage or fraction.
The rules must also cover the procedure to be followed at committee meetings, such as:
The model rules (as set out in the Regulations) do not contain a space for the committee meeting quorum however it is included on the application form submitted to Consumer Protection.
For practical purposes the version of the model rules available on Consumer Protection’s website includes a space on the front page for this information to be inserted.
Rules 41 to 46 outline the procedure to be followed for a meeting of the committee and includes the following:
The rules need to include clear guidelines about who will be responsible for keeping the minutes of committee meetings.
This responsibility usually sits with the Secretary but the Association can consider other options like rotating the minutes taking role.
Rule 47 requires minutes to be taken at each committee meeting and requires the following to be recorded:
The Act allows a member to be reimbursed for any out of pocket expenses relating to the affairs of the association. It is normal to request that the member provide evidence of the payment such as a receipt before the refund is paid.
There may be some situations where an association would like to pay a committee member an honorarium for the service they provide to the group. The Act does not refer to ‘honorariums’ and whether the payment is permitted will depend on the actual reason for the payment.
If the association would like the option of making any payments to committee members (apart from reimbursement of expenses) the rules must provide for approval of the payments by the members of the association.
Rule 40 states that:
A committee member is entitled to be paid out of the funds of the Association for any out-of-pocket expenses for travel and accommodation properly incurred —
Again the quorum set by the association is very important. Make sure that the number for the quorum for a general meeting is achievable, without being so small that the meeting might not be representative of the general membership.
It is also recommended that the rules include information about what will happen if there is no quorum present at a meeting.
Set out the procedure to be followed at general meetings. Include:
The model rules (as set out in the Regulations) do not contain a space for the general meeting quorum however it is included on the application form submitted to Consumer Protection.
For practical purposes the version of the model rules available on Consumer Protection’s website includes a space on the front page for this information to be inserted.
Rules 55 to 60 outline the procedure to be followed for a general meeting of the members and includes the following:
The rules of an association must provide for all members of the association to be entitled to receive notice of and to attend any general meeting of the association irrespective of their membership class or voting rights.
To avoid any confusion it is also important for the rules to clearly explain who is able to vote at a general meeting and how the votes may be cast.
Rule 52 requires the secretary to give all members:
Rule 8(5) gives each ordinary member full voting rights. The model rules also include provisions for proxies voting (rule 53).
A notice of meeting is a written notice that a meeting is going to take place at a specified time.
A notice of motion is a notice, given by a member of the association that proposes some decision or action be discussed and voted on at the meeting.
The rules must specify the period (time) required to be given to members of a general meeting and the manner in which notice is to be given (such as post or email or both).
The rules must also set out the period of notice (if any) a member must give other members if they propose to move a motion at a general meeting. If you wish to allow for members to propose motions from the floor at a general meeting, state that no advance notice is required.
Rule 52 requires the secretary to give members:
The notice must include details of each item of business to be considered at the meeting
Notice may be:
(Rule 66)
While it is common for the committee to be responsible for convening general meetings it is also important that the members have the ability to request meeting be called if necessary.
The rules must include information about the minimum number of members required to request a meeting.
This information must be expressed as a percentage and cannot be greater than 20%.
Rule 51 requires the committee to convene a special general meeting if at least 20% of the members require the meeting to be called.
The meeting request must be submitted to the secretary in writing and clearly state the business to be considered at the meeting.
The committee then has 28 days to call the meeting.
The rules need to include details about how the funds will be managed. It is suggested that information is included about who:
Rule 62 explains how the funds will be controlled and requires:
An association must define a financial year that it will operate under. The chosen financial year will determine the timeframe in which the AGM will be held and financial reports prepared.
The association may use:
The model rules (as set out in the Regulations) do not contain a space for the association’s financial year however it is included on the application form submitted to Consumer Protection.
For practical purposes the version of the model rules available on Consumer Protection’s website includes a space on the front page for this information to be inserted.
The Act only requires an association to hold one general meeting per year, being the annual general meeting.
Holding additional general meetings is decided by each association. An association may decide that general meetings will be held at regular intervals. For example the association may hold a general meeting every four months.
Alternatively an association may only need the ability to call general meetings when a need arises in which case the rules could provide that the committee may call a general meeting from time to time or at the request of the members.
An association is required to hold an annual general meeting each year within 6 months after the end of the association’s financial year (Rule 50).
Any other general meeting is considered to be a Special General Meeting and may be convened:
Under the Act an association may only alter its rules, name or objects by passing a special resolution. Section 51 of the Act outlines the requirements for passing a special resolution so it would be acceptable to include a simple statement in the rules that:
The rules of the association may be altered by special resolution at a general meeting of the association.
If the association wants to include more detailed information it should be mindful of the following requirements:
Rule 72 includes a simple statement that:
If the Association wants to alter or rescind any of these rules, or to make additional rules, the Association may do so only by special resolution and by otherwise complying with Part 3 Division 2 of the Act.
An association can decide whether or not it wants to use a common seal. If the association has one the rules need to set out who will be responsible for it’s custody.
If the Association does not want to use a common seal it should include a simple statement in its rules that it has no common seal.
Rule 65 states that if the association has a common seal it will be kept by the secretary or another authorised committee member.
There are a number of records that need to be kept by an association relating to its specific activities. It is important for all association records to be held in a secure location and the rules should state who will be responsible for keeping these records.
It should also be noted that where a person ceases to be a member of the association’s committee, section 41 of the Act requires that as soon as practicable after their membership ceases, the person must deliver to a member of the committee all of the relevant documents and records they hold pertaining to the management of the association’s affairs.
To make these obligations clear the association may also wish to include information about the handover of records in the rules.
Rule 67 states that the records will be kept by the following custodians:
The documents and records of the association include items such as:
The rules need to detail which records the members may inspect, including any terms and conditions subject to which access may be granted.
The committee may refuse to permit inspection of confidential material, such as confidential personal, employment, commercial or legal matters. However, all members should be given the right to inspect the rules of their association, minutes of general meetings of the association at any reasonable time, the register of members and the register of officer bearers
All members are also entitled to a copy of the rules of their association if they make a request for a copy. If a member requests to inspect the register of members, the incorporated association must allow this at a reasonable time.
Rule 69 allows a member to inspect free of charge the:
If the member wants to inspect a document that records the minutes of a committee meeting, the right to inspect that document is subject to any decision the committee has made about minutes of committee meetings generally, or the minutes of a specific committee meeting, being available for inspection by members.
An association can decide the process to be used for settling disputes under the rules between the association and any members or between a member and other member.
This procedure must give each party to the dispute an opportunity to be heard on the matter and ensure that an unbiased decision maker decides the outcome.
If there is an affiliated or peak body who the association may be able to escalate the matter to, this may be mentioned in the rules however the association should check with the relevant body that they are agreeable to assist before committing them to be part of the process outlined in the rules.
Rules 17 to 25 outline the procedure for dealing with disputes and include the following:
The rules need to set out what will happen to surplus assets of the association if it is wound up or dissolved. The distribution of surplus assets must not be inconsistent with the Act and generally surplus assets must not be distributed to any member or former member of the association.
The association can specify the organisation(s) that they want to distribute their property to or take a more flexible approach which allows the member to choose an organsation when the time comes to wind up.
Remember under the Act an association’s surplus property can only be distributed to:
Rule 71 is a flexible clause that allows the members to decide who the property will be given to at the time they wind up.
On the cancellation of the incorporation or the winding up of the Association, its surplus property must be distributed as determined by special resolution by reference to the persons mentioned in section 24(1) of the Act.
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