Changes to associations legislation – how will this affect your association?
The new Associations Incorporation Act 2009 NSW has introduced a number of changes to help associations run more effectively.
Most of these changes have been designed to modernise the law, reduce red tape and allow more flexibility for associations. There will now be stronger protection of association finances, however, most of the day‑to-day procedures and operations of associations will not be directly impacted. The new laws have been carefully designed to make the transition as smooth as possible for associations.
Modernising the laws and reducing red tape
- Changes to association constitution
An association’s ‘rules’ are now called a ‘constitution’ and this will need to specify the association’s end of financial year.
- Association’s constitution will automatically comply with the new requirements
The current ‘rules’ of an existing association will be taken to comply with the requirements of the new Act until the association chooses to lodge changes. When the association lodges changes they will need to ensure all other aspects of their constitution comply with the new requirements.
- More flexibility for meetings and resolutions
An association is now able to hold a postal ballot to pass any kind of resolution where this is provided for in the association’s constitution. An association’s constitution may also permit meetings to be held at more than one venue using technology that allows members in different places to participate. It should now be easier for meetings to be organised and for more members to be involved.
- More choices for official address of the association
The new Act has allowed the official address to be the association’s premises or the public officer’s residence or place of business or employment. Previously the only address allowed on the public register was the residential address of the public officer. The address will still have to be in New South Wales.
- Common seal will no longer be required
Documents can now be executed when signed by two of their authorised signatories. The public officer will be an authorised signatory by virtue of that office.
- More flexibility for annual general meetings
Associations still have a financial year of 12‑18 months. Associations are no longer required to hold an annual general meeting in each calendar year but will still need to hold one within 6 months of the end of the financial year.
Supporting stability and accountability
Reforms have been introduced to provide more accountability for larger associations, clarify the duties of committee members and to make it easier for associations to comply with the legislation.
- Two tiered financial reporting
Associations are now divided into two tiers for reporting purposes. The requirements have not changed for smaller, or ‘Tier 2’ associations. Larger, or ‘Tier 1’, associations above a certain financial threshold are now required to provide an audited financial statement each year, unless they have been granted an exemption. The audit requirements aim to protect associations that have a responsibility for significant financial turnover or assets.
- Statutory duties of committee members and obligations of office bearers
New provisions imposing statutory duties on committee members have been set out in the new Act. Committee members now need to disclose any potential conflict of interest and will not be able to use their position or information for a dishonest purpose. Office bearers will also have to hand over any documents of the association within 14 days after ceasing to hold office. This will make it easier for new committee members to carry out their duties.
- Australian residency
At least three committee members have to reside in Australia and the public officer has to be a resident of New South Wales.
- Penalty notice system
Certain offences under this new Act will be dealt with by a ‘penalty notice’, which is a type of fine issued as an alternative option to having a matter dealt with in court.
Here at The Quinn Group we can help you to better understand these changes and how they will affect your association. For any other legal or accounting advice, click here to submit an online enquiry. Otherwise call us on 1300 QUINNS (784 667) or on +61 2 9223 9166 to book an appointment.