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Publications / Nonprofit

3 Feb 12
Transition from incorporated association to public company limited by guarantee now possible in Queensland

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Peak trade bodies, non government charities and nonprofits, social action and welfare clubs and organisations need to be aware of the recent amendments to the Associations Incorporation Act 1981 (Qld) (AI Act) which commenced on 6 December 2011.

The amendments introduce a simplified process for incorporated associations to transition to a public company limited by guarantee.

For some organisations who started out as an incorporated association, the passage of time, growth in activities and membership and the ongoing commercialised nature of their operations (including funding arrangements and the employment of staff), a public company limited by guarantee would be a better structure for a number of reasons including the more flexible regulatory framework of the Corporations Act 2001.

Under the new process an incorporated association may, with the prior approval of the chief executive officer at the Office of Fair Trading, may lodge the prescribed application form with ASIC and upon registration of that application the existing entity becomes a public company limited by guarantee. 

For an existing incorporated association, to transition, it means that:

  • an organisation will need to review its Constitution (Rules) to ensure that they reflect the Corporations Law rather than the AI Act but restrictions on things like execution of cheques by management committee members and location of the secretary within 65 kilometres of the Queensland border and only conducting business in Queensland will be removed
  • an organisation does not need to reapply for any applicable tax and fund raising endorsements – the existing endorsements are automatically transferred;
  • all of the existing employees, assets and funding arrangements automatically become those of the company, and
  • the old incorporated association disappears – it does not have to wind up, cancel its ABN and terminate any registrations or endorsements. 

This is a good opportunity for existing nonprofit organisations to review their structure and governing documents to ensure their current structure and governance arrangements are the most suitable in the circumstances.

 

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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