Item 6 of 6 · back to the agenda
Committee members of an incorporated association: NSW and Victoria
An incorporated association is run by its committee, and the committee’s duties come from the state’s own Act: in New South Wales the Associations Incorporation Act 2009, administered by NSW Fair Trading, and in Victoria the Associations Incorporation Reform Act 2012, under Consumer Affairs Victoria. The two look alike in outline and differ in the details, so this paper sets them side by side. Associations are usually incorporated under state or territory law, so elsewhere the rules vary with the state or territory.
General information, not legal advice. The official places to check are NSW Fair Trading’s management committee obligations and Consumer Affairs Victoria’s committee and committee members pages, and the association’s own constitution or rules.
6.1
What both states share
- An incorporated association is a legal entity separate from its members, and it carries on even as its members change.
- Its name ends with “Incorporated” or “Inc.”
- It needs at least 5 members.
- It may not exist to hand profits to its members: NSW says it cannot distribute profits or assets to them, and Victoria that it may trade, but not to distribute profit to them.
- Its first annual general meeting falls within 18 months of incorporation.
- Its committee answers for its solvency: Victoria says the committee must make sure the association does not continue to operate if insolvent, and NSW that the committee ensures it does not incur debts it is not expected to repay.
6.2
The two rulebooks, facing each other
| Topic | New South Wales | Victoria |
|---|---|---|
| Who may sit | A committee of at least 3 members, each aged 18 or over, with at least 3 living in Australia; the constitution may add qualifications. | Members appointed under the association’s rules. A person disqualified as a company director, as a director of an Indigenous corporation, or under the Co-operatives National Law is not eligible, and a sitting member in that position must vacate office immediately. |
| Care | Carry out their functions for the benefit, as far as practicable, of the association, and with due care and diligence. | Carry out their duties with care and diligence, and in good faith in the association’s best interests and for a proper purpose. Consumer Affairs Victoria says these are broadly equivalent to a company director’s duties. |
| Position and information | Not use the position, or information obtained as a committee member, dishonestly. | Not use information gained through the position for personal advantage, another’s advantage, or to the association’s detriment. |
| Conflicts | Disclosed to the committee and recorded in the minutes in both states; the detail is in Conflicts of interest. | |
| Money | Ensure the association does not incur debts it is not expected to repay, and does nothing with intent to defraud. NSW Fair Trading also advises the committee to approve payments at least at each committee meeting. | Oversee the association’s financial affairs, and make sure it does not continue to operate if it is insolvent. |
| Annual general meeting | Within 6 months after the financial year ends; an annual summary of financial affairs is lodged within 1 month of the meeting. | Within 5 months after the financial year ends, with financial statements giving a “fair and true” view presented to members, in Consumer Affairs Victoria’s words. |
| The key officer | The committee appoints a public officer, the official contact with NSW Fair Trading, and fills a vacancy within 28 days. | The committee appoints a new secretary within 14 days if the position falls vacant. |
| On leaving | Deliver the association’s documents to the public officer within 14 days. | Return all the association’s documents within 28 days. |
| Signing documents | At least 2 authorised signatories; the public officer is one automatically. A document is executed by 2 of them, or under the common seal witnessed by 2. | Subject to the rules, signed by two committee members, or by a committee member and the secretary if the secretary is not on the committee. |
6.3
Protection, and where it stops
NSW Fair Trading says incorporation normally protects the management committee from personal liability for the association’s actions, as long as those actions are taken in good faith and with due diligence.
Consumer Affairs Victoria says an association must indemnify its office holders, from its own assets, against liability for what they do on its behalf in good faith, though not where they have deliberately broken the law. It also sets out the other side: an office holder may face criminal action for misusing their position for personal advantage or deliberately letting the association trade while insolvent, and civil action of up to $20,000 for misusing information or their position, or breaching the duties of care and diligence or good faith and proper purpose.
In Victoria the duties reach past the committee. Consumer Affairs Victoria counts as an office holder the secretary, anyone involved in management who can significantly affect the association’s financial standing, and anyone whose instructions the committee is used to following, other than a professional adviser. Office holders may rely on information or advice from staff, fellow office holders or professional advisers, where that was reasonable and done in good faith.
6.4
When the association is also a charity
Committee members of an incorporated association that is a registered charity are its Responsible People in the ACNC’s terms. The ACNC says state and territory incorporated associations legislation has duties equivalent to its Governance Standard 5, and a charity whose committee complies with them meets that standard. An incorporated association that already meets its incorporating legislation’s rules on holding meetings and being accountable to members is taken to meet Governance Standard 2. The Charity boards paper covers the rest.
Committee members do not need a director ID unless the association is also a registered Australian body, which ABRS describes, for example, as an incorporated association registered with ASIC that trades outside its own state or territory.
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