We have previously brought you information regarding the legal obligations for Committee Members of Clubs in a previous blog post. But what are the types of clubs, and, in particular, what is an 'Incorporated Association'? This is a question we are often asked.
A club can be an:
- incorporated association; or
- unincorporated association.
Any club that is formed is automatically considered an unincorporated association, but what is an ‘Incorporated Association?’
In essence, an incorporated association is a club or community group whose members have decided to give their organisation a formal legal structure. You can recognise an incorporated association by the word ‘Incorporated’ or the abbreviation ‘Inc.’ after its name. There are more than 35,000 incorporated associations in Victoria.
You can check if your club is an incorporated association on the Consumer Affairs Victoria website.
What does being incorporated mean?
When you incorporate a club, it becomes a ‘legal person’ (that is, a legal entity that stays the same even if its members change). It can do the following things in its own name:
- accept gifts or bequests
- buy and sell property
- invest and borrow money
- open a bank account
- sue and be sued
- take out public liability insurance
- be charged and taken to the Magistrates’ Court for breaches of the Act.
Are there benefits to becoming incorporated?
There are many benefits to becoming an incorporated association. Some of the benefits are:
- The club will become a legal entity in its own right and can enter into contracts and agreements.
- Club members are protected against personal liability for the club’s debts and other legal obligations.
- The club may be eligible to apply for grants.
- Insurance premiums are generally lower for incorporated associations.
What are the responsibilities of the Committee when becoming incorporated?
An incorporated entity needs to be run as a business. If you are joining an incorporated association as an office holder, you have many responsibilities that must be taken seriously. As the ‘eyes and ears’ and decision makers of the club, you must be clear on your obligations and the consequences for any breaches. You must ensure committee members are educated about their responsibilities and that they receive any training required.
Being a member of an incorporated club means you are more protected under the law as an individual in terms of your personal liability. However, you are not necessarily protected from criminal liability. If the offence is very serious, a club as well as its office holders/members can be held criminally liable in the Magistrates’ Court.
There are also risks when a club is unincorporated; A person who takes a position in an unincorporated association faces being personally liable and may be sued if problems arise. This includes anyone on the committee. On this basis, it is important to consider all factors when thinking about becoming an incorporated association. Independent advice should be sought when making such decisions.We have also provided some of the specific obligations related to the clubs liquor licence here.
To become an incorporated association, your club must:
- operate not for profit
- have at least five members.
Under the Associations Incorporation Reform Act 2012, any club that wishes to become an incorporated association must hold a meeting to vote on whether to do so.
Consumer Affairs Victoria provides a set of model rules that may save your club the time and expense of drafting rules from scratch.
Your association can:
- adopt the model rules,
- modify the model rules to suit its requirements; OR
- draft its own rules.
It is interesting to note that the fees for becoming an incorporated association differ for clubs that adopt the model rules to those that create their own sets of rules. If a club becomes an incorporated association, the Associations Incorporation Reform Act 2012 Schedule sets out matters that must be provided for in the rules of an incorporated association. Clubs that become incorporated associations have additional responsibilities over and above their responsibilities associated with holding a liquor licence. Schedule 1 of the Liquor Control Reform Act, for instance, provides a range of matters that must be considered within your club rules.