Changes to laws for NSW Incorporated Associations
The changes to the association laws took effect on 1 September 2016 and include the following amendments:
- constitutions must address two new matters
- new provisions allowing for electronic ballots
- clarifying the duties of committee members
- allowing for financial records to be kept electronically, and
- changes to the fee schedule.
The key changes are highlighted below.
Matters that must be addressed in associations' constitutions
Associations will still have a choice as to whether they adopt the model constitution or develop their own. However, there are now three new matters that every constitution must address:
- the maximum number of consecutive terms of office of any office-bearers on the committee (you can choose not to set a maximum number of consecutive terms for your office-bearers, however, the matter will still need to be addressed in your constitution. For example, rule 14(5) of the updated model constitution provides, “There is no maximum number of consecutive terms for which a committee member may hold office”)
- the types of resolutions (if any) that may be voted on by electronic ballot (this is in addition to the existing requirement that constitutions set out the types of resolutions that can be voted on by postal ballot), and
- the winding-up of the association.
A number of changes have also been made to the model constitution which will automatically apply to all associations that have already adopted the model constitution. Click here to see a guide to the key changes made to the model constitution.
Electronic ballots and postal ballots
An association will now be able to put a resolution to its members in an electronic ballot where this is permitted by an association’s constitution. Schedule 1 to the Act has been amended to make clear that the types of resolutions that can be voted on through electronic ballot should be stipulated in the association's constitution.
Duties of committee members
The existing common law (judge-made law) duties of committee members have now been specified in the Act. Previously, under the old Act, only two of the four key duties were specified. Now, the two missing duties have been included in the Act, including the duty of committee members to carry out their functions for the benefit of the association, so far as it is practical, and with due care and diligence.
The Act now expressly provides committee members with protection from personal liability where they act in good faith while undertaking the committee member’s functions under the Act. This also covers any omissions made in good faith.
For further information on the full duties of committee members, refer to our Duties Guide.
Some of the other key changes to the Regulations include:
- an association is no longer required to reserve a name prior to making an application to register an association (or when applying to change an association’s name)
- the official address of an association must be in NSW
- requirement for financial records and minutes to be kept in written or electronic form (if electronic they must be able to be converted into a hard copy) with the financial records retained for a minimum of five years, and
- the fees for lodging the annual financial return has been reduced for Tier 2 (small) associations and increased for Tier 1 (large) associations. Changes to the fee schedule are available on the Associations fees page on the Fair Trading website.
For one year from 1 September 2016, any association wishing to update its constitution as a result of the amendments to the legislation will not have to pay a fee to register the change.
To see Not-for-profit Law’s submission on the on the Regulatory Impact Statement for the proposed Associations Incorporation Regulation 2016 (NSW) see here:
To find out how the changes to the association laws will affect associations, visit the Changes to the associations incorporation laws page on the Fair Trading website.