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1. Ways of winding up an association

An incorporated association may be wound up in two ways:

  • voluntarily; or
  • by order of the Supreme Court.

1.1 Voluntary winding up

An incorporated association can only wind up on a voluntary basis if:

  • it is solvent, that is, it has sufficient assets to pay all of its debts and liabilities; and
  • it resolves by special resolution that it should be wound up voluntarily.

(More information on the requirements for a special resolution is provided in the section on  Altering the Rules.) Once a special resolution is passed, a copy of this must be lodged with the Commissioner at Commerce within 14 days from the date when the resolution was passed.

When the winding up takes effect will depend on whether, after the payment of all its debts and liabilities, the incorporated association has any surplus property. The meaning of surplus property covers cash assets, as well as physical property, such as furniture, equipment or real estate.

1.1.1 No surplus property

Where there is no surplus property, then the process is straightforward and the winding up takes effect 14 days after the notice of the special resolution has been lodged with the Commissioner.

1.1.2 Surplus property

Surplus property on winding up can only be distributed to another association incorporated in Western Australia, or for charitable purposes. Surplus property cannot be distributed to members or former members of the association.

The association must prepare and lodge with the Commissioner a plan for the distribution of the surplus property. The plan must be drafted in accordance with the rules of the association and satisfy certain statutory requirements of the Act. If there are no provisions in the rules, the management committee is required to draw up a plan in accordance with any directions given by the members of the association by a resolution.

The Commissioner can:

  • direct the association to amend the distribution plan;
  • appoint a person on his/her behalf to implement a distribution plan in certain circumstances; or
  • direct that surplus funds be paid into the Consolidated Account (ie the Western Australian State Treasury).

Anyone who is aggrieved by a declaration made by the Commissioner may apply to the Supreme Court for a review of the declaration.

An incorporated association must not implement a distribution plan until one month after the distribution plan has been lodged, unless the Commissioner states otherwise.

Once any surplus property is finally distributed, the winding up takes effect seven days after such distribution.

Steps to winding up an association that is solvent:

  1. Convene a special general meeting to resolve to wind up the association.
  2. Submit a notice of the special resolution to wind up the association within 14 days of the meeting to the Commissioner (Form 6).
  3. If there is no surplus property, the association will be dissolved 14 days after the Commissioner receives the notice of the resolution to wind up.
  4. If there is surplus property, prepare a distribution plan according to the requirements of the Act.
  5. Submit the distribution plan to Commerce.
  6. Implement the distribution plan no sooner than one month after lodging it.
  7. An association with surplus property will be dissolved two months after the distribution plan has been lodged with Commerce, unless the Commissioner directs otherwise. If the distribution is complete prior to this timeframe, the association will be dissolved seven days following completion.
  8.  A letter confirming the date on which the association was dissolved will be sent to the person nominated on the form.

Commerce has prepared a brochure detailing all of the steps required to voluntarily wind up an incorporated association. It is available in hard copy form, or may be downloaded from the website.

1.2 Winding up by the Supreme Court

An incorporated association can be wound up by the Supreme Court if:

  • the association was not eligible for incorporation at the time of incorporation;
  • incorporation of the association was obtained by fraud or mistake;
  • the association has fewer than six members;
  • the association has been inoperative for not less than 12 months;
  • the association is unable to pay its debts;
  • the association has engaged in activities outside the scope of its purposes, as specified in its rules, or has ceased to pursue those purposes;
  • the committee of the association has acted oppressively towards members;
  • the association has refused or failed to remedy a breach of the Act or regulations within a reasonable period after notice of the contravention has been given to the association by the Commissioner;
  • the association has, itself or as trustee, traded or secured pecuniary profit for its members;
  • the association, by special resolution, resolved that it be wound up by the Supreme Court; or
  • the Supreme Court is of the opinion that it is just and equitable that the association should be wound up.

An application to the Supreme Court to wind up an incorporated association can be brought by:

  • the association;
  • a member of the association;
  • the Commissioner;
  • the Minister; or
  • in certain circumstances, a creditor.

As always, an incorporated association that is facing proceedings or bringing proceedings in the Supreme Court should seek legal advice.