The purpose of incorporation is to create a legal entity that is separate from the individual members.  In practical terms incorporating means:

• the association becomes a body corporate with perpetual succession (it may exist forever, even as its membership changes);
• the name of the association is protected and will end with the word 'Incorporated' or 'Inc.';
• members or officers of the association are generally not liable to contribute towards the payment of debts or liabilities of the association; and
• the association may sue or be sued in its own corporate name.

The association may do all things that are necessary or convenient to pursue its objects and purposes. It may:

• acquire, hold, deal with and dispose of any real property (land) or personal property (goods, shares, etc.); 
• open and operate bank accounts; 
• invest its money; 
• borrow money upon such terms and conditions as the association thinks fit; 
• appoint agents to transact any business of the association on its behalf; and 
• enter into any other contract it considers necessary or desirable.

In addition, an association can do almost any lawful act so long as it is necessary or convenient for carrying out its objects or purposes.

To be eligible for incorporation the association must be not-for-profit. 'Not-for-profit' refers to the membership, purpose and activity of the association. This does not mean that an association cannot make a profit from its operations.

It is acceptable for an association to trade with the public so long as the profits from those transactions are used to promote the objects and purposes of the association and members do not profit from the activities.

This is different to a ‘for-profit’ company where profits can be lawfully distributed to the members (ie shareholders) in the form of cash dividends.

An association that operates outside of these conditions is no longer eligible to remain incorporated under the Act, and may be required to change its incorporation to a different type such as a co-operative or company.

However a not-for-profit organisation is permitted to:

• employ people (including members) and pay them wages or salary;
• allow members to derive a monetary benefit from the association in circumstances where the member would be equally entitled to the benefit if he or she was not a member (eg members of housing associations being housed);
• protect or regulate a trade, business or industry that members are involved in, as long as the association itself does not participate in the trade, business or industry (eg professional associations);
• commercially trade with the public;
• charge admission fees to events organised for the promotion of the association's objectives;
• arrange competitions between members for prizes and trophies;
• provide facilities or services for members (eg a bowling club running a bar); or
• remunerate a member in good faith for services provided to their association.

Registering a business name

A registered business name is a trading name under which an organisation or an individual can conduct their business activities.

An association does not need to register a business name if it operates under its incorporated name. If the association wants to trade under a different name (including a shortened version of the association name) it will be necessary to register this as a business name.

An association will only have one name for the purposes of incorporation, but may conduct its businesses under more than one registered business name (provided business is being carried on under each of those names).

A business name can be registered online through the Australian Securities and Investments Commission (ASIC). Visit ASIC’s website for further information.

Operating interstate

Incorporated associations can only conduct business in their state of registration. If an association wants to trade interstate or nationally it may be necessary to become a registered Australian body through ASIC. For more information contact the ASIC on telephone 1300 300 630 or visit their website.

Bank signatories

An association may open a bank account in its own name which is operated by people who can sign on behalf of the association.  These signatories are usually members of the management committee and having more than one person required to approve a payment or withdrawal provides financial and security safeguards.  The necessary paperwork can be set up with the bank or credit union. Decisions about the account and signatures should be made by resolution and recorded in the minutes.

A common seal is the official stamp or ‘signature’ of an association.  As a body corporate an association is entitled to have a common seal though it is not compulsory. Common seals are not expensive to purchase and can be obtained from most stationery shops or rubber stamp suppliers.

If an association has a common seal the rules must outline who is authorised to use it, the circumstances in which it may be affixed and who will have custody of the seal.

Material that is produced and published by an incorporated association may be protected by copyright. Copyright is a type of legal protection under the Commonwealth Copyright Act 1968for people who express ideas or information in certain forms, such as through writing, music and visual images.

When a piece of work is created, the person or organisation that owns copyright on the work has exclusive rights to control the copying and distribution of the work. In Australia, copyright is automatic once an original work is written down or recorded. It is free and does not have to be applied for.

Copyright is infringed when the exclusive rights of the owner are violated, such as when a copyrighted work is reproduced and used without the owner's permission.  This includes downloading, copying and printing material from the Internet. To avoid infringement, it is necessary to obtain permission to copy and use the material from the appropriate person or organization, that is, the copyright owner.

The Australian Copyright Council provides information and training for the public. 

PO Box 1986, Strawberry Hills   NSW   2012
Telephone:    (02) 8815 9777
Email: info@copyright.org.au  
Website: www.copyright.org.au

Trademarks

Trademarks are pictures, words or symbols that identify goods or services.  Examples could include logos, labels, marketing mascots, banners or slogans.  A trademark must be registered for it to be protected by the Commonwealth Trade Marks Act 1995.  If an incorporated association has a particular sign or mark that identifies it the public recognises it by, it is worthwhile protecting its use by registering it as a trademark.  IP Australia can assist with further information about registering and protecting trademarks:

IP Australia
Telephone: 1300 65 10 10
Email: assist@ipaustralia.gov.au  
Website: www.ipaustralia.gov.au