Ways of ending an association's incorporation

The Act enables association’s to choose the process for the resolution of their affairs.  Whichever best suits their particular circumstances such as:

  • voluntary cancellation (with or without assets);
  • voluntary winding up, applying the relevant parts of the corporation law; or
  • winding up by order of the Supreme Court.

Voluntary cancellation

An incorporated association can only apply for voluntary cancellation if:

  • it is solvent – having sufficient assets to pay all of its debts and liabilities; and
  • it resolves by special resolution that it should be cancelled voluntarily.

Voluntary cancellation without assets

To begin the process, the management committee must examine the affairs of the association and pass a resolution confirming that there are no outstanding debts or property.

A general meeting of the association can then be called to pass the special resolution to apply for cancellation.  More information on the requirements for a special resolution is provided in Altering the Rules

Once these steps have been completed an application for cancellation can be submitted to Consumer Protection using AssociationsOnline along with copies of:

  • the resolution passed by the management committee; and
  • the special resolution passed by the members.

The cancellation of the association takes effect from the date determined by the Commissioner for Consumer Protection and will be confirmed in writing to the applicant.

Voluntary cancellation with assets

If the association has assets or surplus property there are additional steps that must be completed in order to be voluntarily cancelled.  Surplus property refers to any assets of the association that remain after the payment of any debts or liabilities. 

Again the management committee must pass a resolution before beginning the cancellation process.  The committee must examine the affairs of the association and declare by resolution that it is of the opinion the association can meet its debts and liabilities.  The committee should draft a plan detailing how the surplus property will be disposed of.  This plan must include the name(s) of the intended beneficiary or beneficiaries for the surplus property and an estimate of the value of the property that will be received by the recipient(s).

An incorporated association’s surplus property may only be distributed to organisations which fall into the following categories:

  • an incorporated association;
  • a company limited by guarantee registered under the Corporations Act 2001;
  • an organisation that holds a current licence under the Charitable Collections Act 1946 (see Fundraising for more information);
  • an organisation that is a member or former member of the association and whose rules prevent the distribution of property to its members; or
  • a non-distributing co-operative registered under the Co-operatives Act 2009.

The members must pass special resolutions:

  • confirming that they wish to apply to voluntarily cancel the association’s incorporation; and
  • approving the plan for the distribution of the surplus property.

An application for cancellation can be submitted to Consumer Protection using AssociationsOnline along with copies of:

  • the resolution passed by the management committee;
  • the special resolution passed by the members;
  • the distribution plan as passed by special resolution by the members; and
  • a statement by the committee that the resolutions have been passed in accordance with the Act.

This application must be submitted within 28 days of the date the special resolution was passed and should be accompanied by the prescribed fee.

The distribution plan must be approved by the Commissioner for Consumer Protection before it can be implemented by the association.  When approving the plan the Commissioner will advise the association the time period within which the property distribution must be completed. 

When the association has finished distributing its property it should notify the Commissioner.  The cancellation of the association will then take effect from the date determined by the Commissioner and will be confirmed in writing to the applicant.

Process to voluntarily cancel the incorporation of a solvent association without assets:

Process to voluntarily cancel the incorporation of a solvent association with assets:

 

Cancellation of an incorporated association by the Commissioner

In those instances where members simply walk away from an association without formally finalising its affairs, the Commissioner may direct that the incorporation of the association be cancelled.  The Act provides this discretion where the Commissioner has reasonable cause to believe that the incorporated association, among other things, has been inoperative for at least 12 months or has fewer than six members. 

Where the incorporation of an association has been cancelled, any property of the association vests in the State.  The Commissioner acting on behalf of the State, has an obligation to distribute this property in accordance with the Act.  This can be a time consuming process. 

Depending on the circumstances, former members of the defunct association may have little say in how such property is distributed, although extensive efforts are made to find and consult them.

The voluntary cancellation of an association is the best way to ensure that its assets and property are distributed according to the wishes of the members. 

Reporting defunct or disbanded associations and clubs

Consumer Protection is compiling a list of associations that may be defunct (inactive or dormant for 12 months or more).  If you are aware of an association that is now defunct please use the online form to report the association to Consumer Protection.

Winding up 

An incorporated association can be wound up voluntarily if it resolves by special resolution to wind up.  A solvent association may choose voluntary winding up rather than applying for cancellation if the association has difficulties identifying or locating assets, is a party to legal proceedings or has any outstanding contractual obligations or disputed debts. 
 
Where the financial affairs of an association are complex, winding up allows the association to appoint a liquidator to manage the process of finalising its financial affairs.  It also provides a level of protection for the committee and members in the event of any subsequent claim against the association.

An association may also be wound up by order of 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 suspended its operations or has been dormant for a year or more;
  • 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.

Provisions of the Corporations Law apply to the process.  An incorporated association should always consider seeking legal advice.