Ending an association's incorporation
When a decision is made to cease its activities, the association needs to terminate any agreements, pay its debts and distribute the remaining surplus property. The Act enables an association’s affairs to be finalised depending on the particular circumstances. This includes:
- 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.
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 to be cancelled voluntarily.
Voluntary cancellation without assets
If an association does not have any property, assets or debts it can be cancelled voluntarily by completing the following steps:
- The management committee examines the affairs of the association and declares by resolution that it is of the opinion there are no outstanding debts or surplus property.
- Convene a general meeting of members and pass a special resolution to apply for voluntary cancellation (see Altering the Rules for information about special resolutions).
- Submit the application for voluntary cancellation to Consumer Protection using AssociationsOnline.
If the Commissioner for Consumer Protection considers it appropriate the association’s incorporation is cancelled. The cancellation takes effect from the date determined by the Commissioner 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 its debts or liabilities. An association’s surplus property may only be distributed to:
- another association registered under the Associations Incorporation Act 2015 (WA);
- a company limited by guarantee registered under the Corporations Act 2001;
- an organisation that holds a current licence under the Charitable Collections Act 1946;
- 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.
An association with assets can voluntarily cancel its incorporation by completing the following steps:
- The management committee examines the affairs of the association and declares by resolution that it is of the opinion the association can meet its debts and liabilities.
- Prepares a draft plan detailing how the surplus property will be distributed include the intended beneficiaries and an estimate of the value of the property.
- Convene a general meeting of members and pass special resolutions confirming that members wish to apply for voluntary cancellation and approving the plan for the distribution of the surplus property.to apply for voluntary cancellation (see Altering the Rules for information about special resolutions).
- Within 28 days after the special resolution has been passed submit the application for voluntary cancellation to Consumer Protection using AssociationsOnline.
- The distribution plan will be approved in writing by the Commissioner for Consumer Protection.
- Once approved, implement the distribution plan and notify Consumer Protection when the process has been completed.
The cancellation of the association will take effect from the date determined by the Commissioner and is confirmed in writing.
Cancellation of an incorporated association by the Commissioner
The Act provides the Commissioner for Consumer Protection with discretion to cancel an incorporated association where there is cause to believe that the 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 and the Commissioner can distribute the property in accordance with the Act. Depending on the circumstances, former members of the defunct association may have little say in how such property is distributed, although efforts are generally made to contact the most recent committee.
Reporting defunct or disbanded associations and clubs
If you are aware of an association that is defunct but has not been cancelled, please use the online form to report the association to Consumer Protection.
An association may choose to wind-up rather than applying for cancellation if it 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.
There are also certain circumstances where an association is forced to wind-up by order of the Supreme Court. 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 a creditor. This can be a complex and costly process and anyone considering making an application should seek their own legal advice.