Changes to Associations Incorporation Laws in NSW cut Red Tape for Community Organisations

On 1 September 2016, the remaining provisions of the Associations Incorporation Amendment (Review) Act 2016 (NSW) commenced providing new rules to cut red tape for community based organisations. 

Background to the Act

 The Associations Incorporation Amendment (Review) Act 2016 was, according to the Second Reading Speech, the result of the statutory review of the Associations Incorporation Act 2009. The review of the Act was completed and tabled in both Houses of Parliament on 17 November 2015. The Act commenced on 1 July 2010, replacing the Associations Incorporation Act 1984. Objects for the legislation were introduced for the first time and the regulatory requirements for associations were modernised. The requirement for the Minister to review the Act is imposed by the Act itself. The purpose of the review was to determine whether the policy objectives of the Act remained valid and whether the terms of the Act remained appropriate for securing those objectives.

The review found that while the legislation continues to meet its policy objectives, it could be improved by making certain aspects of running an association clearer and more practical including the following recommendations:

• The first recommendation provided for limitations of rights and liabilities of members of an association;
• The second recommendation was to remove the failure to reserve a name as a ground for refusing a registration application;
• The third recommendation was to enable the secretary to change the association's name to its registration number where an association has failed to change its name as directed;
• The fourth recommendation was that if an association uses a model constitution, the constitution is updated whenever the model is amended;
• The fifth recommendation was to permit electronic voting when association members are voting remotely, provided this is permitted by the association's constitution;
• The sixth recommendation was to clarify that the official address of an association must be for the public officer—who is the official contact—and must be an address at which it is possible to serve documents on the association personally or by post;
• The seventh recommendation was to make explicit provision for two common law duties of the committee;
• The eighth recommendation was to include a ground where the registration of an association may be cancelled when it is in the public interest to do so;
• The ninth recommendation was to streamline the process for an association to cancel its registration;
• The tenth recommendation was to provide for the winding-up of an association on a certificate issued by the secretary in a manner comparable to the Co-operatives National Law (NSW);
• The eleventh recommendation was to amend schedule 1 of the Act to require that the association's constitution deal with winding up; and
• The twelfth recommendation is given effect by the amendment to schedule 1, which concerns the composition of an association's committee.

The Bill was passed with two amendments in the Legislative Council and was assented on 2 March 2016. In particular, other than some minor amendments in the Schedule, the majority of the amendments commenced on 1 September 2016.

Changes Made By the Act

According to the NSW Government Media Release, there are more than 35,000 incorporated associations registered in NSW.

Changes to the associations laws include amendments in the areas of:

• Registration of an association and change of an association's name;
• Official adddress of an association;
• Constitution and Model Constitution changes;
• Electronic ballots and postal ballots;
• Duties of committee members including duty of care and diligence and personal liability of committee members limited if acting in good faith;
• Financial records; and
• Fees

Many of these changes incorporate the recommendations made by the statutory review before the release of the Act.

Response from the Government

According to the NSW Government Media Release, the changes will ease the administrative burden on associations. NSW Fair Trading Commissioner Rod Stowe said:

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NSW Government - Finance, Services and Innovation Media Release

NSW Department of Fair Trading

Associations Incorporation Amendment (Review) Act 2016 (No. 1) and secondary materials, as reproduced on TimeBase LawOne