An incorporated association’s rules determine how the association operates and set out the rights and responsibilities of the association’s members and office holders.
The rules are also sometimes called a constitution or articles.
The rules form a contract between the members and the association. The members and the association are bound to follow the rules.
Considering an incorporated association structure for your organisation? Chances are you have already come across the term ‘model rules’.
But did you know that you do not have to use the model rules? Incorporated associations can choose to write their own rules.
Here are 5 things to consider when writing or amending your rules:
1. Tailored to objects and activities
If your constitution is not tailored to the particular objects, purposes and activities of your organisation, you can miss out on opportunities, including access to funding.
An association can alter its objects (see #5 below), but if you get these things right from the get-go, your organisation can hit the ground running.
We can help you to carefully draft or amend your objects to ensure greatest impact.
2. Comply with the law
Writing your own rules provides a great opportunity to ensure that your constitution suits your organisation. But remember, the law says you must address certain matters in the constitution. These matters differ from state to state and change from time to time.
In addition, the constitution cannot be inconsistent with the incorporated associations legislation in your state.
If the constitution does not address the minimum requirements set out in the legislation, the governing body in your state (Consumer and Business Services in South Australia, Consumer Affairs Victoria, NSW Fair Trading, etc.) will not approve the constitution or the amendments to the constitution. It is worth getting right.
3. Disputes, complaints and grievances
Disputes happen. Sometimes a particular member or faction of members may be causing trouble, leading to instability within the organisation. Spend time now to work out how your association will deal with any disputes that arise. You will save yourself a headache when someone makes a complaint down the track.
Your dispute resolution procedure should be clearly set out in your constitution.
We can suggest different options and help you to work out the procedure that is most appropriate for your organisation.
4. When the association ends
An incorporated association may be wound up and its remaining assets distributed.
In most cases, the constitution will require the organisation to pay the assets to non-profit organisations with identical or similar purposes and objects and will prohibit payment to members on winding up.
If you tailor your constitution, you can name particular organisations to be first in line to receive your organisation’s assets in the event that your organisation is wound up.
5. Changing the rules
To change the constitution of your incorporated association, you will need to pass a special resolution of members. Usually this means that 75% of members who attend a general meeting need to vote in favour of changing the constitution. There are also specific notice requirements to meet.
The governing body in your state must approve the change before it takes effect.
In all cases, you should look carefully at your constitution before trying to change any part of it. For example, your constitution may require a longer notice period, a higher majority to vote in favour of the change, or the consent of a third party before adopting a change.
How can we help?
We can help you to prepare a new constitution. We will tailor it to your organisation and comply with all legal requirements.
Already have a constitution? We can review and update it. Your constitution should be regularly reviewed to ensure it complies with any changes to the law and reflects how your organisation runs.
We will also help to guide you through the process of adopting the constitution and any amendments.
Call us on 1300 654 590 for help to prepare or update your incorporated association’s constitution.