Should our not-for-profit association become incorporated, or seek other legal status?
Once an association is registered, members will have no longer have personal liability for the association’s debts (with limited exceptions).
An association once incorporated becomes a separate legal entity from its members.
It will be capable of perpetual succession.
In the case of an incorporated society, a charitable trust or a charitable company, as its Constitution or trust deed must meet minimum requirements laid down by either the Incorporated Societies Act 1908, the Trustee Act 1956 or the Companies Act 1993 there is some assurance as to the way the organisation’s affairs will be conducted.
In the case of an incorporated society, members can have no individual claim on the property of the society (except where its Rules state that surplus assets are to be distributed to members when the society puts itself into liquidation). This is an issue when charitable registration is being considered.
Which legal structure? Members of an association or club should consider whether an incorporated society or some other legal structure would be the most suitable for their organisation. We can advise on the advantages and disadvantages of various structures.
What are appropriate activities for an incorporated society? An incorporated society may do anything, provided its activities are:
lawful
not for the financial gain of members
authorised by the objects in its Rules
What is ‘pecuniary gain’ to members, and why is it an issue?
In the case of an incorporated society profits made from the society’s activities may not be distributed to a member.
