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Rules for an Unincorporated Association

Last revision Last revision 12/04/2024
Formats FormatsWord and PDF
Size Size12 to 18 pages
4.7 - 33 votes
Fill out the template

Last revisionLast revision: 12/04/2024

FormatsAvailable formats: Word and PDF

SizeSize: 12 to 18 pages

Rating: 4.7 - 33 votes

Fill out the template

These rules can be used as the governing rules for an unincorporated association. They set out a variety of guidelines, such as how the unincorporated association will operate, the purpose for which it will operate, how members can join the association, and how the association will make decisions.

In Australia, unincorporated associations are most commonly used for charitable purposes. However, they can also be used for other purposes, such as a community group to lobby the local government in relation to a particular issue, or for sporting teams.

Whether or not an unincorporated association structure is appropriate will depend on the individual circumstances of the people involved, and what they are seeking to achieve. If in doubt, seek legal advice.

Once it is decided that an unincorporated association is the appropriate structure, these rules provide a quick and easy way to get the association organised and working towards its objective.

What's the difference between an unincorporated association and a company?

Unincorporated associations are not actually distinct legal entities in the way that companies are. Instead, they are simply a group of people, who associate, for a particular purpose. Compared to a company, an unincorporated association is more cheap and simple to set up and to run. However, there are also a number of disadvantages to the unincorporated association structure. In particular, an unincorporated association does not protect the members against legal liability. Therefore, for example, if somebody is injured on a property that is controlled by the association, or at an event that is run by the association, and that person sues the association, then the members of the association may be personally liable. In comparison, if that same person sued a company, then the liability would be limited to the assets of the company (and individual members or shareholders would not be personally liable).

In some cases, unincorporated associations can also face difficulties when dealing with third parties. Because the association is not a separate entity, but is effectively just a group of people who have associated, if the association wants to enter some kind of agreement with a third party (for example, to rent a building, or borrow some money), the members themselves will have to enter the agreement. In some cases, this can raise problems. For example, banks may be reluctant to lend money to the association.

If an unincorporated association makes a profit, how these profits are shared among its members largely depends on the rules of the association. Many unincorporated associations are not-for-profit entities, meaning that any profits are usually reinvested into the association to further its goals rather than being distributed to members. It's important to note, however, that the Australian Taxation Office (ATO) may have specific tax implications for members receiving profit distributions from an unincorporated association. Members may be taxed on their share of the profit, depending on the nature of the profits and the tax status of the individual members.

How to use this document

The people who propose to become the first members of the association should come to an agreement about how the association will operate.

If the people involved want to reach an informal agreement about what is being proposed, before finalising the details of these rules, then they may consider using our Memorandum of Understanding document. It is an informal document which is intended as a starting point, as it enables them to set out the preliminary understanding between one another, and can help them to work towards a more detailed final set of rules.

In some cases, once a first draft of these rules has been prepared, it may also work to provide the relevant people with a draft of the rules so that they can make sure that they understand them.

Once the first members are in agreement about the rules and how the association will operate, then those first members should sign the rules, and provide their names and addresses.

If the association is going to operate as a charity, then there may be additional requirements for it to meet, including registering as a charity with the Australian Charities and Not-for-profits Commission.

Applicable law

The rules form a contract between the members and therefore the principles of contract law as they relate to unincorporated associations will apply.

If the association holds assets then, as previously discussed, those assets will actually be held by the members of the association. If a member or several members hold an asset on behalf of the association, then according to law, those members may be considered to hold the asset on trust for other members of the association. In this case the principles of trusts law may also apply.

If the association operates as a charity, then charities law, including the Australian Charities and Not-for-profits Commission Act 2012 (Commonwealth) may also apply.

If the association collects personal information from members, then privacy law may also apply. This may but is not limited to) the Privacy Act 1988 (Commonwealth) and the Privacy Amendment (Enhancing Privacy Protection) Act 2012 (Commonwealth).

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