This is the second of a series of legal updates that Kott Gunning is producing throughout 2016 on the key features and reforms under the new Associations Incorporation Act 2015 (WA) (Act).
This instalment will deal with the Rules of Incorporated Associations.
Effect of Rules
The rules of an association bind both the association and each member as if there was an executed written agreement between the members.
Requirements as to Content of Rules
Generally speaking the rules need to address and contain certain particulars as required by the Act. These requirements are partly contained in section 22, but are more specifically set out in Schedule 1 to the Act. Some examples as to what matters need to be addressed in the rules are:
- name and objects of the Association;
- qualifications for membership;
- register of members, entrance and subscription fees;
- membership and powers of the Management Committee;
- election, term of office, record keeping, quorum and meeting procedures for the Management Committee;
- the quorum and procedure for general meetings;
- time for notices of general meetings and motions, time intervals between meetings;
- the manner in which funds are controlled;
- the manner for altering or rescinding the rules;
- custody and use of the common seal and the books and securities;
- dispute resolution procedures; and
- must include a statement that the property and income of the association must be applied solely to achieve its objects or purposes and not be distributed to its members, except in good faith in the promotion of its objects or purposes.
The second point to note about the rules is that they must otherwise be consistent with the Act.
An association may develop its own rules, adopt the Model Rules, or use the Model Rules but with its own changes or modifications.
It is possible to seek exemption from compliance with section 22 by application to the Commissioner. It would be necessary to demonstrate special circumstances to obtain such an exemption.
The Act requires that Regulations be made to prescribe the Model Rules.
Existing Rules made under the old Act
Upon commencement of the Act any existing rules that were in force under the old Act will continue to be valid.
Pre-existing rules may be varied in accordance with provisions in the Act allowing variation.
Rules failing to address Schedule 1 matter
If an association develops its own rules, and in doing so fails to address a matter required under Schedule 1 then the Model Rules will apply to the extent required.
Adopting Model Rules
An association can adopt the Model Rules at any time after its incorporation under the Act by special resolution.
Upon adoption of the Model Rules an association must notify the Commissioner and include in the notification the following information:
- the name of the association;
- the objects or purposes of the association;
- the quorum for a general meeting of members of the association;
- the quorum for a meeting of the management committee of the association;
- if relevant, the period of the first financial year of the association.
Alteration of Rules
An association can alter its rules but only by special resolution.
The association must lodge the following documents with the Commissioner within one month of making such a special resolution:
- a notice of the special resolution setting out the alterations;
- a certificate in approved form; and
- a consolidated copy of the rules incorporating the alterations.
An association is liable to a penalty of $1,000.00 for a failure to comply.
Change of name by Alteration of Rules
An association can change its name by using the process for Rule alteration, but the change will not take effect unless and until the Commissioner approves the change.
The Commissioner can require publication of the proposed name change prior to approving same.
Provision of Rules to Members
An association must keep and maintain an up-to-date version of its rules and is liable to a penalty of $2,750 for a failure to do so.
On application by a member an association must make a copy of the rules available for inspection, and must allow the member to make a copy of an extract or the entire rules if required. There is a penalty provision of $2,750 for a failure to allow a member the right to inspect.
A member does not have the right to remove the rules for the purpose of copying them.
An association must also and in any event provide a copy of the rules to a member upon request and give to each person who becomes a member a copy of the rules as in force at the time of commencement of their membership. The association may not charge the member for taking any action in compliance. There is a penalty provision of $2,750 for a failure to comply.
The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.