Date Fast Approaching for Incorporated Associations to Update Rules


If you are an association that was incorporated under the Associations Incorporation Act 1987 (WA) (Old Act) then time is running out for you to update your rules. The reason is that the relatively new Associations Incorporation Act 2015 (WA) (New Act) is in force and pursuant to section 188 it now governs associations that were incorporated under the Old Act.

Under the New Act associations incorporated under the Old Act have until 30 June 2019 to ensure their rules are compliant with the New Act.

Requirements as to Content of Rules

Generally speaking the rules need to address and contain certain particulars as required by the New Act. These requirements are partly contained in section 22, but are more specifically set out in Schedule 1 to the New 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 New Act.

Exemptions

It is possible to seek exemption from compliance with section 22 by application to the Commissioner, being the person designated to that role by the Minister under section 153 of the New Act. However, it would be necessary to demonstrate special circumstances to obtain such an exemption.

Existing Rules made under the Old Act

If you have not updated your rules then currently your existing rules that were in force under the Old Act, will continue to be valid, but only up until 30 June 2019.

Section 198 of the New Act provides that the requirements to comply with section 22 and Schedule 1 do not apply until the expiry of 3 years after the commencement date. This makes the expiry date 30 June 2019.

Alteration of Rules

Generally speaking under section 30 of the New Act, you can only alter your rules by special resolution. However, up until 30 June 2019, the Management Committee can take advantage of section 200 of the New Act which allows the Committee, by resolution, to make alterations to their rules for the purpose of complying with section 22.

Alterations made under section 200 do not take effect unless they are approved by the Commissioner. The ability of the Management Committee to utilize or take advantage of section 200 will end after 30 June 2019.

Model Rules Apply if not Compliant

You may be wondering what will happen if your rules are not updated by 30 June 2019 to ensure compliance with section 22.

The answer can be found in section 201 of the New Act. In summary this section provides that if an association’s rules remain non-compliant with section 22 after 30 June 2019, then the Model Rules will apply as the rules of the association to the extent that the association’s rules are non-compliant.

This is likely to be a highly undesirable outcome as associations in this situation may have difficulty in determining what their rules actually are after 30 June 2019.  Basically, provisions of your existing rules that are compliant will remain so. However, where they are not compliant then those parts of the Model Rules relating to the non-compliant provision will apply in their place, but only to the extent of non-compliance. Also, if an association’s rules are silent on an area that is required to be included, then the Model Rules will again also apply to that area.

Recommendation

Consequently, it is highly recommended that associations incorporated under either the Old or New Act take steps to ensure their rules are compliant before 30 June 2019 by either developing a new set of rules, adopting the Model Rules or by using the Model Rules but with your own changes or modifications. The Model Rules can be found in Schedule 2 to the Associations Incorporation Regulations 2016 (WA).

For more information on this article or any other Associations Incorporation Act matter please contact Brenton Oakley or Philip Mavor on (08) 9321 3755.

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.