This factsheet is current as of December 2019
Protecting community group members from personal liability.
This factsheet is intended as a plain English explanation of a particular area of law. Whilst all care has been taken in its preparation, it is not a substitute for legal advice as legal details have been omitted to provide a brief overview of this area of the law. If you require legal advice relating to your particular circumstances, you should contact EDO or your solicitor.
This fact sheet is the first in a three part series on incorporated associations. It outlines the main points an organisation or community group should consider in deciding whether or not to become ‘incorporated’. This fact sheet would be of particular use to groups or organisations set up to voice concerns over planning and developments (or to address other environmental issues) that are seeking greater legal protection and status. This factsheet applies to Queensland law only.
What is incorporation?
Community groups and organisations can generally be set up and run however the members of that group wish. Although the group may collectively decide its aims and objectives and how it will act in order to pursue those objectives, it is the individual members of the group that carry out the actions. Members are personally liable for their actions.
To protect members from being personally responsible for the legal consequences for action taken on behalf of the group, a group may wish to ‘incorporate’. Incorporation means the group will accept certain legal responsibilities and regulation on the way the group is run, but in return the group will receive its own separate legal identity. There are a number of benefits to having a separate legal identity, including a reduction in the individual risk to members when acting on behalf of the group.
A group can choose from a number of different legal structures through which to become incorporated, such as a ‘Pty Ltd’ Company, or an Incorporated Association. However, this fact sheet focuses on becoming an Incorporated Association, as this is a relatively straightforward and low-cost structure through which a group can receive the benefits of incorporation.
Should your group ‘incorporate’?
When you incorporate your association in Queensland by registering it with the Office of Fair Trading (OFT), it becomes a legally separate entity with the same powers as an individual. This provides the association with certain legal benefits but also imposes legal obligations and responsibilities. Incorporated Associations must comply with the Associations Incorporation Act 1981 and the related Regulations. Below are some of the main benefits and obligations that a group should take into account in deciding whether to incorporate.
- An Incorporated Association can buy and sell property, enter into contracts and appear in court, in its own name.
- An Incorporated Association and its members are legally separate – under normal circumstances this provides protection to the management committee from personal liability for the debts and liabilities of the Incorporated Association.
- As an Incorporated Association your group may find it easier to meet the requirements for grant funding (for example, by already holding the required insurances, or, by having your financial statements readily available in a standard format).
- In carrying out the actions of the Incorporated Association the members of the management committee must act in good faith and with due diligence – failure to do so can mean that members can be held personally liable.
- The financial affairs of your association will need to be audited or verified annually and financial statements lodged.
- Certain documents, such as your association’s rules, annual returns and financial statements are to be lodged with OFT; in addition, any member of the public can access copies of these documents.
To form an Incorporated Association, you must have at least 7 members, be ‘not for profit’ and have an address in Queensland.
Process for setting up an Incorporated Association
There are a number of steps required to become an Incorporated Association which are covered in Part Two of the factsheet series.
This factsheet is part one in a three-part series on Incorporated Associations in Queensland. You can access parts two and three below:
- Part Two: Forming an Incorporated Association
- Part Three: Running an Incorporated Association
The Office of Fair Trading has a
detailed online guide on incorporated associations available here.
 Associations Incorporation Act 1981 s25 (2)(b).
 Ibid s25 (2)(a).
 Ibid s21.
 Ibid s27.
 Ibid s5.
 Ibid s17(2).