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1
Associations Incorporation and Other Legislation
Amendment Bill 2006
Associations Incorporation And Other
Legislation Amendment Bill 2006
Explanatory Notes
Title of the Bill
Associations Incorporation and Other Legislation Amendment Bill 2006.
General Outline
Background
The Associations Incorporation and Other Legislation Amendment Bill
2006 (the Bill) amends the Associations Incorporation Act 1981 (the AI
Act) and the Classification of Computer Games and Images Act 1995 (the
CCGI Act) and the Classification of Publications Act 1991 (the CP Act).
The AI Act, which commenced in 1982, provides a simple and inexpensive
mechanism for non-profit groups to incorporate. In Queensland, there are
now approximately 20,000 registered associations. These include social
and sporting clubs, artistic societies, groups with religious, patriotic and
political interests, professional associations, charitable organisations and
youth, voluntary and community groups. They range from small, locally
based organisations comprised entirely of volunteers, to licensed clubs
staffed by professional managers with annual financial turnover of close to
$30M.
While incorporation under the AI Act is not compulsory, those
organisations which elect to incorporate obtain a number of benefits. For
example, an association incorporated under the Act is a separate legal
entity and therefore it has all the powers of an individual and is legally able
to do things in its own name such as own property, enter a lease or sue or be
sued. The personal liability of the association's members and management
committee is also limited.
However in addition to the benefits that can be gained from incorporation,
there are a number of corresponding obligations. For example, application
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Associations Incorporation and Other Legislation
Amendment Bill 2006
fees must be paid, and associations must provide the Office of Fair Trading
(OFT) with annual returns and audited financial statements. Associations
must also comply with various provisions in the AI Act which regulate
their administration, and are required to take out public liability insurance.
Review of the AI Act
The review of the AI Act commenced in 2003. In February 2005, a public
consultation paper titled "Review of the Associations Incorporation Act
1981" was released. Some 280 stakeholders responded to an invitation to
express their views on a wide range of issues facing non-profit
organisations in Queensland.
The review found that while incorporation under the AI Act has been
popular, and the number of associations has steadily increased, there are
concerns with aspects of the AI Act's operation.
These include:
(1 eligibility for incorporation - issues arise in determining whether
associations are genuinely established for non-profit purposes;
(2) types of associations - the changing profile of associations means
those with significant financial turnover require increased
monitoring and regulation beyond the scope of the current Act;
(3) dispute resolution - associations and their members often
experience difficulty in resolving internal disputes. (Resolving
issues in the Supreme Court which has jurisdiction to deal with
such disputes can be expensive);
(4) conflicts of interest issues arise with committee members
voting on contracts which benefit them directly;
(5) public liability insurance some associations find it difficult to
obtain insurance due to the cost of premiums or cover no longer
being available; and
(6) reporting and auditing requirements - reporting requirements can
impose an unjustifiably heavy burden on smaller associations.
Because of the complexity associated with issues (1) to (4), amendments to
the AI Act are being progressed in two stages. This will facilitate the earlier
passage of amendments in relation to issues (5) and (6) together with other
minor amendments.
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Policy Objectives of the Bill
The key policy objectives of the Bill are to address:
· Mandatory public liability insurance some associations are
unable to obtain public liability insurance due to the cost of
premiums, or cover no longer being available.
· This is addressed by removing the mandatory requirement for
associations to take out public liability insurance. As a safeguard
associations will be required to investigate the need to take out
public liability insurance and report their decision to all members
and inform other parties that might be affected.
· The mandatory public liability insurance requirement has been
retained for associations that hold land on trust under the Land
Act 1994 because this requirement was key to the basis upon
which such land was granted. It has also been retained for
associations that own or lease land. These associations are
generally larger associations which would be likely to take out
public liability insurance as a result of conducting a risk
assessment of the need for such cover.
· Reporting and auditing requirements - smaller associations are
experiencing high costs in complying with the reporting and
auditing requirements under the AI Act.
· This is addressed by introducing a `tiered system' of reporting
relieving associations with total income and current assets of less
than $100,000 from full audit and reporting requirements. Some
15,000 community based associations are likely to benefit from
reduction of the current requirements of the AI Act.
The Bill is considered to be a reasonable and appropriate way of achieving
the objectives and will reduce the financial burden on smaller associations.
Other amendments
The remaining amendments will have the potential to reduce disputes
between members of an association, improve compliance with the Act and
address simple anomalies in the Act.
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Classifications Acts
Amendments to the Classifications Acts will address an incorrect reference
in the CCGI Act as a result of amendments to Commonwealth legislation
and allow for evidentiary certificates in certain circumstances under the CP
Act.
Consistency with Fundamental Legislative Principles
The proposal to allow delegation of the chief executive's power to grant or
refuse an application to use an unsuitable name or to exempt an association
from using the word `incorporated' allows the delegation of legislative
power. This delegation of legislative power is justified as it will
significantly simplify the operation of the Act. There is also no intention to
waiver from present Departmental policy to recommend the granting of an
exemption only in limited circumstances.
The proposal to amend section 32 of the Classification of Publications Act
1991 to allow evidentiary certificates to be used where a publication was
not classified prior to the date of its sale may be interpreted as having some
retrospective effect. The Classification of Films Act 1991 and the
Classification of Computer Games and Images Act 1995 already allows
evidentiary certificates to state that a film or computer game would, if
classified, have been classified as a stated classification. The amendment is
justified because it corrects an anomaly in that many publications may also
be classified after the date of an offence, (ie after being seized by
inspectors) and simply allows the use of evidentiary certificates in such
circumstances.
Administrative cost to Government
It is not expected that the proposed amendments will create any additional
costs in administering the AI Act.
Consultation
Government
All agencies were sent a copy of the consultation paper. Agencies were
also provided with copies of the policy submission prior to Cabinet
consideration in April 2006. Targeted consultation with key agencies was
undertaken during the drafting of the Bill.
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Community
A public consultation paper released in February 2005 provided an
opportunity for stakeholders to express their views about a wide range of
issues facing non-profit organisations in Queensland. The consultation
paper attracted some 280 submissions which have been analysed and
considered as part of the review of the AI Act. The AI Act review has also
been informed by a range of other correspondence and representations
from stakeholders on issues facing associations.
Targeted consultation with the key stakeholder groups was undertaken
during the drafting of the Bill. These groups included: Clubs Queensland,
Queensland Council of Social Service Inc., Surf Life Saving Queensland,
the Centre of Philanthropy and Nonprofit Studies, Queensland University
of Technology and the Queensland Law Society.
Results of Consultation
The key stakeholder groups generally support the Bill.
Notes on Provisions
Part 1 Preliminary
Clause 1 short title
Clause 1 is the short title of the Associations Incorporation and Other
Legislation Amendment Act 2006.
Clause 2 Commencement
Clause 2 provides that the Act will commence on proclamation.
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Part 2 Amendment of Associations
Incorporation Act 1981
Clause 3 Act amended in pt 2 and schedule
Clause 3 identifies the AI Act as the Act being amended by part 2 and the
schedule.
Clause 4 Insertion of new s 1B
1B Act prevails if association's rules are inconsistent with Act
Clause 4 amends Part 1 Division 2 Interpretation by inserting a new
section 1B to make it clear that if a rule of an association is inconsistent
with the AI Act the AI Act prevails to the extent of the inconsistency.
This provision has been inserted as changes to the AI Act may mean that
some associations have rules that are inconsistent with new provisions in
the AI Act. For example, Schedule 3 of the Associations Incorporation
Regulation 1999 requires the rules of an association to prescribe the
quorum size for a general meeting, and such rules may be inconsistent with
the minimum quorums for general meetings prescribed in the new section
57A.
Clause 5 Amendment of s 2 (Definitions)
Clause 5 amends the definitions section of the AI Act by relocating
definitions to the Schedule to the AI Act and providing for the following
new definitions:
Accountant;
Approved person;
Auditor;
Current assets;
End date;
Financial document;
Financial statement;
Financial year;
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Level 1 incorporated association;
Level 2 incorporated association;
Level 3 incorporated association;
Nominated address;
Reportable financial year; and
Total revenue.
Clause 6 Amendment of s 6 (Association may resolve
to incorporate and adopt proposed rules)
Clause 6 amends section 6 which provides that an association may resolve
to incorporate and adopt proposed rules.
New section 6(1) is amended by deleting `special resolution' and providing
that an association may decide to incorporate under the AI Act by passing a
resolution by the votes of at least ¾ of the association's members who are
present and entitled to vote on the resolution.
This amends an anomaly. A decision to incorporate requires the passing of
a simple resolution, however special resolutions can not be passed until an
association is incorporated. Once incorporated, if an association wishes to
pass a special resolution, the provisions of section 3 of the AI Act must be
complied with.
Clause 7 Amendment of s 12 (Chief executive to make
decision about application)
Clause 7 amends section 12 which gives the chief executive the power to
make a decision about an application by an association for incorporation.
New subsection (2) to section 12 makes it clear that the chief executive
may refuse an application for incorporation if the chief executive is
satisfied that the proposed rules of the association do not comply with the
AI Act. This clarifies uncertainty on this point.
Clause 8 Amendment of s 16 (Register of
incorporated associations)
Clause 8 amends section 16 which provides for the keeping of a register by
the chief executive of incorporated associations.
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Associations Incorporation and Other Legislation
Amendment Bill 2006
The amendment to section 16 removes the requirement for the register to
include the address of the association's registered office in section 16(2)(b).
Instead the register is to contain the association's nominated address. The
need for a registered office is unnecessary as there is no requirement in the
AI Act that documents be served at the registered office of an association,
nor that any of the association's documentation must be kept there.
New section 16(3) provides that the register must include copies of the
association's financial documents as lodged pursuant to an association's
financial reporting requirements under new part 6 division 2 of the AI Act.
This will clarify that these documents will be available in the register for
inspection under section 18 of the AI Act.
Clause 9 Insertion of new s 16A (Use of information
on register)
Clause 9 amends section 16 which provides for the keeping of a register by
the chief executive of incorporated associations by inserting a new section
16A.
New section 16A(1) prevents the use of information obtained from the
register to contact or send material to an association or member or to
disclose such information to someone else, knowing that it is likely to be
used in advertising for political, religious, charitable or commercial
purposes.
An example for subsection (1) is putting a person's name and address on a
mailing list for advertising material.
New section 16A(2) states that subsection (1) does not apply if the use or
disclosure of the information is approved by the association.
The amendment is aimed at prohibiting access to the register for direct
marketing purposes.
Clause 10 Amendment of s 17 (Registered office)
New heading (Nominated address for
service)
Clause 10 amends section 17(1) which provides that associations must
have a registered office. This requirement has been replaced by a
requirement to nominate an address for the service of documents. The
requirement to have a registered office is considered an unnecessary burden
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Associations Incorporation and Other Legislation
Amendment Bill 2006
as no documents are required by the Act to be kept there and the current
service provision in section 138 of the Act makes no reference to service at
a registered office.
New section 17(1) provides that the management committee of an
association must ensure the association has a `nominated address' for
service of documents and must give the chief executive written notice of
the nominated address.
Section 17(2) and the example have been amended by replacing `registered
office' with `nominated address'.
Section 17(4) has been amended to provide that members of the
management committee may change the association's nominated address
by giving the chief executive notice in the approved form.
Clause 11 Amendment of s 18 (Inspecting register)
Clause 11 amends section 18 which provides for inspection of the register
on payment of a fee by inserting a new subsection (2A).
New section 18(2A) allows the chief executive to withhold information
about the association or a member if the chief executive has reasonable
grounds for believing the disclosure would put the association or member
at risk of harm.
Examples of such information are: the address of a women's refuge or the
address of a member of an association who is a party to a domestic
violence order.
The amendment will enable the chief executive to withhold information
about the association or a member in certain circumstances.
New section 18(2A) has been renumbered as section 18(3) and section
18(3) has been renumbered section 18(4).
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Clause 12 Amendment of s 29 (Name of incorporated
association to include `incorporated' etc.)
New heading (Incorporated association's
name to include `incorporated' and be in
English characters)
Clause 12 amends section 29 which provides that an incorporated
association must have the word `incorporated' or `inc' as part of and at the
end of its name.
Section 29 has been amended to provide a new subsection (3) requiring the
association's name to be in English characters. This amendment will ensure
that persons dealing with an association understand which association they
are in fact dealing with.
Clause 13 Amendment of s 32 (Name of incorporated
association to appear on documents)
Amended heading (Registered name of
incorporated association to appear on
documents)
Clause 13 amends the heading of section 32 by inserting the word
`registered' before the word `name' and by providing that an association
must ensure that documents which the association endorses or issues have
the association's name in legible English characters. Currently some
associations choose to use a name other than the one registered. To ensure
that persons dealing with the association are not misled, the registered
name in legible English characters must appear on any official documents.
Clause 14 Replacement of s 54 (Form in which rules
must be kept)
Clause 14 replaces section 54 which provides for the form in which rules
must be kept.
New section 54(1) provides that an association's rules, as lodged with the
chief executive or a copy given to someone must be set out in printed
legible form.
New section 54(2) provides that if an association's rules are not written in
the English language, a translation of the rules into English, certified by a
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Associations Incorporation and Other Legislation
Amendment Bill 2006
person to be a correct translation, must accompany any copy of the rules
given to someone.
New section 54(3) provides that no offence is committed against subsection
(2) if a translation of the rules is not required.
The amendment is consistent with the Corporations Act 2001, and with
court requirements that documents written in a language other then English
must be accompanied by a certified translation. The amendment also
complements the amendment to section 130 of the Act.
Clause 15 Replacement of ss 55 and 56
New headings
s 55 (Annual general meetings)
s 56 Rules may allow meetings using
communication technology)
Clause 15 replaces section 55 and section 56. Section 55 provides that the
first annual general meeting of an association must be held within 18
months and section 56 provides for subsequent annual general meetings.
New section 55 provides that an association must hold an annual general
meeting within 6 months after the end of the association's reportable
financial year.
New section 56 provides that an association may make rules regarding the
holding of meetings by the use of any technology that reasonably allows
members to hear and take part in discussions as they happen, for example,
by the use of teleconferencing technology. A person who participates in
such a meeting is taken to be present at the meeting.
New section 55 simplifies and consolidates both section 55 and section 56
by providing in one provision when annual general meetings are to be held.
The amendment of section 55, together with a definition for reportable
financial year will clarify when financial statements must be lodged.
New section 56 takes into account improvements in technology and enables
associations to take advantage of modern means of communication.
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Clause 16 Amendment of s 57 (General meetings)
New heading (Management committee to
ensure association complies with its rules
for meetings)
Clause 16 provides a new heading for section 57 and deletes section 57(3)
which provides that if an association makes decisions in breach of its rules
about quorums for the meeting, the decisions have no effect. The provision
simply provides a new heading for section 57 to reflect the obligations of
the management committee in relation to the calling and holding of
meetings which must comply with the association's rules. Section 57(3) has
been reworded and inserted into new subsection 57A(3) and minimum
quorums are provided for in new subsections 57A (1) and 57A(2).
Clause 17 New subsection 57A (Minimum quorum for
general meetings)
Clause 17 amends section 57, which makes provisions in relation to
general meetings, by inserting two new subsections.
New subsection 57A (1) provides a minimum quorum for a general meeting
of at least the number of members elected or appointed to the association's
management committee at the close of the association's last general
meeting plus one.
New subsection 57A(2) provides that if all members of the association are
members of the association's management committee, the quorum is the
total number of members less one.
New subsection 57A(3) provides that if a decision is made at a general
meeting for which there is no quorum the decision has no effect.
These amendments are intended to address the inadequacy of existing
provisions concerning quorums at general meetings. The Model Rules
prescribe the quorum for a general meeting to be double the number of
members of the association who are on the management committee plus
one other member (clause 28 of the Model Rules). The review of the Act
revealed that in many cases where an association has a small number of
members, the majority of those members are on the association's
management committee, and as such the association is unable to make up
the prescribed quorum.
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Associations Incorporation and Other Legislation
Amendment Bill 2006
New subsection 57A(1) will overcome this problem. In addition new
subsection 57A(2) will accommodate situations where not all the members
are able to attend a general meeting.
New subsection 57A(3) provides that any decisions made at a general
meeting for which there is no quorum will have no effect.
New subsection 57B (Inspection of minutes)
New subsection 57B(1) provides for inspection of minutes for a particular
general meeting. The association's secretary must, within 28 days after a
request by a member is made, make the minute book for a particular
meeting available for inspection at a mutually agreed time and place and
give the member copies of the minutes.
New subsection 57B(2) provides that the association may require the
member to pay the reasonable costs of providing the material.
As access to minutes of meetings can be a cause of disputes within
associations this new provision will enable members to access minutes of
general meetings and obtain copies of those minutes.
Clause 18 Replacement of pt 6, div 2 (Audits)
Division 2 Financial reporting for incorporated
associations
Clause 18 replaces Part 6 division 2 with new financial reporting
requirements.
Section 58 Definitions for div 2
New section 58 contains the following definitions for Division 2:
Accountant;
Approved person;
Auditor;
Current assets;
End date;
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Level 1 incorporated association;
Level 2 incorporated association;
Level 3 incorporated association; and
Total revenue.
Definition of current assets
Current assets of an association are defined to mean the assets held by the
association as at the end of the association's last financial year, other than
real property or assets capable of depreciation, and includes amounts held
in financial institutions, stocks and debentures.
Examples of assets capable of depreciation are vehicles and office
equipment.
The intention of this section is to only capture assets that are readily
realisable.
Definition of total revenue
Total revenue of an association is defined to mean the association's total
income during the last financial year from all the association's activities
before any expenses, including the cost to the association of goods sold by
the association, are deducted.
The intention of this section is to take into account all income of the
association without deducting any expenses such as the cost to the
association of acquiring goods sold by the association or any other
expenses associated with generating the association's income, for example
rent. The term `total income' has been used instead of the term `gross
income' as `gross income' is often understood to mean "sales revenue less
cost of goods sold" and this is not the intention of the definition.
Section 58A Meaning of reportable financial year
New section 58A provides the meaning for an association's reportable
financial year as being calculated either from the time of incorporation or
from the time an association changes its financial year. A reportable
financial year will never be less than 3 months or more than 15 months.
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Associations Incorporation and Other Legislation
Amendment Bill 2006
Section 59 Level 1 incorporated associations and
particular level 2 and 3 incorporated
associations
New section 59(1) states that the section applies to a level 1 incorporated
association and particular level 2 and 3 incorporated associations. The
particular level 2 and 3 associations are those that are required to have an
audit conducted under the Collections Act 1966, the Gaming Machine Act
1991 or under any law for any other purpose.
New section 59(2) provides that within six months after the end of each
financial year the management committee of a level 1 incorporated
association and a level 2 and 3 association to which new section 59 applies
must prepare a financial statement for its last reportable financial year (see
section 58A for meaning of reportable financial year). A level 1 association
must have that statement audited by an auditor or an accountant. A level 2
or 3 association can have their financial statement audited by either an
auditor, an accountant or an approved person (see section 58 for definition
of accountant, approved person and auditor). All associations must
present the financial statement and the signed report on the audit to the
association's annual general meeting for adoption.
New section 59(3) provides that within one month after the financial
statement and the signed report on the audit are presented to the
association's annual general meeting, a copy of the financial statement (as
adopted, signed and dated by the president or treasurer of the association)
must be lodged with the chief executive. If the financial statement is not
adopted then the statement as presented to the meeting (signed and dated
by the president or treasurer of the association) must be lodged. In
addition, a copy of the signed auditor's report, a return in the approved
form and the fee prescribed under a regulation must also be lodged.
New section 59(4) provides that if subsection (3) is not complied with, the
secretary, president and treasurer of the association commit an offence.
New section 59(5) provides that a person must not audit a financial
statement if the person is (a) the secretary or a member of the management
committee, (b) an employee of the association, (c) a partner, employer, or
employee of the secretary, or a partner, employer or employee of a member
of the management committee, of the association, (d) a spouse of a person
mentioned in (a), (b) or (c), or a person who is wholly dependent on a
person mentioned in (a), (b) or (c).
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Associations Incorporation and Other Legislation
Amendment Bill 2006
New section 59(6) provides that a person who is a partner in an
unincorporated body must not audit a financial statement if subsection (4)
prohibits any of the partners of the unincorporated body from auditing the
financial statement.
Example for section 59(6)
"A" and "B" are partners in an accounting firm. "A" can not conduct an
audit because, under subsection (4)(a), "A" is a member of the
association's management committee. "B" also can not conduct an audit
because of subsection (5).
The requirement for level 1 associations to provide audited financial
statements continues current requirements under the AI Act with some
minor changes to detail. Because some government agencies rely on
associations to provide audited financial statements to qualify for
assessment under funding programs, associations which would otherwise
fall under the lesser reporting requirements for level 2 and 3 associations
will be required to also provide audited statements. These include
associations that are required to have an audit conducted under the
Collections Act 1966, the Gaming Machine Act 1991 or under any law for
any other purpose. Any law for any other purpose would normally be to
satisfy a requirement under a funding agreement with another government
agency, for example, the Department of Local Government, Planning,
Sport and Recreation, the Department of Housing and the Department of
Emergency Services.
The current discretion in the AI Act allowing the chief executive to approve
a person with the necessary experience and qualifications to conduct the
audit has been retained. This will enable the Office of Fair Trading to
continue to approve such persons who will otherwise be qualified but may
no longer be a member of the different accounting bodies under the
definition of an "approved accountant."
Section 59A Other level 2 incorporated associations
New section 59A(1) states that the section applies to a level 2 association
that is not required to have an audit conducted under the Collections Act
1966, the Gaming Machine Act 1991 or under any law for any other
purpose.
New section 59A(2) provides that within six months after the end of each
financial year, a level 2 incorporated association must prepare a financial
statement for its last reportable financial year (see section 58A for meaning
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Associations Incorporation and Other Legislation
Amendment Bill 2006
of reportable financial year) and present that statement to the association's
annual general meeting for adoption, together with a further statement
signed by an auditor, an accountant or an approved person (see section 58
for definition of accountant, approved person and auditor) that states that
the person has sighted the association's financial records and the records
show the association has bookkeeping processes in place to adequately
record the association's income and expenditure and dealings with its
assets and liabilities.
New section 59A(3) provides that within one month after the financial
statement and the statement signed by an auditor or an approved accountant
or a person approved by the chief executive (as required under new
subsection 59A(2)(b)) are presented to the association's annual general
meeting, a copy of the financial statement (as adopted, signed and dated by
the president or treasurer of the association) must be lodged with the chief
executive. If the financial statement is not adopted then the statement, as
presented to the annual general meeting (signed and dated by the president
or treasurer of the association), must be lodged. In addition a copy of the
statement signed by the registered auditor or the approved accountant, or a
person approved by the chief executive as having the necessary experience
or qualifications to provide the statement, (as required under new
subsection 59A(2)(b)(ii)) a return in the approved form, and the fee
prescribed under a regulation must be lodged.
New section 59A(4) provides that if subsection (3) is not complied with the
secretary, president and treasurer of the association commit an offence.
New section 59A (5) provides that a person must not sign the statement if
the person is (a) the secretary or a member of the management committee,
(b) an employee of the association, (c) a partner, employer, or employee of
the secretary, or a partner, employer or employee of a member of the
management committee, of the association, (d) a spouse of a person
mentioned in (a), (b) or (c), or a person who is wholly dependent on a
person mentioned in (a), (b) or (c).
The lesser reporting requirements for other level 2 associations means they
will not have to provide audited financial statements. They will only have
to provide a statement signed by an auditor or an approved accountant (as
defined in the AI Act) or by a person approved by the chief executive as
having the necessary experience or qualifications, stating that the person
has sighted the association's financial records which show that the
association has bookkeeping processes in place to adequately record the
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Associations Incorporation and Other Legislation
Amendment Bill 2006
association's income and expenditure and dealings with its assets and
liabilities.
Again the chief executive will have discretion to approve a person with the
necessary experience and qualifications to provide the statement. This will
enable the Office of Fair Trading to continue to approve such persons who
will otherwise be qualified but may no longer be a member of the different
accounting bodies under the definition of an "approved accountant."
Section 59B Other level 3 incorporated associations
New section 59B(1) states that the section applies to a level 3 association
that is not required to have an audit conducted under the Collections Act
1966, the Gaming Machine Act 1991 or under any law for any other
purpose.
New section 59B(2) provides that within six months after the end of each
financial year a level 3 incorporated association must prepare a financial
statement for its last reportable financial year (see section 58A for meaning
of reportable financial year) and present that statement to the association's
annual general meeting for adoption together with a further statement,
signed by the association's president or treasurer, that the association keeps
financial records in a way to properly record the association's income and
expenditure and dealings with its assets and liabilities.
New section 59B(3) provides that within one month after the financial
statement and the statement signed by the association's president or
treasurer (as required under new subsection 59B(2)(b)) are presented to the
association's annual general meeting, a copy of the financial statement (as
adopted, signed and dated by the president or treasurer of the association)
must be lodged with the chief executive. If the financial statement is not
adopted then the statement, as presented to the meeting (signed and dated
by the president or treasurer of the association) must be lodged. In
addition, a copy of the statement signed by the association's president or
treasurer (as required under new subsection 59B(2)(b)(ii)), a return in the
approved form, and the fee prescribed under a regulation must be lodged.
New section 59A(4) provides that if subsection (3) is not complied with the
secretary, president and treasurer of the association commit an offence.
The lesser reporting requirements for other level 3 associations means they
will not have to provide audited financial statements. They will only have
to provide a statement signed by the association's president or treasurer that
states the association keeps financial records so as to properly record the
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Associations Incorporation and Other Legislation
Amendment Bill 2006
association's income and expenditure and dealings with its assets and
liabilities. As there is no mandatory involvement of an auditor or an
approved accountant for other level 3 associations there is no need for any
discretion in the chief executive to approve a person who would otherwise
be qualified to perform that work.
Section 59C Inspection of financial documents
New section 59C makes provision for inspection of financial documents by
a member of an association. New section 59C(1) provides that the
association's secretary must, within 28 days after a request by a member of
the association, make the association's financial documents available for
inspection at a mutually convenient time and place and give the member
copies of the documents.
New subsection 59C(2) provides that the association may require the
member to pay the reasonable costs of providing copies of the documents.
As access to financial documents can be a cause of disputes within
associations this new provision will enable members to access and obtain
copies of those documents directly from their association rather than
having to resort to inspecting the register under section 18 of the AI Act,
although that will still be possible.
Section 59D Defence
New section 59D provides a defence to a prosecution for an offence against
a provision in respect of the financial reporting requirements. The defence
enables a member to prove that the member took all reasonable steps to
ensure the provision was complied with.
As some associations may occasionally find it difficult to determine which
level they come within to comply with the new `tiered reporting'
requirements, this provision has been inserted to provide protection to a
member in the event of a prosecution for failing to comply with the
reporting requirements. The section gives a member the opportunity to
prove that he/she took all reasonable steps to ensure the provision in
respect of the financial reporting requirements was complied with.
Section 59E Approved person
New section 58 defines an approved person to mean a person approved by
the chief executive under section 59E.
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New section 59E provides that the chief executive may approve a person as
an approved person if satisfied the person has the necessary experience or
qualifications to conduct an audit under new section 59 or to provide a
signed statement mentioned in new section 59A(2)(b)(ii).
Clause 19 Amendment of s 62 (Election of
management committee)
Clause 19 amends section 62 which provides for the election of members
of the management committee and that the rules of an association may
permit the management committee to fill a casual vacancy on the
management committee, by adding a new subsection (3).
New section 16 (3) defines `casual vacancy' to mean a vacancy which
happens when an elected member of the management committee resigns,
dies or otherwise stops holding office.
This amendment has been made to clarify the circumstances in which a
`casual vacancy' may arise.
Clause 20 Amendment of s 63 (Meetings of
management committee)
Clause 20 amends section 63, which provides for meetings of the
management committee, by deleting subsection (2) which provides for the
holding of meetings by telephone, video link or another form of
communication.
Clause 21 Insertion of new s 63A
63A Meetings by using communication
technology
Clause 21 amends section 63, which provides for meetings of the
management committee, by inserting a new section 63A.
New section 63A(1) provides that the management committee may hold
meetings, or permit members to take part in its meetings, by using any
technology that reasonably allows members to hear and take part in
discussions as they happen and provides the example of `teleconferencing'.
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New section 63A(2) provides that a member of the management committee
who participates in a meeting under subsection (1) is taken to be present at
the meeting.
This new section clarifies that the rules of an association may now provide
for meetings by using technology such as teleconferencing to facilitate
holding, and voting at general meetings.
Clause 22 Amendment of s 66 (Management
committee to ensure association has
appropriate individual as secretary)
Clause 22 amends section 66, which provides the requirements for
ensuring the management committee has an appropriate individual as a
secretary, by inserting a new subsection (3).
New subsection (3) clarifies when a secretary is taken to be a member of
the management committee and, therefore, entitled to vote. A secretary,
who is a member of the association and elected by the association as a
secretary (pursuant to subsection (1)(a)) or, who is a member of the
association's management committee and is appointed by the committee as
secretary (pursuant to subsection (1)(b)), is a member of the management
committee. A secretary who is appointed by the management committee as
secretary (pursuant to subsection (1)(c)) is not a member of the
management committee and is therefore not entitled to vote.
Clause 23 Replacement of s 67 (Secretary may be
appointed or removed at any time)
s 67 Management committee may appoint or
remove secretary at any time
Clause 23 replaces section 67 to provide for the appointment or removal by
the management committee of the association's secretary at any time. If
the management committee removes a secretary who was appointed
pursuant to section 66(1)(b) of the AI Act the removal does not affect the
person's membership of the management committee and hence the
person's entitlement to vote.
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Clause 24 Insertion of new s 69A
69A Functions of secretary
Clause 24 inserts a new section which sets out the functions of the
association's secretary. These functions include:
· calling meetings of the association, including preparing notices
of a meeting and of the business to be conducted at the meeting
in consultation with the president of the association;
· keeping minutes of each meeting;
· keeping copies of all correspondence and other related
documents; and
· maintaining the association's register of members.
These functions do not limit any other function the secretary has under any
other provision of the AI Act and does not prevent an association's rules
from stating other functions for the secretary.
Clause 25 Replacement of s 70 (Insurance)
s 70 Public liability insurance generally
Clause 25 replaces the existing section 70 insurance requirements and
provides a new section 70A in relation to associations that hold trust land
under the Land Act 1994 and associations that own or lease land.
The requirement under the existing section 70 to take out insurance is
replaced with other requirements for the management committee in
relation to insurance. The requirements mandate the steps the management
committee must take to consider the issue of public liability insurance and
import a rigorous level of accountability regarding public liability
insurance. In addition, the association will be put on notice at each annual
general meeting of the association's public liability insurance status. These
requirements will have the effect of raising association members'
awareness of public liability insurance issues.
The new requirements of section 70 are set out below:
(1) The management committee of an incorporated association must,
at least annually, consider whether there is a need for the
incorporated association to take out public liability insurance.
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(2) The management committee must report its decision about the
need for public liability insurance for the association to the
association's members at the association's next annual general
meeting.
(3) If the management committee decides there is no need to take out
public liability insurance, the committee must, at the annual
general meeting
(a) give the association's members reasons for the committee's
decision; and
(b) advise the members that the failure to take out public
liability insurance means that the association's assets would
be at risk if there was a successful claim against the
association.
(4) The management committee must ensure that -
(a) as soon as practicable after a person applies to become, but
before the person becomes, a member of the association, the
person is advised
(i) whether or not the association has public liability
insurance; and
(ii) if the association has public liability insurance the
amount of the insurance; and
(b) before a person is elected or appointed as a member of the
association's management committee, the person is advised
(i) whether or not the association has public liability
insurance; and
(ii) if the association has public liability insurance the
amount of the insurance.
(5) The management committee must ensure that any person or
entity with whom the association may have dealings, and which
could be expected to have an interest in knowing whether or not
the association has public liability insurance, is advised if the
association does not have public liability insurance.
(6) This section is subject to section 70A.
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Note
This section imposes obligations on a management committee
but does not impose any criminal penalties in relation to breaches
of those obligations.
70A Particular incorporated associations must
have public liability insurance
Where an association elects not to take out public liability insurance, a
successful claim against the association may result in the association's
assets being at risk. Under the Land Act 1994 some associations hold land
on trust, on the basis that the association has public liability insurance. The
mandatory public liability insurance requirement has therefore been
retained in respect of such associations because this requirement was key to
the basis upon which such land was granted. It has also been retained for
associations that own or lease real property. These associations are
generally larger associations which would be likely to take out public
liability insurance as a result of conducting a risk assessment of the need
for such cover.
The provision expressly applies the mandatory public liability insurance
requirement to associations which lease real property. The term "lease" is
not defined in the Act, and therefore takes its ordinary meaning being an
agreement for exclusive possession of real property. A licence to occupy
real property is therefore not a "lease". Examples of a licence arrangement
would include the ongoing hire of a hall for one day per week, or the one-
off hire of a sports field for a day. In other words, a periodic occupancy of
real property is unlikely to fall within the meaning of a "lease", although
the distinction between a "lease" and a "licence" may depend on a case-by-
case examination of the facts as they arise.
The new requirements of section 70A are set out below:
(1) This section applies if an incorporated association is
(a) an owner of land; or
(b) a lessee of land; or
(c) trustee of trust land under the Land Act 1994.
(2) The members of the management committee of the incorporated
association must ensure
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(a) the association takes out public liability insurance in
relation to the land in an amount decided by the
management committee; and
(b) the insurance cover is kept current at all times.
Maximum penalty for each member of the management
committee 2 penalty units.
(3) It is a defence to a prosecution of a member of a management
committee for an offence against subsection (2) for the member to prove
the member took all reasonable steps to ensure the association complied
with subsection (2).
Clause 26 Amendment of s 91 (Declaration of applied
Corporations legislation)
Clause 26 amends section 91(3)(d) which provides a reference to the
principal place of business of a company to be read as a reference to the
registered office of an association by replacing the words `registered office'
with `the address nominated for service'.
Clause 27 Amendment of s 93 (Cancellation of
incorporation)
Clause 27 amends section 93 which provides the grounds for cancellation
of the incorporation of an association by inserting a new subsection (1)(f).
New section 93(1)(f) provides for cancellation of an association that has
not lodged with the chief executive documents required to be lodged under
part 6, division 2 (financial documents).
Clause 27 amends section 93 subsections (1) and (2) by omitting the words
`by prepaid registered post'. It is considered that service of notices under
section 93 can effectively be given by ordinary pre-paid mail in the same
way that all other notices are served under the Act (see section 138).
Clause 28 Amendment of s 113 (Who may make an
appeal?)
Clause 28 amends section 113 which provides for an appeal by a person
affected by a decision of the chief executive under the AI Act, by replacing
the words `this Act' with the words `section 112' to correct a drafting error.
This clarifies that a person whose interests are affected by a decision of the
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chief executive under section 112 (Decision on reconsideration) may
appeal to the District Court.
Clause 29 Insertion of new s 119A
119A Chief executive may ask for
information or documents
Clause 29 provides for the insertion of a new section 119A.
New section 119A (1) provides that the section applies on receipt of a
complaint about a possible contravention of the AI Act.
New section 119A(2) provides that the chief executive may give notice to a
relevant person (see new subsection 6 for a definition of relevant person)
requiring that person to give the chief executive information in the person's
knowledge, or documentation in the person's possession or control, relating
to an association, within a reasonable time and in a reasonable way.
New section 119A(3) provides that the chief executive must warn the
person it is an offence to fail to give the information or to produce the
document, unless the person has a reasonable excuse.
New section 119A(4) provides that the person must comply with a
requirement under subsection (2) unless the person has a reasonable
excuse.
New section 119A(5) provides that it is a reasonable excuse if complying
with the requirement might tend to incriminate the individual.
New section 119A(6) defines relevant person to mean:
(a) a person who is, or was, a member of the management committee;
or
(b) a person who is, or was, an auditor, an accountant or an approved
person who the chief executive believes, on reasonable grounds in the
circumstances, has information or documents relevant to the matter of
complaint.
Clause 30 Amendment of s 126 (Evidence)
Clause 30 amends section 126(3) by replacing the word `actuary' with
`approved accountant'.
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Clause 31 Amendment of s 127 (Evidentiary
provisions)
Clause 31 amends section 127 (1)(a), (b) and (c) by replacing the word
`specified' with the word `stated' and by providing a new section
127(1)(d).
New section 127(1)(d) provides that on a date stated in the certificate, a
financial document required to be given to the chief executive under part 6,
division 2 has, or has not, been received by the chief executive.
This new section accommodates the changes made in relation to the
financial reporting provisions under new part 6, division 2 of the AI Act
and will enable the chief executive to provide a certificate in writing for
evidentiary purposes stating that a financial document required to be given
under part 6, division 2 has, or has not, been received.
Clause 32 Amendment of s 129 (Delegation)
Clause 32 amends section 129 which provides for delegation of the chief
executive's powers by omitting subsection (2). This will allow delegation
of the chief executive's powers under section 33(3) in relation to an
application for exemption from use of the word `incorporated', and section
45(4) in relation to an application for the use of an `unsuitable name'.
Clause 33 Insertion of new s 130A
130A Documents not in English language
Clause 33 provides for a new section 130A.
New section 130A(1) provides that documents required to be lodged under
the AI Act, which are in a language other than English, must be
accompanied by a translation into English certified by a person to be a
correct translation.
New section 130A(2) provides that, for the purposes of the administration
of the AI Act, the English version of a document prevails over a non
English version.
The amendment is consistent with the Corporations Act 2001, and with
court requirements that documents written in a language other than English
must be accompanied by a certified translation. The amendment also
complements the amendment to section 54 of the Act.
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Clause 34 Amendment of s 138 (Service)
Clause 34 amends section 138 which provides for the service of documents
by adding that service of documents on the association may now be made
at an association's nominated address. (See new requirement for
associations to have a `nominated address' under section 17).
Clause 35 Insertion of new pt 16, div 1 hdg
Division 1 Transitional provision for Audit
Legislation Amendment Act 2006
Clause 36 Amendment of s 145 (Transitional provision
for Audit Legislation Amendment Act 2006)
145 Audits
Clause 36 amends the heading of section 145 to read Audits
Clause 37 Insertion of new pt 16, div 2 and schedule
Division 2 Transitional provisions for
Associations Incorporation and Other
Legislation Amendment Act 2006
146 Nominated address
New section 146 provides that if, immediately before the section
commences, an association had a registered office complying with section
17(2), as in force immediately before the commencement, the association's
registered office is taken to be the association's nominated address.
147 Association's name
New section 147 provides that if on commencement of the section an
association's name does not comply with section 29(3), in that the
association's name is not in English characters, the association is not
required to comply with section 29(3) until 3 months after the next annual
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general meeting of the association after the commencement. This will give
those associations time to comply with the new section.
Associations would have to comply with section 35(3) of the AI Act and
make an application to the chief executive to change its registered name
within 3 months of the passing of a special resolution to change its
registered name.
148 Insurance
New section 147(1) provides that section 147 applies if an association has
an annual general meeting within 3 months of the commencement of this
section. New section 147(2) provides that the management committee of
the association is not required to comply with section 70(2) and (3) until its
second annual general meeting after the commencement.
149 Financial reporting
New section 148 provides that the new provisions in relation to financial
reporting only apply to an association if the end date of the association's
reportable financial year happens after the commencement of this section.
See section 58 for the definition of `end date'. The end date means the date
stated in the association's rules to be the end date or closing date of the
association's financial year.
150 Approved persons
New section 149(1) provides that the section applies if immediately before
the section commences, a person was approved by the chief executive
under section 59(1)(b)(v) of the AI Act.
New section 149(2) provides that on commencement, the person is taken to
be an approved person for the incorporated association.
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Schedule Dictionary
Section 2
Part 3 Amendment of Classification of
Computer Games and Images
Act 1995
Clause 38 Act amended in pt 3
Clause 38 states that pt 3 amends the Classification of Computer Games
and Images Act 1995.
Clause 39 Amendment of s 5 (Classification of
computer games by computer games
classification officer)
Clause 39 amends section 5(3) by replacing the word `schedule' in the fifth
dot point with `the National Classification Code, to the extent it relates to
computer games' and adds subsection (4) to provide that the National
Classification Code means the Code under the Classification
(Publications, Films and Computer Games) Act 1995 (Cwlth).'
Part 4 Amendment of Classification of
Publications Act 1991
Clause 40 Act amended in pt 4
Clause 40 states that this part amends the Classification of Publications Act
1991.
Clause 41 Amendment of s 32 (Evidentiary provisions)
Clause 41 amends section 32(1)(c) by renumbering it as section 32 (1)(d).
Section 32(1)(c) is reworded to allow a certificate to be used in evidence
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which states that a publication would, if classified on a certain date, have
held a stated classification.
Schedule Minor amendments to the
Associations Incorporation Act
1981
Clause 42 Section 31, heading
Clause 42 provides for the renaming of the heading to read `Registered
name on seal'.
Clause 43 Sections 31, (second and third mention),
35(1), 36(1) and (2), 37, 38, 46(2)(a) and 78,
before `name' -
Clause 43 provides for insertion of the word `registered' before `name' in
each of the above sections.
Clause 44 Sections 35 and 36, heading, before `name' -
Clause 44 provides for insertion of the word `registered' before `name' in
the headings of each of the above sections.
© State of Queensland 2006