When a decision is made to cease its activities, the association needs to terminate any agreements, pay its debts and distribute the remaining surplus property. The Act enables an association’s affairs to be finalised depending on the particular circumstances. This includes:

• voluntary cancellation (with or without assets);
• voluntary winding up, applying the relevant parts of the corporation law; or
• winding up by order of the Supreme Court.

Voluntary cancellation

An incorporated association can only apply for voluntary cancellation if it is solvent (having sufficient assets to pay all of its debts and liabilities) and it resolves by special resolution to be cancelled voluntarily.

Voluntary cancellation without assets

If an association does not have any property, assets or debts it can be cancelled voluntarily by completing the following steps:

1. The management committee examines the affairs of the association and declares by resolution that it is of the opinion there are no outstanding debts or surplus property.
2. Convene a general meeting of members and pass a special resolution to apply for voluntary cancellation (see Altering the Rules for information about special resolutions).
3. Submit the application for voluntary cancellation to Consumer Protection using AssociationsOnline.

If the Commissioner for Consumer Protection considers it appropriate the association’s incorporation is cancelled. The cancellation takes effect from the date determined by the Commissioner and will be confirmed in writing to the applicant.

Voluntary cancellation with assets

If the association has assets or surplus property there are additional steps that must be completed in order to be voluntarily cancelled.  Surplus property refers to any assets of the association that remain after the payment of its debts or liabilities. An association’s surplus property may only be distributed to:

• another association registered under the Associations Incorporation Act 2015 (WA);
• a company limited by guarantee registered under the Corporations Act 2001;
• an organisation that holds a current licence under the Charitable Collections Act 1946;
• an organisation that is a member or former member of the association and whose rules prevent the distribution of property to its members; or
• a non-distributing co-operative registered under the Co-operatives Act 2009.

An association with assets can voluntarily cancel its incorporation by completing the following steps:

1. The management committee examines the affairs of the association and declares by resolution that it is of the opinion the association can meet its debts and liabilities.  
2. Prepares a draft plan detailing how the surplus property will be distributed include the intended beneficiaries and an estimate of the value of the property.
3. Convene a general meeting of members and pass special resolutions confirming that members wish to apply for voluntary cancellation and approving the plan for the distribution of the surplus property.to apply for voluntary cancellation  (see Altering the Rules for information about special resolutions).
4. Within 28 days after the special resolution has been passed submit the application for voluntary cancellation to Consumer Protection using AssociationsOnline.
5. The distribution plan will be approved in writing by the Commissioner for Consumer Protection.
6. Once approved, implement the distribution plan and notify Consumer Protection when the process has been completed.

The cancellation of the association will take effect from the date determined by the Commissioner and is confirmed in writing.

Cancellation of an incorporated association by the Commissioner

The Act provides the Commissioner for Consumer Protection with discretion to cancel an incorporated association where there is cause to believe that the association, among other things, has been inoperative for at least 12 months or has fewer than six members. 

Where the incorporation of an association has been cancelled, any property of the association vests in the State and the Commissioner can distribute the property in accordance with the Act.   Depending on the circumstances, former members of the defunct association may have little say in how such property is distributed, although efforts are generally made to contact the most recent committee.

Reporting defunct or disbanded associations and clubs

If you are aware of an association that is defunct but has not been cancelled, please use the online form to report the association to Consumer Protection.

Winding up 

An association may choose to wind-up rather than applying for cancellation if it has difficulties identifying or locating assets, is a party to legal proceedings or has any outstanding contractual obligations or disputed debts. 
 
Where the financial affairs of an association are complex, winding up allows the association to appoint a liquidator to manage the process of finalising its financial affairs.  It also provides a level of protection for the committee and members in the event of any subsequent claim against the association.

There are also certain circumstances where an association is forced to wind-up by order of the Supreme Court. An application to the Supreme Court to wind up an incorporated association can be brought by the association, a member of the association, the Commissioner, the Minister, or a creditor. This can be a complex and costly process and anyone considering making an application should seek their own legal advice.

An insolvent association is one that is unable to pay its debts when due for payment. An insolvent association cannot apply for cancellation or be wound up voluntarily.  It may only be wound up by the Supreme Court.

If there is a concern that an association may be insolvent, it is recommended that no further debt be incurred until the financial position of the association has been established and appropriate action taken to address the issue.

If it is not possible to restructure, refinance or obtain additional funding it may be necessary to appoint a voluntary administrator or contact a liquidator. 

Liquidation is the orderly winding up of an organisation’s affairs.  It involves realising the organisation’s assets, cessation or sale of operations and distributing to the creditors.

Voluntary administration involves an external administrator investigating the organisation’s affairs and providing a recommendation to the creditors.

If the association is unsure where to begin it is recommended to do the following:

• make a list of all possible creditors and how much is owed to each.
• arrange to have the association’s accounts audited.
• contact creditors and see if an agreement can be reached regarding the debt.
• discuss the situation with a finance professional or a lawyer. 

Any association that may be insolvent is encouraged to seek professional advice to determine its rights, obligations and options.

Voluntary administration

Where a management committee resolves that the association is insolvent, or likely to become insolvent, they may appoint an administrator. The administrator takes control of the association’s affairs and may perform any function, and exercise any power, that the association or any of its officers could perform or exercise if the association were not under administration.

Voluntary administration seeks to maximise the chances of an association continuing to operate or, if the association cannot continue, achieve a better return for creditors and the association when winding up its affairs.

As soon as practicable, the administrator must investigate the association’s circumstances and make a recommendation on its future. The management committee is required to assist the administrator by delivering all books in their possession and reporting on the association’s affairs and financial circumstances.

Merging the activities of two or more incorporated associations together to continue on as a single incorporated association is known as amalgamation. To begin the amalgamation process each of the merging associations must pass its own special resolutions confirming the:

• terms of the amalgamation;
• name and objects of the new group; and
• proposed rules for the new group 

More information on the requirements for a special resolution is provided in Altering the Rules. An application to amalgamate the associations should be submitted using AssociationsOnline.
 
If the Commissioner is satisfied that the:

• required special resolutions have been passed in accordance with the Act;
• proposed new body is eligible for incorporation; and
• rules of the new body comply with the requirements of the Act,

a certificate of incorporation will be issued for the new body and each of the amalgamating incorporated associations will be automatically cancelled. 

Transfer of amalgamating associations’ property and liabilities

Once the new body has been incorporated:

• the property of all the former associations vest with the new incorporated association;
• the rights and liabilities of the former associations become the rights and liabilities of the new incorporated association;
• any proceedings by or against the former associations that existed immediately prior to the incorporation of the new association may be continued by or against the new body; and
• any pre-existing agreements of the former associations will apply to the new incorporated association (unless the agreements state otherwise).

There may be circumstances where it may be advantageous for the association to move to another jurisdiction. For example, an association wanting to expand its activities into other States may prefer to become a company, regulated by Commonwealth authorities. 

The Act contains provisions that allow the Commissioner to facilitate a transfer to another jurisdiction for example:

• a co-operative;
• an Aboriginal or Torres Strait Islander corporation; and
• an incorporated company

Incorporation under the Corporations Act

An organisation wishing to operate for profit or conduct its activities anywhere in Australia can incorporate as an Australian company under the Corporations Act 2001. In general, companies have greater scope than incorporated associations in the activities that they can undertake however they are more highly regulated than other entities and can have higher ongoing costs. There are several types of company including:

• Unlimited company with share capital is often used for pooled investments and allows members to withdraw their investment capital. Members are personally liable for the debts of the company.
• Company limited by shares is often used for business purposes. Members' personal liability is limited to any unpaid subscription price for their shares.
• Public company limited by guarantee cannot issue shares. The liability of members is limited to the amount agreed to in a guarantee (e.g. membership fee).

For more information about companies contact ASIC on telephone 1300 300 630 or visit their website.

Registration as a co-operative

A co-operative is a legal entity created, owned and controlled by its members. Members benefit by sharing and using the co-operative's products and services. Co-operatives can be set up for a wide range of social and economic activities such as retail, agriculture, irrigation, marketing and taxi services.  

There are different types of co-operatives to suit different business needs.  A distributing co-operative has a share capital and may give returns or profits to members.  A non-distributing co-operative may or may not have a share capital and cannot give any returns or profits to members (other than the nominal value of shares). 

It may be decided the association is better suited to the structure of a co-operative and would operate more effectively if it transferred from being an incorporated association to a co-operative company.  For further information please visit www.commerce.wa.gov.au/co-ops or contact Consumer Protection on 1300 30 40 74.

Incorporation under the Corporations (Aboriginal and Torres Strait Islander) Act

The Corporations (Aboriginal and Torres Strait Islander) Act (2006) provides a simple way for Aboriginal or Torres Strait Islander groups to incorporate. 

Eligibility for membership must meet certain requirements relating to required numbers or percentages of Aboriginal or Torres Strait Islander persons . Unlike incorporated associations, Aboriginal or Torres Strait Islander corporations allow groups to share profits and engage in trading activities that incorporated associations are restricted from doing.

Assistance and advice on forming an Aboriginal or Torres Strait Islander corporation is available from the Office of the Registrar of Indigenous Corporations.

PO Box 2029   WODEN    ACT   2606
Telephone:    1800 622 431
Email:   info@oric.gov.au
Website:    www.oric.gov.au

The Commissioner for Consumer Protection has authority to approve an incorporated association’s transfer to a company, an Aboriginal Corporation or a Co-operative. To transfer to another corporate structure requires the association members to pass a special resolution at a general meeting.

An application for approval to transfer incorporation can be submitted using AssociationsOnline.

Where an incorporated association has decided to wind up, there may be some members who wish to carry on some or all of the old association’s activities. Please note if this course of action is being contemplated, the old association’s assets or property cannot be handed on to those running the unincorporated association.