If an organisation becomes incorporated, it is recognised as a legal entity with an existence separate from that of its members.
An incorporated organisation can:
- make contracts in its own name
- sue and be sued in its own name
- hold assets in its own name
- be eligible for many types of grants.
When an incorporated organisation has liabilities, its own assets can be used to pay those liabilities but assets belonging to a member cannot be taken. If an incorporated organisation is sued, its members will generally not be personally liable. If the organisation does not have enough assets to pay its debts, it can be wound up but members will not have any personal financial responsibility.
It is important to consider incorporation if your organisation:
- owns any interest in land which must be registered in the Lands Titles Office, or any other substantial assets
- employs someone
- needs insurance
- wishes to enter into a substantial contract
- wishes to apply for a grant of funding.
To become incorporated, South Australian associations can use the process provided for in the Associations Incorporation Act 1985 (SA) . The majority of non-profit community organisations incorporate using this Act.
Associations with gross receipts greater than $500 000 per year (other than money received as subscriptions, gifts under a will or from the sale of assets not originally bought for the purpose of resale) are prescribed associations and have strict controls imposed on them. For more information, see Prescribed associations.
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.