Name and Purposes of a Typical Not-for-Profit

Chosen name of a not-for-profit For societies incorporated under the Incorporated Societies Act 1908, the full word “Incorporated” must be the last word in the name (section 6(1)(a)). For charitable societies and trusts incorporated under the Charitable Trusts Act 1957 there is no such requirement. However, whether legally required or not, indicating the fact of incorporation in a registered charity’s name helps protect members of a charitable society or trust from potential personal liability by establishing the not-for-profit’s corporate status and serves to confirm that the entity is a credible organisation with a proper constitution and a degree of permanence. It is an offence to use the word “Incorporated” or any abbreviation of it in association with unincorporated entities (section 3, Incorporated Societies Amendment Act 1953). Objects or purposes of a not-for-profit The objects or purposes of a society registered under the Incorporated Societies Act must be clearly stated in its rules (section 6(1)(b)), and similar requirements apply to a society or trust registered under the Charitable Trusts Act (section 11(1)(b)). This is important as issues as to the lawfulness of a society’s or charitable trust’s actions may come into question, and, associated with that, often the stewardship and potential personal liability of its committee or trustees. The fiduciary obligations of those governing a charity will be assessed in part by their advancement of its charitable purposes (important in litigation or in the course of monitoring or investigation by the Charities Board). A not-for-profit’s objects or purposes must be lawful. Section 4(1), Incorporated Societies Act, expressly states that incorporated societies may only be “associated for any lawful purpose,” while...

The Powers of a Not-for-Profit

Contracts Entities registered under the Incorporated Societies Act 1908 and the Charitable Trusts Act 1955 have statutorily implied powers (something that ma y change with reform). While some powers may necessarily be implied, it is good practice to set out detailed powers in constitutions of not-for-profit entities. Entities incorporated under the Incorporated Societies Act (section 15) and Charitable Trusts Act (section 19) have statutory powers enter into contracts, stated differently in the two statutes. Societies under the Incorporated Societies Act have specific power to enter into compromises with creditors (sections 23A and 23B), impose penalties on members (section 3, 1922 Amendment Act), make regulations or bylaws not inconsistent with statute or the constitution (section 4, 1953 Amendment Act), and set out additional powers in rules (section 6(2)). Companies registered under the Companies Act after 6 December 1983 were automatically given the rights, powers and privileges of a natural person (Companies Act 1955, section 15A(1)), and since 1993 the default position is that all companies have full capacity (Companies Act 1993, section 16(1)). Whether this will feature in reforming societies’ legislation has yet to be seen. Borrowing Section 6(1)(j), Incorporated Societies Act, requires a society’s rules to provide for any power to borrow, but the Charitable Trusts Act has no similar provision. Any power to borrow should be carefully drafted in a well-drawn constitution, whether the entity is registered under the Incorporated Societies Act or the Charitable Trusts Act, as where there is power to borrow Courts will restrict the exercise of the power to what is expressly stated. The decision in Union Bank of Australia (Ltd) v The South...