Entity Comparison 20170518 FINAL.xlsx
 Share
The version of the browser you are using is no longer supported. Please upgrade to a supported browser.Dismiss

 
View only
 
 
ABCDEFGHIJKLMNOPQRSTUVWXYZ
1
Incorporated Association NSW (IA)
Public Company Limited by Guarantee (PCLG)
Non-distributing Co-operative NSW (NDC)Which one works better for Seed? (ACNC = Australia Co-operatives National Law)
2
CommonalityAll are incorporated bodies with the legal capacity of a natural person
Must be Membership based (min 1 member)
Can operate as a mutual
Members have limited liability
Members exercise democratic control
Annual financial returns lodged with government
Cannot distribute surplus funds to members either from profits or sale of assets upon winding up
3
JurisdictionNSW State GovernmentCommonwealth of AustraliaNSW State Government
4
Governing legislationAssociations Incorporation Act 2009Corporations Act 2001 (Commonwealth Law)Co-operatives (Adoption of National Law) Act 2012
Co-operatives National Law (NSW) (CNL)

More commercial solicitors in Australia are familiar and experienced with the Corporations Act than either the Associations Incorporation Act or Co-operatives National Law. This has implications for solicitor availability, competition and ultimately legal costs.

However, ACNC registration provides 7 pieces of overriding commonwealth legislation regardless of which entity type is adopted, but makes legal work for an ACNC registered entity even more speciallised.
5
Administrative BodyNSW Fair TradingAustralian Securities and Investment Commission (ASIC)NSW Fair Trading
6
Name of governing body Committee of ManagementBoard of DirectorsBoard of Directors
7
GovernanceA management committee which must include 3 or more members, each of whom is aged 18 years or more and at least 3 of whom are ordinarily resident in Australia.

A public officer must be a person who is aged 18 years or more and is ordinarily resident in New South Wales.
A public company must have at least 3 directors (not counting alternate directors). At least 2 directors must ordinarily reside in Australia.

A public company must have at least 1 secretary. At least 1 of them must ordinarily reside in Australia.

All directors and secretaries must be a person who is aged 18 years or more.

A co-operative is managed by a board of directors which must consist of at least 3 directors (not counting alternates of directors) and at least 2 of the directors must be ordinarily resident in Australia.

A co-operative must have a board appointed secretary whom ordinarily resides in Australia.

All directors and secretaries must be a person who is aged 18 years or more.
PCLG or NDC provide more comprehensive laws regarding boards and directors which some argue produces better qualitiy governance.

However, ACNC registration provides 7 pieces of overriding legislation effectively equalising all three especially with regards to governance and elected officials.
8
Membership
Members qualify in accordance with the association's rules.

Can have different classes of members with different voting rights.

Members qualify in accordance with the company's articles.

Can have different classes of members with different voting rights.

Members must have an 'active' relationship with the co-op in accordance with the co-op's rules.

One class of active membership with equal voting rights.
NDC membership usually results in greater member engagement and democratic governance and management.
9
Membership limitsAt least 5 members to register. No maximum.At least 1 member to register. No maximum.At least 5 members to register. No maximum.
10
ControlGenerally one member one vote.Generally one member one vote.One member one vote.All entity types can facilitate both voting and non-voting members.
11
Major Asset DisposalCommittee can sell main asset without member approval. Members could requisition a general meeting if they were not consulted. Board can sell main asset without member approval.Members could requisition a general meeting if they were not consulted. Sale of main asset requires member approval.
12
TransparencyNo requirement to provide information to members re major decisions. Members could requisition a general meeting if they were not consulted. No requirement to provide information to members re major decisions. Members could requisition a general meeting if they were not consulted. Major decisions by members require disclosure of certain information.
13
Accountability
No audit required if income less than $200,000 or assets under $500,000.

Annual financial accounts presented to members.
Annual audit required

Auditors report and annual financial accounts presented to members

No audit required for small co-operatives.
Annual financial accounts presented to members.
14
Capital RaisingMembership subscriptions
Public donations (ACNC/GDR)
Retained earnings
Membership subscriptions
Public donations (ACNC/GDR)
Retained earnings
Debentures

Issuing shares to members
Membership subscriptions
Public donations (ACNC/GDR)
Retained earnings
Debentures
15
Public inspection of member's details
NoYesNo
16
Public inspection of director's details
NoYesYes
17
National Trading RestrictionsNone providing IA registers with ASIC Registrable Australian Bodies (a trivial exercise)NoneNone
18
LiabilityMembers are liable for the amounts each member owes the association in respect of their membership. For most this means the fees or subscriptions due to the association.
Members of the management committee of an association also have limited liability for the debts of an association, as long as they follow accepted business and community standards.
The members of a company limited by guarantee must specify the amount they are willing to contribute to the property of the company on its winding up and this will determine or limit the liability of the company’s members.Members, directors, managers and employees are not liable for any debts incurred unless they are the result of recklessness, negligence or fraud.All have limited liability for members
19
Maximum revenue or assets thresholds
NoneNoneNone
20
CategoryTurnover is over $250k, therefore considered large and have stricter reporting requirements associated with a large association. Standard CLG - revenue under $1M
Large CLG - revenue over $1M
< $8m revenue, < $4m turnover and <80 employees = Small Co-operative
21
Financial reporting Requirements for CategoryThe association must lodge:
An Annual summary of financial affairs (Form A12) for the financial year;
the financial statements for the financial year, presented at the AGM;
the auditor's report for the statements;
a copy of the terms of any resolution passed at the AGM, concerning the financial statements and the auditor's report.
Up to revenue of $1m can elect to have reviewed financial statement. Over $1m have to have audited financial statements. A small co-operative must prepare a report for its members containing the following financial statements for a financial year:

income and expenditure statement setting out the appropriately classified individual sources of income and individual expenses incurred in the operation of the co-operative
balance sheet (including appropriately classified individual assets and liabilities of the co-operative)
statement of changes in equity
cash flows statement, if consolidated revenue of the co-operative and any of its controlled entities is $750,000 or greater, or the value of consolidated gross assets is $250,000 or greater.
An audit or review of a small co-operative’s financial statements, and/or additional financial reports may be required if specified in the co-operative’s rules, or at the request of its members or the Registrar.
ACNC registration equalises all three options.
22
TaxExempt from Income Tax as long as operated as a non-profit, the constitution prevents any distribution of funds to members, either while operating or upon winding up of the organisation & complete self assessment under cultural requirements (advancement of art and music). Exempt from Income Tax as long as operated as a non-profit, the constitution prevents any distribution of funds to members, either while operating or upon winding up of the organisation & complete self assessment under cultural requirements (advancement of art and music). Exempt from Income Tax as long as operated as a non-profit, the constitution prevents any distribution of funds to members, either while operating or upon winding up of the organisation & complete self assessment under cultural requirements (advancement of art and music).
23
Special Employer ConsiderationsNoneNoneNone
There are many benifits and compliance exemptions (such as OH&S legislation) for organisations that have no paid staff and who only contract roles to people with ABN, resulting in significant reductions in compliance costs.
24
Record Keepinga register of committee members
a record of any disclosure of conflict of interest by a committee member
a record of the association's financial transactions and position
minutes of the proceedings of committee and general meetings
a register of members.
keep a record of all directors’ and members; meeting minutes and resolutions;
keep proper financial records;
receive and review an annual company statement and pay an annual review fee;
lodge notices whenever changes to its officeholders, office addresses, constitution and its name occur within specified timeframes as determined by the Corporations Act
Directors must keep registers of:

members, directors and shares
loans to, securities given by, debentures issued by and deposits received by the co-operative
names of people who have given loans or deposits to, or hold securities or debentures given or issued by the co-operative
loans made or guaranteed by the co-operative, and any securities taken
memberships cancelled under Part 6 of the Co-operatives Act 1996
fixed assets
subordinated debt.
ACNC registration equalises all three options.
25
Management responsibilitiesThe management committee is responsible for managing the affairs of the association in accordance with its constitution and the law. Each member of the committee should be familiar with the association's constitution and legal obligations.Greater level of scrutiny and oversight - although ACNC is reducing the red tape for non-profits compared to ASIC.
Although it is a separate entity, management and the directors can be held liable for negligent activities.
Directors and officers should be adequately informed (seeking professional advice if necessary), active at board meetings in response to directors' proposals and their effects on the co-operative, and aware of management direction.ACNC registration equalises all three options.
26
Annual MeetingsNeed to hold an AGM within 6 months of the financial year end and invite all members. Organise a meeting at least annually with your members (such as an annual general meeting) with opportunities for members to ask questions and vote on resolutionsThe co-operative must hold its first annual general meeting (AGM) within 18 months of registration.

Subsequent AGMs must be held within five months of the end of the co-operative's financial year (specified in its rules), or at a time approved by the Registrar.
ACNC registration equalises all three options.
27
Decision makingA resolution is a formal decision passed by the association in accordance with its constitution usually at a general meeting or in a postal ballot.
There are two types of resolutions, ordinary and special.
An ordinary resolution is passed if more than half of the formal votes cast support it. Most decisions at a general meeting are made by ordinary resolution.
A special resolution is passed if at least three-quarters of the votes cast support it.
More decision making lies with the elected board. Ordinary resolution
An ordinary resolution is a resolution passed by a simple majority of members at a general meeting of the co-operative.

Special resolution
The Co-operatives National Law requires certain decisions to be made by a special resolution. A special resolution is a resolution of a co-operative that is passed by a two-thirds majority of members.

Postal ballots
Special postal ballot
ACNC registration equalises all three options.
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
Loading...
 
 
 
Sheet1
 
 
Main menu