Congratulations on considering setting up a not-for-profit organisation or a charity. This article, which is part 1 of a 5 part series to assist charities, will help you choose the right structure. Part 2 describes the legal documents that you need. Part 3 looks at registering with the ACNC. Part 4 describes what is a Public Benevolent Institution, a health promotion charity and a religious charity, and Part 5 explains how to obtain deductible gift recipient (DGR) status.

In Australia, not-for-profit organisations are usually established as one of the following:

  1. an Australian public company limited by guarantee – this is the most common type of company structure used by charities and other not-for-profit organisations which operate across Australia;
  2. an Australian private company limited by shares – this can be used where, for example, a business is wholly owned by a charity which has a similar charitable purpose;
  3. an incorporated association – a separate legal entity that can only operate under the state/territory that it was registered in, which can later be registered under the Corporations Act so that it can carry on business in other states/territories and becomes an Australian registered body; or
  4. a trust – this could be a fixed or discretionary trust.

The two most common structures for a not-for-profit organisation or a charity are an incorporated association, or an Australian public company limited by guarantee. Each is discussed below.

Incorporated Association

An incorporated association is incorporated in a specific state or territory. It does not operate nationwide.

An incorporated association is a separate legal entity, like a company, so it can hold assets and can sue and be sued in its own name. A key difference between an Incorporated association and a company is that the Incorporated association can only operate in the relevant state or territory that it is incorporated in.

The aim of the incorporated association path, not a public company path, is to provide a simple and more affordable way to create a legal entity for small, community-based groups with limited resources.

Associations are incorporated and regulated under state and territory associations’ incorporation legislation, which is administered by the relevant state or territory authorities, such as the NSW Office of Fair Trading for NSW. They are not governed by the national Corporations Act. This legislation generally imposes less onerous conditions than the Corporations Act.

The relevant legislation differs in each state or territory. Some of the general principles are that the incorporated association may need to:

  • have a registered office in its state of incorporation;
  • have objects and rules and act in accordance with those;
  • have a committee, responsible for managing the association;
  • hold an annual general meeting each calendar year;
  • lodge an annual statement every year;
  • keep proper accounting records;
  • keep minutes of committee and general meetings; and
  • keep a register of members and committee members.

A charities lawyer can help you understand the requirements to incorporate an association in the relevant state or territory.

Australian public company limited by guarantee

A company is a separate legal entity from the shareholders or members. The company can own assets and can sue and be sued in its own name.

Limited by guarantee means the liability of the company’s members is limited to the amount that the members undertake to contribute to the property of the company, if the company is wound up.

Companies must comply with the Corporations Act 2001 (Corporations Act). This is administered by ASIC.  There are a suite of minimum requirements for a public company, including the following:

The company must have:

  • at least three directors and one secretary;
  • at least one member;
  • a registered office address and principal place of business in Australia;
  • a registered office open and accessible to the public;
  • a constitution or replaceable rules; and
  • a register of its members.

The company must also:

  • keep a record of all directors’ and members; meeting minutes and resolutions;
  • keep financial records;
  • appoint a registered company auditor within one month of registration;
  • prepare, have audited and lodge financial statements and reports after the end of each financial year, unless exceptions apply;
  • provide its members with a copy of the company financial statements and reports, unless exceptions apply;
  • hold an annual general meeting once every calendar year, within five months of the end of the company’s financial year;
  • receive and review an annual company statement and pay an annual review fee to ASIC; and
  • lodge notices with ASIC if it changes officeholders, office addresses, constitution and its name.


For more information, check the ACNC Factsheet on choosing the right legal structure for your charity.

Ursula Hogben
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