Conversion to a Company

We have drafted a large number of new constitutions in recent times for various organisations from the smallest to the largest.

There seems to be a genuine desire to improve governance at all levels of member-based organisations throughout Australia. This is to the credit of the boards of those organisations who are spending significant time and money updating and reviewing their governance models and the documents that support them, particularly, their constitutions and by-laws.

Increasingly, the issue of whether an organisation should convert from an incorporated association to a company limited by guarantee is a matter being considered.

There have been many articles written by law firms including ourselves as to the pros and cons of companies limited by guarantee as opposed to incorporated associations.

To me, the major benefit of a company limited by guarantee over an incorporated association is that all members of the board do not have to be elected and there is the opportunity to appoint directors to fill skills gaps on the board.

I believe the ability to appoint a lawyer, accountant, an architect, a marketing professional, whatever is needed to assist the board, is a significant advantage.

Constitutions have never been a one size fits all document. There are many reasons why an organisation would choose to remain an incorporated association rather than convert. The old saying that “if it ain’t broke, don’t fix it” seems to be appropriate. However, if it is broken and you are attempting to fix it, then you need to consider whether a company limited by guarantee would suit your purposes better.

“The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.”
For the latest publications and updates, click on the link below.
Scroll to Top

Book a consultation