[AUUG-Talk]: Re: [AUUG-ANNOUNCE]: [AUUG-BOARD]: Dissolution ballot results

[steve jenkin]

David Lloyd wrote on 16/3/08 4:59 PM:
>
> Steve,
> steve jenkin wrote:
>> Chris Maltby wrote on 16/3/08 1:25 PM:
>>
>> Agree: Better cost structure is necessary for any future for AUUG.
>>
>> "Trading whilst insolvent" is specifically an offence under the
>> Corporations Act and probably doesn't apply.
>> AUUG comes under the VIC Associations Act - not sure if that rules
>> applies.
>
> http://www.consumer.vic.gov.au/CA256902000FE154/Lookup/CAV_Publications_Consultations_Reviews/$file/IAreviewreport.pdf
>
>
> According to that document, it would at least be wholly unwise for any
> director to allow an incorporated association to trade whilst insolvent.

The relevant paras of the Review are:

The statutory duties set out in the Associations Incorporation Act are
less onerous than those set out in the Corporations Act. The two key
duties of a committee member under the Associations Incorporation Act are:
* not to misuse information or their position, and
* to disclose pecuniary interests. 

Incorporation Act with respect to insolvent and fraudulent trading,
section 51 of the Act provides that (subject to exceptions), an
incorporated association shall not trade or secure pecuniary profit for
its members. If this provision is breached, any member of the
Association (not just members of the committee) involved in such
activities shall be deemed to have
committed an offence and may be jointly and separately liable to a
creditor for any liabilities incurred as a consequence of the trading or
securing pecuniary profit.

i.e. None of the protections of "Limited Liability" and "the Corporate
Veil" formalised in the Corporations Act are to be found in the
Associations Act.

There is specifically *no* limitation of liability as there is with
companies.
The general membership will mostly not be liable, but above it says
"*any* member involved in such activities"

=> Persons who cause the Association to trade whilst insolvent are
*personally* liable.
=> s52 (directors liability and criminal offence) does not apply.

If I was a board member, I would be seeking professional opinion...

>
>> I always thought, but never checked, that board members were
>> *personally* liable for Association debts...
>> Not sure if that liability extends to all members -
>
> The purpose of the incorporation, much like a public company with
> shares, is to limit the liability in case the entity goes belly up.
> IIRC, one's liability is the extent of one's membership fees.
>
> (i.e. if you still owe membership fees for some reason, you still have
> to pay them. And if you've paid them, you don't get them back)
>
> DSL
>
>


-- 
Steve Jenkin, Info Tech, Systems and Design Specialist.
0412 786 915 (+61 412 786 915)
PO Box 48, Kippax ACT 2615, AUSTRALIA

sjenkin at canb.auug.org.au http://members.tip.net.au/~sjenkin