Under Seal

Does your property transaction actually bind the incorporated association?

Councils routinely enter property transactions with incorporated associations.  Amendments to the Associations Incorporation Act 1981 came into effect on 22 June 2022.  Pertinently, these amendments permit incorporated associations to execute documents without affixing a common seal, but there’s a catch…

Background

In 2020, the Queensland Government passed the Associations Incorporation and Other Legislation Amendment Act 2020 (“Act”).  The Act was introduced to reduce red tape and improve internal governance of incorporated associations in Queensland.  The Act’s provisions took effect in stages, with the relevant suite of amendments (concerning execution requirements) entering into effect on 22 June 2022.

How have execution requirements changed?

Prior to 22 June 2022, in order to duly execute an agreement (or other legal document) an incorporated association was required by law to affix its common seal.  

From 22 June 2022, an incorporated association may now duly execute a document without using a common seal if the document is signed by a member of the association’s management committee and countersigned by:

• the association’s secretary; or
• another member of the management committee; or
• another person authorised by the management committee.

However, the above changes introduced by the Act are subject to any greater restriction provided for in the rules of the incorporated association.

It’s all in the rules

On registration, an incorporated association may adopt the model rules prescribed by the Associations Incorporation Regulation 1999 (“Regulation”) or its own rules (provided the rules comply with requirements under the Regulation).*

As at 22 June 2022, the current version of the model rules provide no greater restriction then the Act, so an incorporated association that has adopted these model rules may execute a document without affixing a common seal (and is no longer required to possess a common seal).

However, in circumstances where an incorporated association has adopted its own rules (without appropriate amendment) a common seal may still be required to be affixed to a document for it to be validly executed.

Additionally, as a matter of practice, the amendments introduced by the Act do not operate retrospectively, so any document executed by an incorporated association prior to 22 June 2022 will still require a common seal to be affixed.

For advice about the legal effect of a document executed contrary to an incorporated association’s rules, or how to determine if a document has been validly executed by an incorporated association, please email Elizabeth Neilson or Tim Fynes-Clinton or call us today on (07) 3243 0000.

*Note: alternative terminology by which these rules are also commonly referred to is ‘the constitution’ of an incorporated association.