Under a company structure, not-for-profit organisations or charitable organisations will generally be registered as public companies that are limited by guarantee. Limited by guarantee means that the members guarantee to pay a fixed but small amount of money in the event of the liquidation of the company.
Registration of a company creates a legal entity separate from its members. The company can hold property and can sue and be sued.
Companies are registered under the
Corporations Act 2001, which is Commonwealth legislation administered by the Australian Securities and Investment Commission (ASIC). A company's registration is recognised Australia-wide.
Information about
how to register a company can be found on the ASIC website.
A company limited by guarantee may also be registered without the word 'Limited' in its name. This is only possible if its constitution contains all of these conditions:
- it requires the company to pursue charitable purposes only, and to use its income for promoting those purposes
- it prohibits the company making distributions to its members and paying fees to its directors
- it requires the directors to approve all other payments the company makes to directors.
Advantages
Advantages of a company limited by guarantee include:
Disadvantages
Disadvantages of a company limited by guarantee include:
- it's more expensive to register than an incorporated association
- compliance with the requirements of the Corporations Act is more expensive and onerous than compliance with the Associations Act.
More information
On this site
Things to consider when setting up a community organisation
Resources for community organisations
Managing a community organisation
Aboriginal community organisations
Frequently asked questions about community organisations