Two churches unite, two provincial sports bodies form one federation, two NGOs with the same donors merge to save costs. Under the 1966 Act the only way was to wind one up and transfer its assets. Part XI of the 2023 Act provides a proper amalgamation procedure, modelled on Part XIII of the Companies Act.
The power
Section 98 of the Associations Incorporation Act 2023 provides that two or more incorporated associations may, “by special resolution of each of them, amalgamate and continue as one of the participating incorporated associations, with or without a dissolution or a division of funds”, if the plan is approved under section 103. The amalgamated body is one of the existing associations, not a new one; the others cease to exist on the effective date without a winding up.
The amalgamation proposal
The proposal must include: the name and registration number of each amalgamating association and the name of the surviving one; the terms and conditions of the amalgamation; the manner and basis of converting the memberships of each association into memberships of the survivor; and, where a public benefit association is amalgamating into a member benefit association, how its donations and grants will either be distributed to another public benefit association beforehand or spent on the public benefit association’s objectives. It may also set out amendments to the survivor’s rules and any other provisions.
Notice to creditors and the public
Under section 100 each amalgamating association must, at least 30 days before the proposed effective date, send a copy of the proposal to every secured creditor of each association, give public notice of the proposed amalgamation, and file the proposal with the Registrar in the prescribed form. The public notice must state the names and registration numbers of the associations, the proposed effective date, and that the proposal is available for inspection at their principal places of business and registered offices during business hours (section 101). Unsecured creditors are not sent the proposal but learn of it from the notice and keep their rights against the survivor under section 104.
Approval and registration
Each association passes a special resolution approving the proposal, 75 per cent on 21 days’ notice, lodged within 20 days (section 64). To complete the amalgamation, section 102 requires delivery to the Registrar of a prescribed application with the final proposal, a copy of the public notice showing the date it was given, and, for each association, a certificate signed by the committee members that the proposal was approved in accordance with the Act and its rules. The Registrar must not approve an amalgamation of a public benefit association into a member benefit association unless satisfied that its donations and grants have been or will be applied to public benefit purposes (section 102(2)). Otherwise, if satisfied that the surviving association meets section 102 and could be incorporated under the proposed name, the Registrar must issue a certificate of amalgamation without delay (section 103). The certificate takes effect on the date the proposal specifies, which must be no more than 60 days after the application is filed (section 103(2) and (3)).
Effect of the certificate
On the date in the certificate, under section 104: the amalgamation is effective; the amalgamated association has the name in the proposal; it is entitled to all the property, rights, powers and privileges of each amalgamating association; it is subject to all their liabilities and obligations; proceedings by or against any of them may be continued by or against it; convictions, rulings, orders and judgments for or against any of them may be enforced by or against it; and the proposal’s provisions on conversion of memberships have effect. Members of the absorbed associations become members of the survivor on the terms stated. Property passes by force of the section, but section 105 provides that the Registrar of Titles and other registrars are not obliged to alter their registers merely because of the amalgamation; an instrument executed by the amalgamated association stating that property has become its property under the Act is sufficient evidence for registration of the new owner.
Court orders for the unfairly prejudiced
Before the effective date, a member or creditor of an amalgamating association, or a person to whom it owes an obligation, may apply to the National Court on the ground that the amalgamation would unfairly prejudice the applicant (section 106). The Court may direct that effect not be given to the proposal, modify it, direct reconsideration, or allow it to proceed with or without modification, on any conditions; the application and any order must be served on the Registrar within five days. A minority of members whose association is being absorbed on terms that strip them of rights, or a creditor whose security would be weakened, uses this section.
Which association survives and under what name; how the committees are combined; which rules apply and what amendments are made; how classes of membership convert; the treatment of trust property and restricted funds; the balance date and allocated month of the survivor; and, for a public benefit body, where its restricted funds go. Aim for an effective date that leaves time for the section 100 notices and the Registrar’s processing within the 60-day limit.
Sources
- Associations Incorporation Act 2023 — ss 64, 98–106
- Companies Act 1997 — Part XIII (amalgamations)
- Land Registration Act (Chapter 191)
Before relying on anything here, read the current text of the Associations Incorporation Act 2023 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.