Associations end more often by fading away than by insolvency. The Act provides a simple exit for a solvent association that has finished its work, and it is a good deal cheaper than a liquidation.
Who may request removal
Section 109(1) of the Associations Incorporation Act 2023 lists three: “(a) a person authorised to make the request by a special resolution of members entitled to vote and voting on the question; or (b) a committee member; or (c) any other person, if the rules so provide”. Ground (b) is striking: a single committee member may request removal without a members’ resolution. That is why the public notice and objection procedure exists, and why a request by a committee member against the members’ wishes will draw an objection. The orderly course is a special resolution, which also satisfies section 62(2)(c), reserving the decision to wind up to the members.
The grounds
A request may be made on the grounds that the association (a) has ceased to carry on activities in furtherance of its objectives, has discharged in full its liabilities to all known creditors, and has distributed its surplus assets in accordance with its rules and this Act; or (b) has no surplus assets after paying its debts in full or in part, and no creditor has applied to the National Court for an order putting it into liquidation.
Ground (a) is for the association that has money left; ground (b) for the one that has none. Neither is available while creditors remain unpaid and the association has assets; that is a case for winding up under section 142. Nor is either available while the association is still operating; an active association that simply wants to change structure should amalgamate or wind up and transfer.
Distributing the surplus first
Ground (a) requires the surplus to have been distributed “in accordance with its rules and this Act” before the request. The Act’s rule is section 143: on a winding up, surplus goes as the members resolve by a two-thirds majority, subject to the National Court finding it just, and a public benefit association’s surplus may only go to another public benefit association. Section 143 is framed for a winding up, but a request under section 109(2)(a) certifies compliance with it, so the safe course is to pass the two-thirds resolution, apply the surplus accordingly, and, where the amount is significant or a public benefit association is involved, obtain the Court’s order under section 143 before requesting removal. Members cannot share the surplus among themselves; that would breach the non-distribution undertaking. See surplus assets.
The request
The request must be in the prescribed form, accompanied by the prescribed fee and by any prescribed third-party consents, and filed with the Registrar (section 109(3)). The regulations may require, for instance, a consent from the Internal Revenue Commission, as they do for companies; the draft Regulation does not yet prescribe any. The request should be accompanied by evidence of the resolution, the payment of creditors and the distribution of the surplus, and by the final accounts.
Public notice and the 30-day window
Under section 110(1)(a)(iii) the person requesting removal must give public notice of it, in a daily newspaper or the Gazette, specifying a due date at least 30 days ahead by which objectors must apply to the National Court (section 110(3)). Any person may object on the section 111(3) grounds: that the association is still carrying on business, is a party to legal proceedings, is in receivership or liquidation, that the objector is a creditor or member or claimant, or that removal would not be just and equitable. An objection is made by applying to the National Court under section 112 before the due date, with a copy filed with the Registrar within five days. If no application is made, or the Court refuses one, the Registrar registers a notice of removal under section 107 and the association ceases to exist.
After removal
Any property overlooked in the distribution vests in the Registrar under section 113 and the Companies Act provisions it imports. Liabilities of committee members and members for pre-removal conduct continue under section 114. A creditor who was not paid, and who did not object, may apply to the National Court under section 116 to restore the association so as to pursue its assets, within the limits the Court thinks just; a member of the former association may apply on the same basis. The records should be kept for seven years by the public officer or a nominated custodian, since section 154 inspection powers and section 155 disclosures can outlast the association.
Alternatives
- Winding up under section 142 where there are unpaid creditors, disputed assets or a need for a liquidator’s independence.
- Amalgamation under Part XI where the association’s work is being taken over by another.
- Dormancy: an association may stay registered while inactive, provided it files annual returns and keeps its essential elements; but section 108(f) allows the Registrar to remove an association believed to have ceased to exist.
Sources
- Associations Incorporation Act 2023 — ss 3, 62(2)(c), 107–116, 142, 143, 154, 155
- Companies Act 1997 — ss 366, 372–375 (removal of companies and vesting of property)
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.