An association, as defined by the Associations Act, includes any association, society, club, institution or body formed or carried on for a lawful purpose. The minimum membership of an association is five people.

An incorporated association has a legal identity separate from that of its members. Normally, an individual can enter into formal agreements, sue (or be sued), buy property and so on, because a person has a legal identity. When a group of people incorporate, that body of people has a collective legal identity. If 10 people form the Buffalo Tom Appreciation Society (BTAS) and then incorporate BTAS, it may sue or be sued, purchase property, enter into agreements and so on, in its own name.

Flowing from the legal status of the incorporated association is an important feature: that the members' liability is limited to the annual subscriptions of the members and any other money due under the Rules of Association.

All incorporated associations must have a Public Officer (and when the office becomes vacant a new Public Officer must be appointed within 14 days). Public Officers are the conduit between the association and those people and organisations that the association deals with. The holding of the office of Public Officer does not preclude the holding of another office in the association. The Public Officer must be at least 18 years old and a resident of Victoria. The Public Officer has a number of obligations to the Registrar of Associations, generally having to keep the Registrar informed of certain events and to assist the Registrar in its functions. In particular, the Registrar must be:

The purposes of the association are those set out in its Statement of Purposes. This "charter" or "mission" sets out what the association is aiming to achieve, how it intends to do so and what will be the collective "beliefs" of the association. Most groups will simply need to commit to writing answers to the questions that they will have discussed when they decided to form an association including: why do we want to form an association, what do we want to achieve, and how are we going to do it?

As the Statement of Purposes needs to be lodged with the Registrar as part of the incorporation application, it is sensible to have it typewritten in a form similar to that of the Rules of Association (that is, titled and with numbered paragraphs).

The Rules of an association govern the rights and responsibilities of the members as well as how the association will operate; they are a contract between the incorporated association and its members.

The Rules must be divided into paragraphs which are set out in a logical sequence, e.g. in alphabetical order such as paragraph a, b, c etc, or numerically as in 1, 2, 3 etc.

An association has a choice to either:

If an association decides to change the Model Rules to suit its needs then the following information must be included in detail:

The Rules must also set out a grievance procedure for dealing with disputes between members. This procedure is provided for in the Model Rules. Disputes relating to the observance of the Rules are resolved in the Magistrates' Court.

An incorporated association cannot be formed with a view to making a profit. In this way it is different from business organisations such as partnerships. The Associations Act prohibits an association from trading or making pecuniary profit for its members (with exemptions for charitable organisations in some circumstances). Generally, only non-commercial non-trading organisations will be suited (or would wish) to use the incorporated association structure.

Community organisations can, with certain limitations, participate in a number of activities typically associated with businesses. An association can carry out the following activities, deemed by the Associations Act not to be activities with a view to a profit (see the explanation of non-profit above):

In Victoria it is not legally necessary for incorporated association to have a Common Seal. A Common Seal is simply a stamp showing the association's name and incorporated number, which is used on legal documents. Its purpose is to indicate to people dealing with the association that those documents that feature the Common Seal have been approved by the association.

Where an association chooses to have a Common Seal the Constitution or Rules of the association usually specify the rules regarding its custody and use.

Where a document requires authentication by an incorporated association it may be authenticated by the signature of the Public Officer and does not need to authenticated by the use of the Common Seal.

All incorporated associations must have a registered address. An association must display its name and incorporation number on all its notices and business documents, including its letterhead.

All incorporated associations must hold an AGM. An association’s first AGM may be held within 18 months of incorporation. Subsequent AGMs must be held within five months after the end of the association’s financial year. An association may apply to the Registrar for an extension of time for holding an AGM.

Regardless of the formality or content of the meeting, the following information must be submitted to the members:

Details of the AGM must be lodged by the Public Officer with the Registrar within one month of the date of the AGM. The Public Officer must lodge a Statement with the Registrar that sets out when the AGM was held, details of the compulsory financial information set out above, certification that they were presented to the AGM, the resolutions relating to the financial statements and the lodgment fee.

Australia must now undertake financial reporting using Australian equivalents of International Financial Reporting Standards (known as AIFRS). Section 296 of the Corporations Act requires disclosing entities to prepare their financial report(s) in accordance with the Australian Accounting Standards Board's (AASBs) accounting standards. Accordingly, statutory accounts will need to be prepared in accordance with AIFRS for reporting periods, including half years, commencing on or after 1 January 2005.

At the end of each financial year, all of the financial records should be inspected by an auditor (an accountant who specialises in reviewing the financial records of organisations). They must be inspected if the association has assets of more than $500,000 or a gross income of over $200,000, and also to ensure that the accounts are kept in accordance with the AASB's accounting standards. These records should then form the financial statements that must be presented to the AGM. These records must be retained for seven years.

An incorporated association may only remove its auditor from office by resolution passed at a general meeting of the association. Notice of the proposed resolution must be provided to all members, the auditor and the Registrar.

If your association deals with only very small amounts of money, it may not be necessary to engage an auditor. However, if anything more than minor amounts are being dealt with, it is prudent to have the financial records independently scrutinised for the sake of the association and its members. Associations must keep adequate and accurate accounting records.

Any person who is 18 or over, a Victorian resident and has been authorised by a majority of the group's members can apply for incorporation.

A meeting of the members (a minimum of five) should be held to appoint a Public Officer who is authorised to make the application for incorporation and approve the Statement of Purposes and Rules of Association. Members should be given 21 days notice of the meeting and all resolutions must be passed by at least a simple majority (that is, one more than half the people present either in person or by proxy).

Minutes of the meeting (that is, a written record of the meeting) should be kept. This should reflect the resolutions passed by the meeting. The resolutions should be along the lines shown below.

Most associations benefit from developing a structure and accordingly will often appoint a Chairperson/President, Treasurer and so on to be responsible for the different functions of the Committee. The Committee of Management (or the Executive Committee, whatever it may be called) should appoint officers at its first meeting. Being a committee member is an important and responsible role. Members should always act honestly, exercising reasonable care and avoiding conflicts of interest. The Committee will also need to consider whether insurance should be taken out to protect the interests of the association.

All office holders, former office holders or members of an incorporated association are required to return any documents that belong to the association within 28 days after they cease to hold those positions or when they cease to be a member of the association.

Officers have a special duty, which the law treats very seriously, to act in good faith. Committee members must disclose their interests in any contract with the association and cannot take part in decision-making about those contracts. Committee members (or former members) must not knowingly or recklessly make improper use of their position to gain direct or indirect financial or material advantage to themselves (or to the detriment of the association). (See also: "Penalties", below.)

The application for incorporation is made to the Registrar on an Application for Association Incorporation form (IA Form 1), which is available from the Consumer Affairs Victoria website at www.consumer.vic.gov.au. The form must be accompanied by a declaration that the applicant is authorised to make the application, the Statement of Purposes, the Rules of Association and any trust deed relating to the association.

As at 1 July 2011, incorporation costs between $61.10 and $122.20 depending on whether the Model Rules are adopted and whether the entity making the application is a company, co-operative or society. The Registrar may refuse to incorporate an association when the type of group appears not to be appropriate as an association.

An association must not have, in the opinion of the Registrar, an undesirable name. While "undesirable" is not further defined, common sense would dictate against obviously offensive names.

The name and the registered number of the association must appear on all business documents including letterheads, notices, advertisements and publications. Once an association is incorporated, it must add the word "Incorporated" or "Inc." to the end of its name.

An association can change its name by special resolution and by also seeking the approval of the Registrar. The change of name does not change the legal identity of the association, nor does it alter its rights or obligations in law.

The Registrar must send a Certificate of Incorporation that sets out the name of the association and the date of incorporation. Currently this takes approximately two to three weeks. An association must have a registered address, which can be the address of the Public Officer.

Committee members, especially the Public Officer, should be aware that the Associations Act prescribes various penalties for non-performance of the Act's requirements. Officers should make themselves aware of their responsibilities and ensure that they are carried out; this satisfies the officers' duties to the association and the legislative regime.

Two or more associations may amalgamate to form one association. To do this each of the associations wishing to amalgamate must pass a special resolution approving the terms of the amalgamation and the statement of purposes and rules of the proposed amalgamated association. In addition, the associations must each lodge with the Registrar a Notice of Special Resolution Approving Amalgamation of Incorporated Associations.

The application for amalgamation of the associations is made to the Registrar on an Application for Amalgamation of Incorporated Associations, which must be lodged by the public officers of the associations collectively. The application must include a copy of the statement of purposes and the rules of the proposed amalgamated association. As at 1 July 2011, the cost of application for amalgamation is $122.20.

If the Registrar accepts the application for amalgamation a certificate of incorporation for the amalgamated association will be issued and the incorporation of the individual associations will be cancelled.

Upon amalgamation any property or debts of the individual associations becomes the property or debts of the amalgamated association.