[Fwd: [Aust-NZ] Incorporation options]

[Tim Bowden]

On Fri, 2007-11-09 at 20:13 +1100, bruce wrote:
> Tim,
> 
> 
> I don't pretend to be an expert on this topic. I just have a basic
> understanding having run my own consultancy for a number of years (as a
> Pty Ltd company).
> 
> 
> 
> One of the main reasons for selecting a Company structure over a
> Business structure such as you describe below is that of legal
> liability.

Ok, when I first started drafting a reply I was quite confused by what
you're saying, but I think I've worked it out.  Apologies if I've got it
all wrong.  I suspect you've confused business registration (under state
legislation) with incorporation for non-profit associations under state
legislation.  Business registration gives no protection what so ever.
Incorporation does.  It creates a separate legal entity and gives the
same type of protection as incorporation under federal corporations
legislation (which is what *Incorporation* means).  For a definitive
answer, see the WA legislation:
http://www.slp.wa.gov.au/statutes/swans.nsf/5d62daee56e9e4b348256ebd0012c422/3a0626f8a0eb0aa3482565da000b61c4/$FILE/Associations%20Incorporation%20Act%201987.PDF

In particular section 12:
------
12.     Liability of officers, trustees and members
    (1) An officer, trustee or a member of an incorporated association
is
        not by reason only of his being such an officer, trustee or
        member liable in respect of the liabilities of the association.
    (2) Subsection (1) does not apply in respect of liabilities incurred
by
        or on behalf of the association prior to incorporation.
------

Now I don't want anyone confusing this with legal advice, as I don't
make a habit of reading legislation, and I'm certainly not trained in
such an art.  I'm quite sure my interpretation would be somewhat
different than a legal persons.  Rather, I'm just presenting what I've
found, to assist everyone in making a decision.

>From my understanding, there are four basic differences between
incorporating as a non profit under state legislation and incorporating
under the federal corporations act.

1. Under state legislation only non-profits can be incorporated, with a
distinction usually (always?) being made between registered charities
and other non profits.

2. Reporting requirements are much less stringent under state based
incorporation, and vary slightly from state to state.

3. By default associations incorporated under state legislation are only
able to operate in the state of incorporation, but that can be extended
nationally with registration of the incorporated association with ASIC.

4. Costs are significantly lower with state based incorporation, but do
vary considerably from state to state.


> 
> With a Company structure you are setting up an organisation that is a
> legal entity in its own right.
> 

Same as for state incorporated associations as stated above.

> One of the advantages of this is that Directors of the company can limit
> their liability in the event that things go pear shaped. With a business
> structure, the proprietors wear the whole lot.
> 

My understanding is that corporations law actually places fairly onerous
obligations onto directors (at least as far as public companies are
concerned, I don't think it's quite as strict for private companies),
and the liability of proprietors is limited to their existing
investment, hence the description *proprietary limited*.

> See:   http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Starting%20a%
> 20company%20or%20business    section:  Step 1: Decide on your business
> structure
> 
> 
> 
> While we are attempting to start up this organisation, we will be at
> high risk of failure for a number of years. Statistically, most
> organisations fail in their first five years of operation. Add to this
> the risks associated with trying to run an international conference and
> the sniping that open source often faces from those whose businesses are
> threatened... etc.
> 
> 
> Therefore for me, OSGeo Australia is too risky to run as a Business
> entity.
> 
> 
> The other reason that I like the company structure (as a non-profit
> organisation) is that it has the requirements that business is conducted
> openly and above board, as I outlined briefly in my original post.
> 

Same for any incorporated body, be it under federal corporations act or
state legislation.  As a state incorporated body we would have to lodge
a set of rules under which the association must operate.  For more info
about WA requirements, see
http://www.docep.wa.gov.au/cp/associations/new/information_sheets/Assoc%
20Info%20Sheet%201.pdf and
http://www.docep.wa.gov.au/cp/associations/new/information_sheets/Assoc%
20Info%20Sheet%202.pdf

> 
> With regards to New Zealand involvement, do we have any comments from
> our brethren across the Tasman?
> 
> 
> ASIC have some suggestions at:
> 
> http://www.asic.gov.au/asic/asic.nsf/byheadline/Company+searching+and
> +registration+in+New+Zealand?openDocument
> 

NZ specific info:
http://www.companies.govt.nz/cms/other-registered-entities/incorporated-societies?searchterm=non-profit%20registration
and
http://www.community.net.nz/how-toguides/legalstructures/publicationsresources/choosing.htm

> 
> 
> 
>  How do we get the money to establish this?
> 
> 
> I think that we should put our money where our mouths are to show that
> we are serious about starting this up. 
> 
> We have 21 people on the OSGeo Wiki who have made a commitment to the
> world that they wish to support the Australian Chapter of the Open
> Source Geospatial Foundation.
> 
> I'm prepared to chip in $200 to get this started (as a company). If we
> were all do do this we should have sufficient funds to get this going.

I'm happy to chip in also, providing we incorporate in one way or
another.  I'm just far from convinced that it needs to be under the more
expensive and onerous federal corporations act rather than state
incorporation.

> 
> We could call these people contributing funds Founding members or
> something similar. OSGeo has a good term, though I can't recall what it
> is at the moment.
> 
> 
> For ongoing funding, we could look at annual subscriptions (similar to
> SSI and ACS), sponsorship, selling promotional items etc.
> 

I'd prefer to keep membership free, and raise money as required
(corporate sponsorship, selling supporter packs with t-shirts, hats
etc).  We need to remember that the OSGeo community isn't just for those
operating in the commercial space or involved because of their
employment.  We also have to consider hobbyist members, such as might be
involved through projects such as openstreetmap.

Autodesk Australia has already invested considerably on our behalf in
getting brochures printed and a banner made up.  I'm sure there are
other companies that are willing to pitch in with support- in fact
there's already something in the works there, and as soon as there's
news, details will be posted.

> 
> 
> 
> Do I hear any more bids?
> 
> 
> 
> 
> Bruce
> 

Regards,
Tim Bowden