For landholders thinking of establishing a formal collaborative business structure to undertake carbon farming, there are a range of legal models to consider, each with their own pros and cons.
One of the first decisions a group will need to make is whether to create a new legal entity, or a ‘legally incorporated organisation’ or to work as an informal group or network? Each option has pros and cons, as shown in the table below.
There are a few options for keeping your group informal with no formal legal responsibilities, including informal networks, working groups and committees and unincorporated associations.
Informal networks – Can include: Facebook groups, community email lists & e-newsletters, neighbourhood groups that care for shared places or resources – such as a local weeding group.
Working groups and committees – Can include: board or project sub-committees (e.g. audit & risk, governance, fundraising).
Unincorporated associations – Can include: Local conservation or campaign-based groups.
- Australian Institute of Company Directors, Governance Resources for Not-For-Profits
- ACNC Factsheet, Unincorporated Associations and ACNC Registration
Incorporation refers to a process where a group of people use the Australian legal system to create a new organisation and the new legal entity/organisation has separate legal status from its members.
To create an incorporated organisation, groups can choose from three main types of structure:
- Incorporated associations, governed by relevant laws in each state and territory
- Co-operatives, governed by relevant laws in each state and territory
- Companies, governed by national corporations’ law
Whatever legal form your organisation takes, as soon as you create an incorporated entity, that organisation takes on a life of its own. All incorporated organisations – whether an incorporated association, a co-operative or a company – are ‘legal persons’. Like ‘natural persons’ incorporated organisations can enter into contracts, they can sue and be sued, own assets and employ staff. Importantly, separate legal status ensures that the liability of members for the debts of the organisation is limited to the extent of their shareholding (or, in the case of not-for-profit companies, the guarantee that they make upon joining the company). This feature of incorporation is known as limited liability.
Key differences between incorporated associations, co-operative and companies are outlined below.
Incorporated associations have an exclusively non-commercial focus while co-operatives have a distinctly member-based focus. The core focus of companies is to provide a vehicle for investment (or a not-for-profit activity) where the regular and active engagement of its members is NOT required.
Examples of Incorporated Associations include: Sporting, arts & crafts, social, ethnic & cultural, pensioner associations, musical societies, professional representative bodies and environmental groups.
Co-operatives: These can be non-distributing – which do NOT distribute profits back to their members (they work a bit like a not-for-profit company), or distributing cooperatives – these DO distribute profits back to their members when they’ve invested in the organisation (these work more like a for-profit company).
Examples of Co-operatives include: Food co-operatives (e.g. Bathurst Wholefoods Co-op), agricultural and farming businesses (e.g. Co-operative Bulk Handling), industry representative or marketing bodies, Organic and Regenerative Investment Co-op; community owned renewable energy co-ops, agricultural businesses.
Company: This is another form of corporation, which has separate legal status from its members (or shareholders). In Australia, companies are registered under the Corporations Act 2001 (Cth).
Unlike associations and co-operatives the core focus of companies is to provide a vehicle for investment where the regular and active engagement of its members is NOT required. While they are the most common model for small family businesses, they also suit larger organisations seeking investment from passive shareholders.
Companies may be not-for-profit – examples include: Wilderness Society Ltd (national body), Bush Heritage Australia Ltd, Greening Australia Ltd, the Australian Earth Laws Alliance Ltd.
Suggested viewing/reading – co-operatives:
- Farming Together Lesson 1: Co-operative and companies as vehicles for collaboration
- Business Council of Co-operatives and Mutuals
Suggested reading – non-distributing cooperatives:
- The Co-op Federation Manual (Co-ops NSW) and Farming Together Co-ops
- NSW Fair Trading
- ACNC, Registering a Charity
- International Cooperative Alliance
- ATO, Deductible Gift Recipient
Suggested reading – distributing cooperatives:
Suggested reading – companies:
- ASIC, Steps to Register a Company
- Australian Institute for Company Directors (AICD)
- ACNC, Registering a Charity
- ATO, Deductible Gift Recipient
Land trusts, which may be either unincorporated or unincorporated, are generally not-for-profit corporations that either hold land, or enter into agreements with landholders to conserve land on behalf of the environment. Land trusts might also comprise a group of landholders that enter into an agreement to obtain conservation covenants on their land titles or simply undertake conservation activities on their properties. This second option is generally not incorporated as a separate legal entity; it is simply an agreement between landholders.
Land trusts may also be set up through the establishment of a charitable trust, although this is less common in practice.
Land trusts – Examples include: small private conservation trusts, Bush Heritage Australia, The Nature Conservancy, Australian Wildlife Conservancy, West Arnhem Land Fire Abatement Project.
- NSW Biodiversity Conservation Trust
- Commonwealth Department of Environment and Energy, Conservation Covenants
- ACNC, Charitable Trusts
Alliances & Federated Structures
Alliances & Federated Structures involve several groups or pre-existing organisations working together on a specific issue on either a permanent or temporary basis. Alliances and federated structures may be either unincorporated or unincorporated and formed informally – for example, through voluntary Memorandum of Understanding, or other non-legally binding agreements – or they can be created as new, incorporated entities.
Federated structures refer to structures where a number of existing state-based groups or organisations choose to join together to work on nationally significant issues or projects. Quite often, federated structures will form separate incorporated entities with each member group as a member of that corporation.
The following are all examples of multiple groups joining together to form one incorporated entity (sometimes as an alliance, sometimes as federation): Landscape-scale conservation alliances such as Gondwana Link, The Wilderness Society (national body), Lock the Gate, Places You Love Alliance, Australian Network of Environmental Defenders’ Offices, national representative bodies such as the National Farmers’ Federation.
- You may wish to review the constitutions or governing rules of some of the examples we have provided above, to understand the structures used by various alliances and federated structures. You can often find this online or (if you’re willing to pay a small price) through the ASIC Company Register.
 The guidance provided here was developed by Australian Earth Laws Alliance (AELA) as part of a previous project on landholder collaboration funded by the NSW Environmental Trust.