This page explains some of the rules that apply to nonprofit groups that are not incorporated. It’s useful to know these rules because they can help you resolve disputes, particularly if your group owns property.
An unincorporated association is a group of people who have decided to do things together for a purpose or goal other than profit.
Some groups don’t need the legal protection from certain personal liabilities that a corporation provides. Others have other needs for their limited funds, and don’t see a priority in spending them on incorporating. And some wish to be as independent as possible from government oversight – most trade unions and most political parties, for example, are unincorporated associations.
As soon as you start doing things together, you become an unincorporated association. You don’t need to register with any government office.
There are no federal or provincial laws that govern unincorporated associations.
There is no law that says you have to have a constitution, which is somewhat like a corporation’s bylaws, but it’s a good idea to agree upon your rules, in the form of a constitution. If you need to go to court to settle a dispute, the court looks at your association’s rules, if you have any, before deciding the issue. The court also looks at previous court decisions to see what rules have been applied to unincorporated associations in the past.
Yes, the Constitution of an unincorporated association is legally binding. The Constitution is a kind of contract between its members. This is one reason why it’s important to define and document who the members of your unincorporated association are.
For example, does a member who hasn’t paid their membership fee in time continue to be a member and can vote at a meeting? If you have a constitution, it will help answer questions like this one.
It’s important for your constitution to answer questions like:
- What are the purposes or goals of your group?
- Who is a member?
- How do you become a member?
- What rights do members have?
- How does membership end?
- How are decisions made?
- Is there an executive?
- Do you decide by consensus or majority?
- How will you deal with property?
- Who does it belong to?
- Who will it go to if your unincorporated association closes down?
- How do you change your constitution?
All your rules should further your purposes.
If you don’t have a written record of your rules, the court tries to figure out your unwritten rules based on how you did things in the past. If you haven’t acted consistently, then the court may require you to make decisions by consensus.
Members of an unincorporated association can structure the association in any way that they like. If you don’t write down how you make decisions, then the court will assume decision-making is based on consensus, and not by majority votes.
No. Unlike a corporation, an unincorporated association isn’t a separate legal person. This means that the members of the group can be personally responsible for the group activities that they participate in ‑ just as they are for any activities they participate personally in.
It’s very important to have clear, written rules and records that say whether your unincorporated association’s property belongs to individual members, the unincorporated association, or someone else. If this isn’t clear, the court may find that it belongs to the group as a whole and group members must decide by consensus what to do with it.
If an unincorporated association closes down, then a decision on what to do with its property usually can only be made by consensus of the members. This is called the “clubman’s veto”.
Yes. You need to ensure that your procedures are fair, particularly if your unincorporated association owns property. For example, to be fair you must give:
- members who can vote, notice of meetings in advance so they can vote on the issues being decided
- members a chance to respond if they are being disciplined
Yes. Unincorporated associations cannot pursue illegal purposes or goals that are against the law. For example, an association cannot be formed to illegally harass people who hold a particular political view.
If a group of people has ‘making a profit’ as one of their purposes or goals, they will likely be considered a partnership rather than an unincorporated association.