What the Non-Profit Associations Act comprehends?
The Non-Profit Associations Act is an important law in the Estonian legal system that regulates the creation and activities of non-profit associations. This act establishes the rules that non-profit associations must follow, what they can and cannot do. This article provides an overview of the establishment and management of non-profit organizations, as well as the legal aid that lawyers can provide to non-profit associations.
The purpose and scope of the Non-Profit Associations Act
The Non-Profit Associations Act defines non-profit associations as legal entities whose purpose is not to earn a profit. Non-profit associations can engage in various activities such as promoting culture, sports, education, and charity. The activities of such organizations are usually aimed at achieving public benefit rather than earning a profit. Our law firm also has experience in the legal management of non-profit organizations. This experience allows us to understand the activities, problems, and management of non-profit organizations at the client level, not just at the lawyer and advisor level.
Establishment and registration of non-profit associations
When establishing a non-profit association, the requirements set out in the Non-Profit Associations Act must be followed, including the mandatory preparation of the non-profit association's articles of association. The articles of association must specify the non-profit association's name, location, goals, members' rights and obligations, membership requirements and termination rules, management, and other important aspects. These are just some of the essential aspects that must be reflected in the articles of association. All requirements are found in the act.
An establishment agreement known as memorandum of association must also be prepared. By signing the memorandum of association, the non-profit association's articles are also confirmed as an annex to it. The memorandum of association must specify the non-profit association's name, location, founders' names and personal identification codes, founders' obligations, etc. Note that there must be at least two founders, and founders can be both legal and physical persons.
After the articles of association and memorandum of association have been prepared, and other necessary initial measures have been taken, the non-profit association must be registered with the Business Register. To register, the memorandum of association, articles of association must be submitted, the Business Register application must be completed, and other necessary measures must be taken.
The above are just the most important aspects to consider when establishing a non-profit association. Timely and correct action ensures the legality of the non-profit association and enables the successful implementation of its objectives and activities. An attorney is competent to perform all the activities mentioned above on behalf of the non-profit association and can explain in more detail the other necessary actions at each stage.
Management of non-profit associations and members' rights
The day-to-day management of the non-profit association is carried out in accordance with the articles of association and decisions of the non-profit association's management board. Non-profit association members have the right to participate in the management of the non-profit association, including voting and presenting their candidacy for election to the management organs. Also, the members of the non-profit organization have the right to receive information about the activities of the non-profit organization.
The management of an NGO is carried out in accordance with the articles of association and the law and is the responsibility of the NGO board. The board is elected for up to three years, and its member(s) are selected by the general meeting. All members of the NGO can participate in the association's activities, mainly through the general meeting, which is the highest authority of the NGO. The general meeting must be held at least once a year. Thus, on a daily basis, members can participate in the decision-making process of the NGO by electing board members of their choice at the general meeting.
The competence of the general meeting of the NGO is to solve the most important issues. This includes changing the articles of association, approving the annual financial report, dissolving the NGO, and much more. In addition to electing board members, the general meeting also has the authority to recall board members. Therefore, the general meeting also performs a certain control function over the board. To exercise such control, the minority has the right to convene an extraordinary general meeting. However, a decision at the general meeting requires over 50% of votes in favour, and in certain cases even 2/3 of votes. Thus, the minority can demand the organizing of a general meeting, but the decision-making power remains with the majority.
Any natural or legal person who meets the requirements of the NGO's articles of association can become a member of the non-profit organization. Some NGOs have specified requirements in their articles of association that must be met to accept a person as a member of the NGO. On the other hand, other NGOs may conduct aggressive recruitment campaigns and be willing to accept anyone as a member.
Members of the NGO can resign at any time by submitting a required application. The board may also exclude members from the membership by decision if the member has violated, for example, the articles of association of the NGO. Members have the right to contest such a decision. A lawyer can help the NGO board and members understand their rights and obligations and find legal solutions in case of possible dispute.
Non-profit organizations' economic activities and financing
Non-profit organizations can earn income through economic activities, but the use of that income is limited to the goals of the non-profit organization. Non-profit organizations can receive funding from various sources, including support from the state and local governments, donations, membership fees, and project grants. Legal aid and law firms are often used to find additional funding.
The economic activities of the non-profit organization take place in accordance with the statutes and laws, and the board of the non-profit organization is responsible for them. The non-profit organization may operate for the purpose of gaining economic benefit, but this must not be its main activity. In other words, the non-profit organization can make a profit as a result of its activities, but this profit is not paid out as dividends to the founders of the non-profit organization. The non-profit organization may organize events, provide services, or sell goods, but this must be in line with the non-profit organization's goals.
Financing of the non-profit organization mainly comes from membership fees, donations, grants, and sponsorship amounts. Membership fees are amounts paid by members of the non-profit organization, and their size and payment method are determined in the non-profit organization's statutes. Donations are financial or other support given to support the non-profit organization's goals. Grants are financial or other support given to the non-profit organization for certain activities or projects. Sponsorship amounts are financial or other support given by companies or organizations to the non-profit organization in exchange for advertising or other benefits.
The non-profit organization has an obligation to keep account and submit financial statements in accordance with the law. The non-profit organization must follow the financial control and reporting requirements set out in the law and ensure transparency in its activities.
The role of a lawyer in managing non-profit organization economic activities and financing is to help the board of the non-profit organization understand the legal requirements and ensure compliance with them. The lawyer can help the non-profit organization develop an appropriate financing strategy, explain members' obligations to pay membership fees, and help to apply for grants and sponsors. Legal advice to non-profit organization financing may also be necessary later when a problem or dispute has already arisen. For example, in the case of possible improper activity by the non-profit organization Slava Ukraini, it would be necessary to consult a lawyer before making final decisions.
Non-profit organization and lawyer
Lawyers and law firms can advise non-profit organizations both during the establishment of the organization and throughout its operations. Lawyers and law firms often provide legal assistance to non-profit organizations. The lawyers at the Lepmets & Nõges law firm are familiar with non-profit organization law, and they can advise on the registration process, management of the organization, and the restrictions and obligations of non-profit organizations. Lawyers also help non-profit organizations create their articles of association and other necessary documents.
In addition, lawyers and law firms provide legal assistance to non-profit organizations in various legal issues. For example, non-profit organizations may need legal assistance in tax matters, employment law-related issues, or real estate-related issues. Lawyers help non-profit organizations understand their rights and obligations and provide advice on how to resolve various disputes in court or out of court. Lepmets & Nõges - Law Firms Estonia.