Part C: Voluntary Associations
Introduction
There are various types of Voluntary Association under South African law.
The Association discussed in this memorandum is the universitas or Association incorporated under Common Law.
Characteristics of a Voluntary Association
It has separate legal personality, i.e. :
it exists apart from the individuals and/or corporations who make up its
members.
It has perpetual succession, i.e. changes in the identity of its members
do not affect its existence.
It is capable of owning property apart from its members.
The object which an Association pursues must be lawful, and other than
primarily the acquisition of gain or profit for itself or its members.
Formation and Contitution
A Voluntary Association is founded on a contractual basis.
It will be incorporated under Common Law if the individuals who propose
forming it have the serious intention to associate and are in agreement on the
essential characteristics and objectives of the Association.
This agreement is usually manifested by the approval and adoption of a
written constitution. The
constitution of an Association constitutes the contract which is entered into by
its members.
This contract is the crucial factor in the existence of a Voluntary
Association. It not only determines the nature and scope of the
Association's existence and activities, but also, where necessary, prescribes
and demarcates the powers of, inter alia,
the executive committee, secretary and general meeting; in addition, it expresses and regulates the rights of members
and provides for certain procedural matters.
Property of a Voluntary Association
The constitution of an Association may (and usually does) determine that
movable and immovable property be held in the name of the Association.
Name of the Voluntary Association
Any Association which is not of a political or religious character may
(but is not obliged to) apply to the Bureau of Heraldry for the registration of
its name and, upon registration, shall be entitled to the sole and exclusive use
of that name (in terms of Section 7 (2) of the Heraldry Act, 1962).
A Voluntary Association may change its name in accordance with its own
particular procedural rules, which are ordinarily incorporated in the written
constitution.
Membership of a Voluntary Association
As appears above, an Association is made up of individual members, who
may be corporations.
The rules or constitution of an Association determine who is eligible for
membership, and whether or not there is a limit to the number of members which
the Association may admit.
A person who
qualifies for membership is not necessarily a person entitled
to membership. The constitution
usually accords the Association or its executive committee a discretion to admit
persons as members of the Association, subject to their satisfying the
appropriate criteria or qualifications.
An Association's constitution often makes provision for the payment by
members of membership fees.
If an Association wishes to obtain exemption from the payment of income
and other taxes, its constitution will have to contain a number of provisions
restricting and qualifying its powers, including a provision that the Association's
income and assets may not be distributed among its members by way of profit
distribution or in any other way, but must be used to promote the objects of the
Association.
The Association's constitution ordinarily provides for the election of
members to various offices, including chairperson, treasurer, secretary, etc.
The Association's constitution will ordinarily set out the circumstances
in which membership terminates, e.g. by expulsion, the member being declared
insolvent, resignation, etc.
Powers of a Voluntary Association
The constitution determines the powers of an Association.
An Association may be accorded, through its constitution, any of the
rights and powers that may be accorded to any other corporate body, such as a
Company. Such powers will have to
be exercised within the framework of the objects of the Association, which are
likewise set out in the constitution.
The powers of an Association may include the following
: the power to purchase,
mortgage or in any other way encumber and sell immovable and movable property;
the power to invest the funds of the Association in any way;
the power to enter into contracts, and to sue and be sued, in its own
name; the power to employ and
remunerate employees, etc.
There is no power which may be exercised by, for example, a Section 21
Company or a Trust, which cannot be accorded to and exercised by a Voluntary
Association.
Management of a Voluntary Association
The proper functioning of an Association requires the appointment of a
group of persons with executive powers. The
constitution of an Association usually entrusts the management of the
Association to an executive committee, and provides for the periodic election of
the members of this committee by general meetings of members of the Association.
The Association's constitution usually accords the executive committee
the right to exercise all the powers and duties of the Association, subject to
any instructions or directives given to them in the form of a resolution of the
members adopted at a general meeting. The
executive committee must comply with the constitution of the Association in the
exercise of these powers.
The constitution of an Association ordinarily provides for the holding of
annual and special general meetings of the Association, and for the procedure to
be followed at such meetings, including the manner in which the meetings are
called, the quorum required and the manner in which the votes are taken.
Voluntary Associations and Litigation
Because a properly constituted Association is recognised as a separate
legal entity apart from its members, it may sue and be sued in its own name.
Members' liability for debts of a Voluntary Association
Unless the members of an Association expressly agree to this, they are
not liable for the debts incurred by the Association in the event of the
Association not having sufficient funds to meet such debts.
Dissolution of a Voluntary Association
The constitution of an Association ordinarily provides for the manner in
which it may be dissolved. If an
Association seeks exemption from income and other taxes, or to obtain a
Fund-raising authority, its constitution will have to provide inter
alia that, upon dissolution, the net remaining assets of the Association be
transferred to another, non-profit association or body having similar objects.
Regulation of Voluntary Associations
Unlike a Trust or a Section 21 Company, an Association is not required
under South African law to register with any public official.
There is at present no South African statute in operation which regulates
generally the affairs and the conduct of Associations.
Likewise, no public official is accorded the right to investigate or
regulate the affairs of such Associations.
(However, if and when the Nonprofit Organisations Act comes into
operation, Associations will have the option of registering under this Act).
The result is that considerably less formality attends the formation and
running of an Association, than is the case with Trusts or Section 21 Companies.
However, this lack of formality and regulation may be a disadvantage in
the case of an Association which intends soliciting donations in order to carry
out some charitable object. Many
funding organisations prefer donating to an entity or corporation which is
required to be registered, and which is subject to regulation by statute and a
public official.