Associations are similar to foundations but do not require a public deed to be constituted. Furthermore, the activities which can be carried out by an association are less restrictive than those which can be carried out by a foundation and they are generally of a more flexible nature. They are also regulated under the Second Schedule of the Maltese Civil Code (Chapter 16 of the Laws of Malta) which provides that an association is an agreement between three persons or more to join efforts for a certain aim or purpose. An association established in Malta has juridical personality separate to its founder or to its administrators and thus exists as a person in its own right. Associations may also enrol as a voluntary organisation.
There are a number of purposes for which an association may be established, namely:
- to promote private interests;
- to promote a trade or profession;
- for the achievement of a social purpose; or
- for the carrying on of any lawful activity on a non-profit making basis.
There are also certain restrictions on the modification of the purpose of an association, in that an association with a social purpose cannot be extended to non-social purposes, while a non-profit organisation cannot change its statute to having an association with a private interest.
As mentioned, a public deed is not required for the establishment of an association. Nevertheless, a constitutive deed needs to be drawn up in writing on pain of nullity and must contain:
- the name;
- the registered address, in Malta;
- the purposes or objects;
- the method or process by which membership of the association is granted to applicants;
- the mode of procedure during general meetings;
- the composition of the board of administration and the names of the first administrators;
- the manner in which administrators are elected to and removed from office;
- the legal representation;
- in case of an association, the administrators of which are non-residents of Malta, the name and address of a person resident in Malta who has been appointed to act as the local representative of the association in Malta; and
- the term for which it is established, if any.
In order for the association to achieve separate legal personality, the constitutive deed, together with the written consent of the administrators named in the statute to act as administrators of the association, must be filed with Public Registry in Malta.
One major distinguishing factor between foundations and associations is that unlike foundations, associations must have paying members. The members of an association may choose to leave such association and are free to do so. Such members cannot be subject to any liability except to unpaid membership fees and cannot be held responsible for any action that occurs after their leaving from such association.
Since associations can have members with a membership fee, activities such as the following are allowed:
- Consideration for sale of goods and services to members (this is deemed to apply only in the case of associations as only associations have members); and
- Participation fees in competitions organised for members (again this is deemed to apply only in the case of associations as only associations have members).
Associations registered as voluntary organisations are also permitted to carry out certain activities which are allowed for foundations by the Commissioner of Voluntary Organisations.
Administrators are bound to submit an account of their administration. They may also be remunerated as provided for in the deed of association. Administrators represent and bind the association to the extent of the powers vested in them by law, the deed of association and any other by-laws or as otherwise stated in the law applicable to the association. Administrators are also bound by fiduciary obligations: they must carry out their obligations with utmost good faith and act honestly in all cases. They must ensure that they act in the interest of the association, that that the assets of the association are used to pursue the purposes and objects for which the association was set up and keep the property of the association segregated from their personal property.
An association has to convene once a year for a general meeting and can have other meetings by request of the administrators or by request of at least 10% of the members.
Equinox is able to assist with the establishment of an association in Malta and any advice related thereto, including advice in relation to property and estate planning, efficient tax structuring, drafting of the deed of incorporation and liaising with the Public Registry. We can also undertake the registration of an association with the Commissioner for Voluntary Organisations.