MODEL 1
CONSTITUTION OF A VOLUNTARY ASSOCIATION
INDEX
Clause Heading
- Background
- Name
- Objectives
- Legal Status
- Non Profit Distributing Character
- Powers
- Members
- Structure of the Association
- Financial Matters
- Amendments to the Constitution and Dissolution
- Indemnity
- Disputes
Schedule A: Requirements of the Commissioner for
the South African Revenue Service
Schedule B: General Administrative and Investment
Powers for Exemption from Taxes and Duties
Schedule C: Schedule of Initial Members
Explanatory Guideline
1. BACKGROUND
2. NAME
The name of the Association is:
(hereafter referred to as the "Association")
3. OBJECTS
3.1 The Association is a public, non-profit organisation established for the following sole object:
4. LEGAL STATUS
The Association is a body corporate with its own legal identity which is separate from its individual members. The Association shall continue to exist even if the members change. The Association may own property, enter into contracts, and sue or be sued in its own name.
5. NON-PROFIT DISTRIBUTING CHARACTER
- The income and property of the Association shall be used solely for
the promotion of its stated objectives. The members and the office-bearers
shall have no rights to the property or other assets of the Association solely
be virtue of them being members or office-bearers. No portion of the income
or property of the Association shall be paid or distributed directly or indirectly
to any person (otherwise than in the ordinary course of undertaking any public
benefit activity) or to any member of the Association or Management Committee,
except as:
- reasonable compensation for services actually rendered to the
Association;
- reimbursement of actual costs or expenses reasonably incurred
on behalf of the Association.
- Upon the dissolution of the Association, after all debts and commitments
have been paid, any remaining assets shall not be paid to or distributed
amongst members, but shall be transferred by donation to some other non-profit
organisation which the Management Committee (and failing which any division
of the High Court) considers appropriate and which has objectives the
same or similar to the objectives of the Association; and should the Association
become an approved public benefit organisation:
- Upon the dissolution of the Association, after all debts and commitments
have been paid, any remaining assets shall not be paid to or distributed amongst
members, but shall be transferred by donation to some other non-profit organisation
which the Management Committee (and failing which any division of the High
Court) considers appropriate and which has objectives the same or similar
to the objectives of the Association; and should the Association become an
approved public benefit organisation:
- is a similar public benefit organisation which has been approved
in terms of section 30 of the Income Tax Act, or
- any institution, board or body which is exempt from tax under the provisions
of section 10(1)(cA), which has as its sole or principal object the carrying
on of any public benefit activity, or
- any department of state or administration in the national or provincial
or local sphere of government of the Republic comtemplated in section
10(1) (a) or (b).
- The Association intends to apply to the Commissioner for the South African
Revenue Service exemption from appropriate taxes and duties. In compliance
with the provisions of the Income Tax Act, the provisions set out in the attached
Schedule A shall bind the Association and qualify this Constitution.
6. POWERS
The Association, acting through its Management Committee, or at General Meeting, shall have all the powers necessary for it to carry out its stated objectives effectively. Such powers shall include, but not be limited to, the General Investment and Administrative Powers set out in the attached Schedule B.
7. MEMBERS
- The initial membership shall be those persons whose names and signatures
appear on the attached Schedule C.
- The Management Committee may admit further members from time to time:
- Subject to due compliance with any conditions of membership
(including payment of any membership fees) which the Management Committee
may stipulate from time to time; and
- In accordance with the following criteria:
- The Management Committee may suspend or terminate the membership of any
member provided that:
- At least (14) fourteen days prior written notice is given to
all members of the Management Committee of the intention to terminate
a membership; and
- At least (14) fourteen days prior written notice is given to
the member concerned. The notice shall invite the member to make written
or verbal representations to the meeting as the member may consider appropriate.
- The decision of the Management Committee to admit an applicant to
membership, or to suspend or terminate a membership shall lapse unless
confirmed by a resolution of two thirds of the members of the Association
present at the next General Meeting.
- Neither the Management Committee nor the Association shall be required
to give reasons for their decisions with respect to membership.
8. STRUCTURE OF THE ASSOCIATION
- The Management Committee
- Powers
- The affairs of the Association shall be controlled and managed by
the Management Committee. Subject to the terms of this constitution
and to the resolutions of members in General Meeting, the Management
Committee may exercise all the powers of the Association.
- In General Meeting, the Association may review, approve or amend
any decision taken by the Management Committee but no such resolution
of the Association shall invalidate any prior action taken by the
Management Committee in accordance with the provisions of this Constitution.
- Election
- The members of the first Management Committee shall be elected at
the General Meeting at which this Constitution is adopted, and shall
hold office until the first Annual General Meeting after such appointment,
when all of them shall resign. At the first Annual General Meeting,
a new Management Committee shall be elected. Thereafter, a new Management
Committee shall be elected at each succeeding Annual General Meeting.
OR
The members of the first Management Committee shall be elected
at the General Meeting at which this Constitution is adopted, and
shall hold office until the first Annual General Meeting held after
their appointment. At such first Annual General Meeting and at every
subsequent Annual General Meeting held thereafter, not less than
one half of the Management Committee members shall retire by rotation.
The members to retire shall be those who have been in office the
longest since their last appointment. As between members of equal
seniority, the members to retire, in the absence of agreement between
them, shall be determined by ballot.
- Resigning Management Committee members shall be eligible for re-election
or co-option.
- Management Committee members shall be members of the Association.
- Composition
- The Management Committee shall comprise at least ______ but not
more than ___________ members. The membership of the Management Committee
shall comprise:
- the Chairperson;
- the Vice-Chairperson;
- the Treasurer
- the Secretary;
- at least three (3) other persons.
- The Management Committee may co-opt up to ________ additional
non-voting members as it may consider appropriate from time to
time. The co-opted members shall serve for such period as the
Management Committee considers appropriate.
- Management Committee Member Vacating Office
- The office of a Management Committee member shall be vacated
if a member:
- resigns; or
- becomes unfit and/or incapable of acting as such; or
- would be disqualified, in terms of the Companies Act
or equivalent legislation in force from time to time, from acting
as a Director of a Company; or
- is removed by the Management Committee, by resolution
adopted by at least three-quarters (3/4) of its members in office
from time to time, being not less than the required minimum of
________. The Management Committee shall not be obliged to furnish
reasons for its decision/s regarding removal except to the member
removed and to the members of the Association in General Meeting.
- Should a position on the Management Committee fall vacant, the Management
Committee, by resolution adopted at least two-thirds (2/3) of its
members, may (and if the vacancy reduces the number of members to
less than seven [7], shall) co-opt a member/s to fill the vacancy/ies.
The office of any person so co-opted as member of the Management Committee
shall lapse unless confirmed by resolution of members at the next
General Meeting.
- Procedure at Management Committee Meetings
- The Management Committee shall conduct its meetings and
regulate its proceedings as it finds convenient, provided that:
- The Chairperson, or in his or her absence, the Vice-Chairperson,
shall chair all meetings of the Management Committee which he
or she attends. In the absence of the Chairperson and the Vice-Chairperson,
the remaining members of the Management Committee shall elect
a chairperson from those attending.
- The Chairperson shall convene a meeting of the Management
Committee, quarterly and at the written request of any two (2)
members of the Management Committee and may convene such a meeting
at any other time.
- The quorum necessary for the transaction of any business by
the Management Committee shall be two-thirds (2/3) of the Management
Committee members serving at any given time.
- At meetings of the Management Committee each member shall have
one (1) vote.
- Questions arising shall be decided by a majority of votes. Should
there be an equality of votes the Chairperson shall have a casting
or second vote.
- Proper minutes shall be kept of the proceedings of the Management
Committee, and a record of the persons present at each meeting.
The minutes shall be signed by the member who chairs the meeting,
and shall be available at all times for inspection or copying
by any member of the Management Committee, and on two (2) days’
notice to the Secretary or his or her deputy, by any member of
the Association.
- A resolution signed by all members of the Management Committee
shall be as valid as if passed at a duly convened meeting of the
Management Committee.
- The Management Committee may delegate any of its powers to any
of its members, or to a special purpose committee. The member, committee,
employee or agent to whom such delegation is made shall conform to any
regulations and procedures that may be stipulated by the Management Committee
from time to time.
- The Management Committee may appoint a Chief Executive and other
officers and employees as it may consider necessary from time to time
upon such terms and conditions as it may consider appropriate.
- General Meetings
- Annual General Meeting
- An Annual General Meeting of the Association shall be held within
a period of fifteen (15) months of the adoption of this Constitution.
Subsequent Annual General Meetings shall be held within three (3)
months of the end of each financial year.
- Annual General Meetings shall be convened by the Chairperson
on not less than twenty-one (21) days prior written notice to all
members entitled to attend the meeting. This notice shall state the
date, time and place of the meeting and in broad terms the business
to be transacted at the meeting.
- The business of an Annual General Meeting shall include:
- the presentation and adoption of the Annual Report of
the Chairperson;
- the consideration of the Annual Financial Statements;
- the election of members to serve on the Management Committee
for the following year;
- the appointment of Auditors;
- other matters as may be considered appropriate.
- Other General Meetings
- Other General Meetings of the Association shall be convened
at any time by the Chairperson or at the written request of:
- the Management Committee;
- the lesser of one quarter (1/4) or ________ of the members
of the Association.
- Any General Meeting other than the Annual General Meeting shall
be convened on not less than fourteen (14) days written notice to
all members. The notice shall state the date, time and place of the
meeting and in broad terms the business to be transacted at the meeting:
provided that: should the Chairperson, having been requested to give
such notice, fail to give it within seven (7) days of the request,
the persons requesting the meeting shall be entitled themselves to
give notice of and to convene the meeting.
- Quorum
- A quorum constituting a General Meeting of the Association
shall be the lesser of:
- ________ members; or
- one quarter (1/4) of the members.
- Should any General Meeting have been properly convened but no quorum
be present, the meeting shall stand adjourned to another date, which
shall be within seven (7) days thereafter. The notice reflecting such
adjournment shall be given to the persons and in the manner provided
for in this Constitution. At such reconvened General Meeting, the
members then present or represented shall be deemed to constitute
a quorum.
- Resolutions and Voting
- At all General Meetings, a resolution put to the vote shall be decided
by means of a show of hands or by ballot. A vote by ballot shall be
held only if demanded by the Chairperson or not less than one third
(1/3) of the persons voting in person or by proxy. The result of the
vote shall be the resolution of the meeting.
- Each member present or represented at such meeting shall be entitled
to one (1) vote.
- Questions arising shall be decided by a majority of votes. Should
there be an equality of votes the Chairperson shall have a casting
or second vote.
- Minutes
Proper minutes shall be kept of the proceedings of all General Meetings,
and a record of the persons present at each meeting. The minutes shall
be signed by the chairperson of the meeting, and shall be available
for inspection or copying by any member on two (2) days notice to the
Secretary or his or her deputy.
- Powers
Subject to the provisions of Clause 8.1.1.2 above, a duly convened
General Meeting of the Association, at which a quorum is present, is
competent to carry out all the objectives and to exercise all the powers
of the Association as set out in this Constitution.
- Notices
- Notice of all meetings provided for in this Constitution, shall be delivered
personally, or sent by prepaid post, to the last address notified by each
person concerned to the Association, or in any other manner as the Management
Committee may decide from time to time.
- The accidental omission to address notice/s to any person shall not
invalidate the proceedings of any meeting.
- If posted, notices shall be deemed to have been received seven (7) days
after posting.
9. FINANCIAL MATTERS
- Bank Account
The Management Committee shall open a bank account in the name of the Association
with a registered Bank or Building Society. The Management Committee shall
ensure that all monies received by the Association are deposited in the
abovementioned bank account as soon as possible after receipt.
- Signatures
All cheques, promissory notes and other documents requiring signature on
behalf of the Association shall be signed by two (2) of the Management Committee
members.
- Financial Year End
The Association’s financial year end shall be:
- Financial Records
The Management Committee shall ensure that the Association keeps proper
records and books of account which fairly reflect the affairs of the Association.
- Annual Narrative Report and Financial Statements
- The Management Committee shall ensure that the Association prepares
an annual narrative report describing the Association’s activities and
an Annual Financial Statement for each financial year. The Annual Financial
Statements shall conform with generally accepted accounting principles
and shall include a statement of income and expenditure and a balance
sheet of assets and liabilities.
- Within two (2) months after drawing up the Annual Financial Statements,
the Management Committee shall ensure that:
the Association arranges for an accounting officer to certify that
the annual financial statements are consistent with the financial records
of the Association and that its accounting policies are appropriate
and have been appropriately applied in the preparation of its financial
statements.
OR
the books of account and financial statements are audited and certified
in the customary manner by an independent practising chartered accountant.
- A copy of the Annual Financial Statements and annual narrative report
shall be made available to all members as soon as possible after the close
of the financial year.
10. AMENDMENTS TO THE CONSTITUTION AND DISSOLUTION
The terms of this Constitution may be amended, the name of the Association may be changed and the Association may be dissolved by resolution of sixty six per cent (66%) of the members present at a General Meeting: provided that proper notice of the meeting is given not less than twenty-eight (28) days prior to the date of the Meeting and such notice states the nature of the resolution to be proposed.
11. INDEMNITY
- Subject to the provisions of any relevant statute, members of the Management
Committee and other office bearers shall be indemnified by the Association
for all acts done by them in good faith on its behalf. It shall be the duty
of the Association to pay all costs and expenses which any such person incurs
or becomes liable for as a result of any contract entered into, or act done
by him or her, in his or her said capacity, in the discharge, in good faith,
of his or her duties on behalf of the Association.
- Subject to the provisions of any relevant statute, no member of the ManagemenCommittee
and or other office bearer of the Association shall be liable for the acts,
receipts, neglects or defaults of any other member or office bearer, or for
any loss, damage or expense suffered by the Association, which occurs in the
execution of the duties of his or her office, unless it arises as a result
of his or her dishonesty, or failure to exercise the degree of care, diligence
and skill required by law.
12. DISPUTES
- In the event of a serious disagreement between the members of the Management
Committee and/or the Association regarding the interpretation of this constitution
then any two (2) Management Committee members or any five (5) members of the
Association shall be entitled to declare a dispute. Such declaration shall
be in writing, state the issue in dispute, and be addressed to the Management
Committee.
- The Management Committee shall consider such declaration within two (2)
weeks of receiving it. Should the Management Committee not be able to resolve
the dispute to the satisfaction of the person(s) declaring it, the dispute
shall be referred either to a mediator or arbitrator.
- Should the dispute be referred to a mediator, the person(s) declaring
the dispute and the Management Committee must agree on a suitable mediator
and to the costs of such mediation. A mediator may recommend an appropriate
resolution of the dispute.
- In the absence of agreement regarding a mediator or should mediation not
resolve the dispute, the dispute shall be referred to arbitration. The arbitrator
shall be such suitably qualified person/s as the person(s) declaring the dispute
and the Management Committee may mutually agree. Alternatively, each of the
parties shall be entitled to nominate one arbitrator, who shall act jointly
with a third person to be nominated jointly by the respective nominees of
the parties; on the basis that a majority decision of the appointed arbitrators
shall be final and binding.
- The arbitration shall be held on an informal basis, and the arbitrator
shall have the power to determine the procedure to be adopted subject to principles
of natural justice.
- The arbitrator may base her/his award not only upon the applicable law but
also upon the principles of equity and fairness.
- The person(s) declaring the dispute and the Management Committee, beforehand,
may agree to share the costs of the arbitration. In the absence of such agreement
the arbitrator shall decide which parties shall be liable for the costs.
- The decision of the arbitrator shall be final and binding upon all parties
and capable of being made an Order of Court on application by any of them.
SCHEDULE A
REQUIREMENTS OF THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE FOR
EXEMPTION FROM TAXES AND DUTIES
As provided for in Clause 5.3 of this Constitution, the Association intends to apply to the Receiver of Revenue for the exemption from appropriate taxes and duties. In compliance with the anticipated requirements of the Commissioner in respect of such exemptions, the following provisions shall bind the Association:
- In the case of a PBO seeking an exemption from income and other related
taxes only, in terms of section 10(1)(cN) of the Income Tax Act, as amended:
Carry out all its public benefit activities in accordance with section
30 of the Income Tax Act.
0r
In the case of a PBO seeking a section 10(1)(cN) exemption from income
and other related taxes and donor deductible status in terms of sections
10(1)(cN) and 18A, respectively, of the Income Tax Act, as amended:
Carry on its public benefit activities in the Republic.
- Only in the case of a PBO which provides funds solely to any income tax
exempt PBO seeking a section 10(1)(cN) exemption from income and other related
taxes only and section 18A donor deductible status, as described in section
18A(1)(b) of the Income Tax Act, as amended.
During the year of assessment preceding the year of assessment during which
the donation is received, distribute or incur the obligation to so distribute
at least 75% of the funds received. Provided that the Minister may on good
cause shown and subject to such conditions as he or she may determine, either
generally or in a particular instance, waive, defer or reduce the obligation
to distribute at least 75% of its funds having regard to the public interest
and the purpose for which the relevant organisation wishes to accumulate
those funds.
- Carry on its public benefit activities in a non-profit manner.
- Comply with such conditions, if any, as the Minister may prescribe by
way of regulation to ensure that the activities and resources of the organisation
are directed in the furtherance of its objects.
- Submit to the Commissioner a copy of and a copy of any amendment to
the Constitution, Will or other written instrument under which it has been
established.
- Be required to have at least three persons, who are not connected persons
in relation to each other, to accept the fiduciary responsibility of the organisation
and no other single person directly or indirectly controls the decision making
powers relating to that organisation: Provided that the provisions of this
sub-paragraph shall not apply in respect of any trust established in terms
of a will of any person who died on or before 31 December 2003.
- In the event of the Association investing funds, invest such funds :
- with a financial institution as defined in section 1 of the Financial
Services Board Act, 1990 (Act No. 97 of 1990); and/or
- in securities listed on a stock exchange as defined in section 1
of the Stock Exchanges Control Act, 1985 (Act No. 1 of 1985) ; and/or
- in such other prudent investments in financial instruments and assets
as the Commissioner may determine after consultation with the Executive
Officer of the Financial Services Board and the Director of Non-Profit
Organisations;
provided that the provisions of this sub-paragraph do not prohibit
any such organisation from retaining any investment (other than any
investment in the form of a business undertaking or trading activity
or asset which is used in such business undertaking or trading activity)
in the form that it was acquired by way of donation, bequest or inheritance.
- Be prohibited from carrying on any business undertaking or trading
activity, otherwise than to the extent that:
- the gross income derived from such business undertaking or trading
activity does not exceed the greater of :
- fifteen percent (15%) of the gross receipts of such public benefit
organisation; or
- twenty five thousand Rand (R25 000,00);
- the undertaking or activity is:
- integral and directly related to the sole object of such public
benefit organisation; and
- carried out or conducted on a basis substantially the whole
of which is directed towards the recovery of cost, and which would
not result in unfair competition in relation to taxable entities;
- the undertaking or activity, if not integral and directly related
to the sole object of such public benefit organisation as contemplated
in clause 8.2.1, is of an occasional nature and undertaken substantially
with assistance on a voluntary basis without compensation; or
- the undertaking or activity is approved by the Minister by notice in
the Gazette, having regard to:
- the scope and benevolent nature of the undertaking or activity;
- the direct connection and interrelationship of the undertaking
or activity with the sole purpose of the public benefit organisation;
- the profitability of the undertaking or activity; and
- the level of economic distortion that may be caused by the tax-exempt
status of the public benefit organisation carrying out the undertaking
or activity.
- Be prohibited from accepting any donation which is revocable at the
instance of the donor for reasons other than a material failure to conform
to the designated purposes and conditions of such donation, including any
misrepresentation with regard to the tax deductibility thereof in terms of
section 18A; provided that a donor (other than a donor which is an approved
public benefit organisation or an institution, board or body which is exempt
from tax in terms of section 10(1)(cA)(i), which has as its sole or principal
object the carrying on or any public benefit activity) may not impose conditions
which could enable such donor or any connected person in relation to such
donor to derive some direct or indirect benefit from the application of such
donation.
- Ensure that it is not knowingly a party to, and does not knowingly permit
itself to be used as part of any transaction, operation or scheme of which
the sole or main purpose is or was the reduction, postponement or avoidance
of liability for any tax, duty or levy, which, but for such transaction, operation
or scheme, would have been or would have become payable by any person under
the Act or any other Act administered by the Commissioner.
- Has not and will not pay any remuneration as defined in the Fourth Schedule,
to any employee, office bearer, member or other person, which is excessive,
having regard to what is generally considered reasonable in the sector and
in relation to the service rendered and has not and will not economically
benefit any person in a manner which is not consistent with its objects.
- Comply with such reporting requirements as may be determined by the Commissioner.
- Take reasonable steps to ensure that the funds which it may provide to any
association of persons as contemplated in section 30(b)(iii) of the Act are
utilised for the purpose for which they are provided.
- Become registered in terms of section 13(5) of the Non-Profit Organisations
Act, 1997 (Act No. 71 of 1997), within such period as the Commissioner may
determine, and comply with any other requirements imposed in terms of that
Act, unless the Commissioner in consultation with the Director or Nonprofit
Organisations designated in terms of section 8 of the Nonprofit Organisations
Act, 1997, on good cause shown, otherwise directs.
- Has not and will not use its resources directly or indirectly to support,
advance or oppose any political party.
- Ensure that any books of account, records or other documents relating
to its affairs are:
- where kept in book form, retained and carefully preserved by any person
in control of the organisation, for a period of at least four years after
the date of the last entry in any such book; or
- where not kept in book form, are retained and carefully preserved by
any person in control of the organisation, for a period of four years
after the completion of the transaction, act or operation to which they
relate.
SCHEDULE B
GENERAL ADMINISTRATIVE AND INVESTMENT POWERS
- To employ staff and hire professional and other services.
- To institute or defend any legal or arbitration proceedings and to settle
any claims made by or against the Association.
- To open and operate accounts with registered banks and building societies.
- To make and vary investments and re-invest the proceeds of such investments
on condition that any investments made by the Association shall be with Financial
Institutions as defined in Schedule A Clause 7 above.
- To accept donations made to the Association and retain them in the form
in which they are received, or sell them and re-invest the proceeds.
- With regard to movable and immovable property and tangible and intangible
assets of whatsoever nature:
- to purchase or acquire property and assets;
- to maintain, manage, develop, exchange, lease, sell, or in any
way deal with the property and assets of the Association;
- to donate and transfer the property and assets of the Association
to organisations with the same or similar objectives and the same exemptions
from taxes and duties to those of the Association.
- To borrow and to use the property or assets of the Association as security
for borrowing;
- To guarantee the performance of contracts or obligations of any person
on condition that any such person is primarily engaged in activities which
further the objectives of the Association.
- To execute any act or deed in any deeds registry, mining titles or other
public office.
- To work in collaboration with other organisations and to amalgamate
with any organisation with the same or similar objectives and the same exemptions
from taxes and duties to those of the Association.
- To exercise all the management and executive powers that are normally vested
in the Board of Directors of a Company.
- To exercise all the powers and authority of the Association not only
in the Republic of South Africa but in any other part of the world.
SCHEDULE C
SCHEDULE OF INITIAL MEMBERS
Name |
Address |
Date |
Signature |
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
|
|
|
|
EXPLANATORY GUIDELINE: CONSTITUTION
OF
A VOLUNTARY ASSOCIATION
INTRODUCTION
A Voluntary Association is created by an agreement between three or more people to form an association to achieve a common non-profit objective which promotes the public interest in some way. The agreement does not have to be in writing. However, to avoid uncertainty and disputes it is usually advised that it is reduced to writing. Should an Association wish to register itself as a non-profit organisation in terms of the Non-Profit Organisations Act, a written agreement is needed. This written agreement is the founding document of the organisation and is called the constitution.
The constitution sets out the rules which will govern the non-profit organisation (NPO), such as its main purpose and objectives, its membership, governance structures and procedures, and the rights and duties of the association, its members, and its office-bearers. The constitution provides clarity about these issues for people both inside and outside the association. There are many different kinds of associations, and their constitutions reflect their different characters.
EXPLANATION
1. BACKGROUND
These clauses describe the context, circumstances and motivations which gave rise to the creation of the association.
2. NAME
The constitution must state the full name and any abbreviation of the name of the association. Usually, the name identifies what kind of association it is.
3. OBJECTIVES
The constitution must list the main and ancillary objectives of the association in general terms. The objectives describe the purpose of the association and what it intends to do. The objectives should reflect that the association does not exist primarily for the gain, self-interest or profit of its members and officers but to promote a public interest objective.
4. LEGAL STATUS
The constitution must define the association as a corporate body with its own legal identity which is separate from its individual members and officers and which continues to exist even if its members or officers change.
An association which is a body corporate may sue, be sued, and own property in its own name. Also, should the members and officers of such an association enter into transactions on its behalf, within the powers granted to them by the constitution, such transactions will be considered to be those of the association, not those of the office bearer whose personal liability is limited.
5. NON-PROFIT DISTRIBUTING
The constitution must state that the income and property of the association will be used to promote its objectives and will not be distributed to its members or office-bearers, except as reasonable compensation for their work. As this principle applies during the life time of the organisation and on its closure (dissolution), the constitution must provide that on dissolution of the association, its property will be given to an organisation with similar objectives. These clauses demonstrate the non-profit character of the association.
The above clauses are important for the purpose of obtaining a tax exemption. However, the Receiver of Revenue requires that the constitutions of all non-profit organisations which apply for tax exemption comply with a varying list of additional clauses which boulster and reinforce the essential non-profit distributing clauses.
An association exists to advance a public interest objective. It does not exist primarily for the gain or self-interest of its members. The constitution must make clear that the members and office-bearers of an association have no personal right to the property of the association.
6. POWERS
The powers of the association must be set out in the constitution and these powers must be consistent with the non-profit objectives of the association.
7. MEMBERS
These clauses should be included in the constitution if the Association. The clauses define who may become member, the procedures for the admission and removal of members and the duties and privileges of members. The constitution may include a schedule of initial members.
8. STRUCTURE
The constitution must specify the structure of the association and the mechanisms and procedures for its governance and management. The constitution
must state how the Association plans to conduct meetings, make and record decisions. It may also provide for the appointment of officers.
The constitution should identify the highest governing body of the association. Usually this is a general meeting of members or the managing body.
The constitution usually contains a clause which vests all the powers of the association in a managing body. If the managing body is not the highest governing authority, then such powers should be subject to the instructions of the highest governing authority.
This is an important part of the constitution because these structures and procedures build in accountability by the officers to the members of the association.
9. FINANCIAL MATTERS
This section of the constitution states how the money of the association will be managed and accounted for. The constitution
must set a date for the end of the association’s financial year and must state that the association’s affairs will be conducted by means of a banking account.
10. AMENDMENTS TO THE CONSTITUTION AND DISSOLUTION
The constitution must explain how the constitution can be changed and how the association can be dissolved (closed down) by its members.
11. INDEMNITY
The constitution should provide that the members and officers of the association are not personally liable for any of its obligations and debts. These clauses reinforce the principle of limited liability mentioned in point 4 above.
12. DISPUTES
The constitution may set out a procedure for resolving serious disputes between the members regarding the interpretation of the constitution.