Many times, we notice that various associations have been created, serving various purposes of everyday life (e.g., sports clubs, environmental organizations, etc.). Have you ever wondered how they operate legally and how the relationships between their members are regulated? The answers to the above questions are not particularly difficult, given that associations have a relatively simple legal framework. In this analysis, we will delve deeper into the subject to understand how procedures have been simplified in this area.
1.How do associations operate?
In everyday life, it is often perceived that coordinated efforts of multiple individuals yield better results than individual efforts. Therefore, the legislator encourages individuals to come together to pursue a common purpose, so that their efforts bear fruit more quickly. The simplest way to achieve this is by establishing an association. To this end, parties may contribute not only financially—by paying dues to an association of which they are members—but also administratively/organizationally, by assuming the management of the association, a task that is quite challenging in practice many times.
It is important to note that an association must pursue a non-profit purpose—its main goal should not be to profit from its activities and projects. However, this prohibition by law does not extend to the point of prohibiting any financial contribution to the association. Indeed, an association may have its own property, usually formed by the contributions regularly made by its members, as well as any property belonging to an association, from which its operational expenses are covered, such as rents paid by a property owned by the association.
2.What do I need to establish an association?
Regarding the establishment of the association, the law is quite clear, and its requirements are easily understood. Thus, to establish an association in Greece, one must:
- Have at least 20 individuals.
- Pursue a non-profit purpose.
- Register the association in the special register maintained at the County Court of the seat where the association is located.
- Therefore, the founders/managers of the association must submit an application to the judge for the registration of the association.
- Have drafted the association’s statutes (which must include the signatures of the members of the association and the date of drafting).
- The application must include the founding act of the association, the names of the management members, and the statutes.
It is critical here that during the examination of the application, the judge will only verify the legality of the association and not its purpose. They will only check if the conditions mentioned above are met and will not examine whether the purpose of the association is illegal/unethical unless it is clearly evident (e.g., establishing an association for the formation of a criminal organization is obviously illegal). Also, the judge cannot modify the purpose of the association; they can only accept or reject the application (in which case the members of the association can submit a new application).
5.How does it differ from the management of the association?
The management of the association is a different body from the general assembly, with obviously different powers from the latter. Indeed, the association’s management has the right and at the same time the obligation to convene the general assembly of the association when required by the statutes (monthly/weekly/yearly depending on what has been provided) and whenever the interest of the association requires it (in extraordinary cases where the association needs to make decisions immediately). The most significant authority of the association’s management is that it can legally and extrajudicially represent the association = enter into contracts with third parties and thus bind it, acting on behalf and for the account of the association (and therefore its members).
Additionally, one-fifth of the members of the association (if there is no provision in the statutes) can request the association’s management to convene the general assembly if there is no unanimity/majority of the members for its convening. In that case, the association’s management must consider the request and convene the general assembly of the association; otherwise, the members of the association can submit the same request to the court = the court will grant permission to the members to convene the assembly, bypassing the association’s management.
Furthermore, the association’s management deals with matters for which the general assembly does not have jurisdiction (as we saw in the previous question), which will be determined by the association’s statutes, as the law only provides for a minimum provision regarding how matters are distributed between these two bodies. Moreover, only individuals who are members of the association can participate in its management (unless the statutes provide otherwise, in which case individuals who are not members of the association can be appointed as members of the management if elected by the general assembly of the members).
6.How are decisions made by the association?
For a decision to be made by an association and to be valid, the law requires a specific procedure to be followed. More specifically, the following must occur:
- The board of directors must properly convene the general assembly.
- The general assembly of the association must convene.
- The issue for which a decision will be made must be listed on the agenda of matters to be discussed.
- Members of the association must be present (although there is no minimum number specified).
- A positive vote of 50% + 1 member of all present members is required on the issue.
- A decision can be made without a vote if all members of the association are present and vote in writing on a specific proposal.
- To make a decision regarding an amendment to the articles of association, at least half of the members must be present, and at least 3/4 of them must vote in favor.
- Also, for the purpose of the association to be changed, all members of the association must consent—even those absent, who must consent in writing.
7.Can a decision be invalid?
Often, due to flaws observed in the procedure, some decisions of associations are subject to annulment, meaning they produce legal consequences until annulled by a court through a final judicial decision. A typical case of annulment is when one of the procedural requirements we discussed in the previous question is not met. Another obvious case of an annulable decision is when an association decision contradicts the law or good morals—social and economic perceptions prevailing in modern life.
Additionally, a decision may be void, meaning it is considered as if it was never made when none of the legal provisions necessary for the validity of the decision are complied with. For example, when a general assembly is not even convened or a pseudo-assembly is held by certain members of the association, it is legally considered that no decision of the association was taken (not even void, in fact).
To declare the nullity of the association decision, a lawsuit must be filed in court by a member of the association who did not consent to the decision or by any other person with a legal interest in its annulment—someone who is harmed by the decision and would benefit from its annulment. As for the prescription of the member’s claim for the exercise of an annulment lawsuit, it expires after 6 months from the date the decision was made.
8.When is the association dissolved?
For various reasons, it is not uncommon for an association to reach a point where it desires to terminate its activities. Therefore, how this termination occurs and what happens to the property accumulated by the association up to the time of dissolution are significant. Thus, the association is dissolved when:
- A decision is made by the assembly of members regarding the dissolution of the association.
- For this, at least half of the members of the association must be present, and at least 3/4 of the present members must vote in favor of the proposal.
- The number of members of the association falls below 10.
- The articles of association of the association provide for cases in which it is dissolved (so we need to check the articles of association).
- By court decision, because the members of the association have decreased to the extent that a management cannot be elected or the association cannot operate based on its articles of association.
- By court decision, if the purpose of the association appears to have been fulfilled, or if it is evident that it (the purpose) cannot be fulfilled anymore.
- By court decision, if the purpose of the association has become illegal/unethical/opposed to public order or to the articles of association of the association.
Regarding the property of the dissolved association, it is important to know that it is never distributed to its members. Instead, it will be used to carry out the procedure following the dissolution of the association, namely its liquidation. Specifically, in this process, special bodies, liquidators, satisfy the creditors of the association as well as all other debts to third parties, if any, and after receiving payment for their services, they deliver any surplus (if any) to whoever it belongs to (certainly not to the members of the association, as mentioned).
9.I want to resign from an association.What should I do?
Any member of an association, over time and for various reasons, such as personal disputes with other members or conflicts of interest, may decide to resign from the association. To ensure the validity of a member’s resignation from the association and to avoid disputes on this matter, the law establishes certain conditions.
Specifically, the member is always free to resign from the association—no clauses can be imposed in the articles of association regarding lifelong membership in the association, etc. However, to resign legally from the association, the member must be financially settled, meaning they must have paid all the contributions due to the association, and thus have no outstanding balance. Nonetheless, the resignation of a member who still owes their contribution is also valid; however, the association can later file a lawsuit against the member for the unpaid contribution.
The law states that the member must notify the association of their resignation at least 3 months before it takes effect, and that it applies to the end of the respective fiscal year (usually December). This provision has remained unenforced in practice and therefore does not apply. The above simply confirms the rule that the resignation of a member from an association is always free without restrictions, except for those we mentioned.
10.Can the purpose of an association be changed?
Although we briefly mentioned the topic above, it is worthwhile to examine it from a substantive perspective at this point. This is because court decisions regarding the legal or illegal character have significant interest depending on the criteria used each time.
For a change in the purpose of the association to be valid, as we mentioned, the general assembly must convene, and all members of the association must consent to the change without exception. The decision will naturally bind even absent members who must vote in favor of the matter. If a member refuses unjustifiably to give their consent, they may be compelled judicially by the other members, provided that their refusal is unjustified.
The judicial review regarding the legality or illegality of the purpose of the association is usually not so exhaustive as to restrict its freedom. This means that the purposes of associations advocating anti-governmental policies or more radical ideas (on a social/economic level, etc.) are considered legal as long as they operate within the bounds of legality—i.e., not inciting violent acts, disobedience to authority or public order, and generally conducting their activities based on applicable laws.
Next to the client and his needs.
Athena Kontogianni – Lawyer
The above does not constitute legal advice, and no responsibility is taken for it. For more information,please contact us.