If you're thinking of setting up an association, you may be wondering which route to take. After all, an association brings together at least two people around a cause, acting voluntarily and without seeking profit. Whether your objective is sporting, social, educational, cultural, humanitarian or other, the key point lies in the disinterested management and not-for-profit purpose. It's a whole world governed by the law of 1901.
As you dive into this adventure, you'll discover that there are many different forms of association, each with its own range of possibilities. Between the unregistered association, the registered association, the association recognized as being in the public interest and the approved association, the nuances are varied, particularly when it comes to their legal framework.
So you're wondering which choice of legal status is best for my small association? It's a question that deserves careful consideration, and that's what we're going to explore in this practical guide.
Unregistered associations
Imagine an association that takes shape naturally, without the usual administrative formalities. This is what we call a de facto association. Several people, individuals or legal entities, come together around a cause and agree to make it work. The whole is simply formalized by an associative contract, the terms of which are freely defined by those in charge.
Although this association is legally recognized, it does not have the legal personality of a legal entity. Consequently, it has no rights or obligations as an entity. Its actions engage the personal liability of its members, who are jointly and severally liable. If assets are acquired in the name of the association, they belong to all members in equal shares. As they are unable to receive donations or subsidies, the founders themselves provide the assets needed to run the association: equipment, furniture, premises, money, etc. In the event of dissolution, which requires no formal procedure either, everyone has the right to recover what they have invested or made available.
To maintain funds, any contributions are kept in a common fund managed by an appointed treasurer, who can also open a bank account in his or her own name.
The legislator's aim in authorizing this form of association was to make it easier for a large number of people to form their own association. This is why the regulatory framework remains flexible. It can be used by small groups with few or no ties to third parties.
However, after drawing up the articles of association, the founders are required to convene a constituent general meeting. At this meeting, the officers are chosen and minutes are drawn up. At a later date, this may enable the informal association to be transformed into a formal association registered with the prefecture, in order to acquire legal personality.
A registered association, a legal entity
Once registered, an association becomes an entity in its own right, just like a company. It acquires legal capacity, enabling it to act in its own name:
- Asset ownership,
- Open a bank account for the association,
- Conclude contracts,
- Employ staff,
- Receive subsidies,
- Take legal action.
Associations are governed by civil law, in particular by the Law of 1901 and contract law. The specific statutes of each association complement the framework set by the law, and are drawn up by the founders with a degree of flexibility. These statutes define how the association operates, including membership procedures.
It is possible to manage an association collectively, provided a legal representative is appointed to sign contracts and apply for subsidies.
Although they have a non-profit purpose, registered associations can also carry out income-generating economic activities. However, under no circumstances may profits be redistributed to members; they must be reinvested in the association's activities.
Whether a registered, approved or charitable association, each of them is an autonomous legal entity that does not pursue profit, which distinguishes them primarily from commercial enterprises that do. However, they also need resources to finance their projects and manage their expenses with peace of mind.
Only registered associations can benefit from financial resources derived from membership fees, subsidies (under certain conditions), donations and legacies (only associations recognized as being of public utility), as well as in-kind resources such as the provision of space. They can hire employees and issue tax receipts to donors.
Accreditation by certain ministries lends added legitimacy, which is vital in areas such as tourism or consumer rights protection, to name but a few.
The status of "association reconnue d'utilité publique " (ARUP) also reinforces this legitimacy, which is particularly essential for charities. They can accept manual donations, gifts and bequests, and have broader powers.
That's why larger associations, or those planning to expand, are well advised to make their declaration by following the necessary procedures, such as publication in the Journal Officiel. But don't worry, you can always expand your legal capacity by changing category at any time.