An association'scorporate purpose is a fundamental element of its identity.
The corporate purpose must be stated at the outset of the creation process. The founders of the association must therefore pay close attention to it.
Let's find out everything you need to know to draft your association's corporate purpose correctly.
An association's corporate purpose is not an insignificant element. It describes the association's activities and objectives. It is set out in the association's articles of association, and determines its scope of action.
The chosen corporate purpose must be lawful.
This means that it must be in line with public order, the law and morality. For example, an association whose corporate purpose incites child abuse or separatism is not legal. It must not undermine the integrity of the national territory or the republican form of government.
The company's purpose must not be profit-making.
An association cannot distribute its profits to its members. If it does, it runs the risk of being reclassified as a company.
Drafting an association's corporate purpose requires particular attention.
An association can only carry out its activities within the limits of its corporate purpose.
Any activity not mentioned in the association's corporate purpose is not legal, and is binding on its directors vis-à-vis third parties. The insurance policy taken out by the association may also refuse to indemnify it for an activity not covered by its corporate purpose.
To avoid these inconveniences, the corporate purpose must be :
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Extended in time. It is advisable not to restrict the duration of the association's activity in terms of time, nor to make it conditional on the completion of its corporate purpose.
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Relatively open. The corporate object should not be too precise, nor too restrictive, so as not to limit the association in its actions. Nor should it give the impression of serving specific, targeted interests.
It is advisable to insert a general formula to broaden its scope of action without having to amend the articles of association. For example, "and any additional means likely to contribute to the realization of its corporate purpose" or "in general, any means likely to facilitate the development of the defined purpose" are commonly used formulas.
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Explicit. Particularly if the association is engaged in an economic activity. Ambiguity is always detrimental, which is why it's essential to be transparent about the association's possible sources of income.
Choosing a corporate purpose that reflects the association's actual activities is important, as it is used to determine the association's APE codecode, the official identifier used to define the collective bargaining agreement applicable to its employees.
It can also be useful for applying for subsidies andpublic aid , or as a civil party in a lawsuit.
On a more general level, it also gives everyone a better understanding of the company's activities.
Changing an association's corporate purpose entails amending modification of its articles of association. There are several reasons for this:
- When the association wishes to diversify its activities beyond its initial field of action
- When the association becomes the owner of a building that is not directly useful for carrying out its activities
- When the association receives income other than that specified in its corporate purpose.
Changes to an association's bylaws are voted on at a general meeting.
Once the amendment has been approved by a majority vote, it must be filed with the Registrar of Associations within 3 months.
The correct and precise drafting of an association's corporate purpose is essential to avoid incessant modification of the articles of association, or the risk of dissolution.
Written by our expert Paul LASBARRERES-CANDAU
June 18, 2021
