By virtue of Act XIII of 2007, the Maltese legislator introduced detailed provisions governing associations in the Civil Code. Associations and foundations are the two forms of legal organizations regulated in the Second Schedule of the Maltese Civil Code. An Association is defined as an agreement that is entered into between a minimum of three persons who aggregate to achieve pre-established aims via the pooling of efforts and resources. In Associations, the focus is on the associative element of the members who are coming together to set up the legal entity that is devised to fulfill the defined aims, differently to the case of a foundation whereby the all-defining element is the patrimonial aspect of the assets that are vested in the foundation itself.
An Association can be set up for an array of purposes, namely: for the fulfillment of private interests; for the promotion of trade or a profession; for the obtainment of a social purpose, as well as for the carrying on of any lawful activity on a non-profit making basis. Depending on the scope that the Association will fulfill, different considerations would apply. Thus, if the association is set up for the achievement of a private purpose, the entity would be regulated by the law applicable to civil partnerships; if, on the other hand, the association is set up for the achievement of commercial scopes, then the entity is regulated in the same manner as a commercial partnership. When compared to foundations, by way of example, associations are more adaptable insofar as the agreement to associate between the members can be done for any lawful purpose, which purpose will then determine the entity de quo.
A statute for the Association must be prepared and signed by all the associating members. Administrators are appointed to manage the affairs of the Association. Associations are not bound to register as legal persons in terms of Maltese law, but are entitled to do so. Moreover, provided the purpose of the Association is in line with the dictates of the Voluntary Organisations Act, this can also be rendered applicable to Associations in the like manner as it applies to trusts and foundations.
It is readily appreciable how the Maltese legal system has been enriched by the introduction of a plurality of legal institutes which offer endless possibilities to investors/ clients seeking to don their affairs with a legal form.
As in the case with Foundations and Trusts, our legal experts liaise with the firm’s clients in order to understand their requirements in order to determine which legal solution best suits their needs in the case at hand.