Association law of 1901

Associations law 1901

An association law 1901 must meet several conditions:

to be made up of at least two people;
does not need to be declared: a not declared association is called an association in fact;
must have another goal to share benefit. Moreover the activity of association does not have to enrich directly or indirectly one by its members.

As opposed to what one could believe:

it is not obligatory that association is managed by an office or a board of directors;
a minor not émancipé can adhere to an association and even create one of them;
an association can generate benefit, but the finality of these benefit is regulated;
an association can function on a horizontal mode: it is not necessary to have a hierarchical structure (president/treasurer/secretary).
the obligatory station within an association law 1901 is that of the person in charge vis-a-vis the law (administrator or appointed president, director, or other… cf Art.5 of the law 1901).

Legal mode

According to the article first of the law of July 1st, 1901:

“association is the convention by which two or several people share, in a permanent way, their knowledge or their activity with an aim other than to share benefit. It is governed, as for its validity, by the general principles of the duty applicable to the contracts and obligations. ”

The law of 1901 defines in fact very few things. Association is a Contrat of Private law.

This law leaves the creators and members of association freedom:

to organize itself (in the respect of the laws in force);
to choose the goal of association: practically all the spheres of activity and the social life are possible provided that they are licit;
to decide mode of organization and internal procedures of operation and to introduce them into the statutes, and possibly rules of procedure;
to as often as modify desired or necessary its goal, its mode of organization and its operation;
to declare the creation of association, or not, and to make of it publicity in the Official journal so that association becomes a moral person equipped with legal capacity, which gives him:

the possibility of accepting or of creating various means of financing of its operation like the contributions of its members, the territorial collectivity or State grants, the manual gifts, the assistances coming from the partnership or the patronage…,
the possibility of signing legal documents (opening of bank account, subscription of contracts of insurances, service contract…),
the possibility of employing employees,
the possibility of acting as justice as a moral person (enough strictly framed by various provisions).

A not declared association is a Association in fact, without legal entity nor legal capacity (it can however engage in front of the administrative judge of the Recours for abuse of power to dispute the legality of the administrative acts making objection to the interests that it has the role of defending: THIS October 31st, 1969, N° 61310, Trade union of defense of the channels of the Durance). I.e. the regrouping of people in an unspecified place is authorized, which is not an obviousness in oneself (in some Dictature S, the regrouping of several people is regarded as an attack with the state security).

The legal capacity of an ordinary association is known as “reduced” compared to the full legal capacity of the business firms. For example:

an association cannot be registered with the guild chamber or the room the commercial;
cannot obtain a commercial lease;
cannot distribute its goods and benefit between its members and leaders;
must give its goods and its credit to another person (moral or physical) when it dissolves (prohibition to distribute them between the members or people having a bond with those Ci like with close parents or relations).

The people who adhere to association can be natural persons (individuals) or many moral persons. It is enough to the assent exchanged between two people (minimal number) to create an association. For certain categories of associations, legislative measures or lawful impose a higher number.

This assent is not valid if it is obtained by error, violence or fraud (Civil code French article 1109 and following):

error: this error must hold in the objective contents of convention, for example error on the object of that Ci;
Violence: adhesion with convention cannot be obtained by the force, the threat or the blackmail;
fraud: operate intended to hide or omit certain aspects of the convention of association in order to obtain adhesion; this last risk is avoided if association provides, before its adhesion, information with the candidate with adhesion (at least statutes and rules of procedure if there is one) and if it can bring the proof of it later on (what requires that the handing-over of the documents is done against discharge signed by the candidate then filed and preserved).

Contrary to the beliefs, a minor not émancipé can adhere to an association if this adhesion engages only one weak amount (about its pocket money). But its civil responsibility continues to engage that of his/her parents or the people having the parental capacity.

A minor can create and manage an association. But not having the capacity to carry out legal documents, those must then be realized by major or the people equipped with the parental power, who engage their civil responsibility.

There exists a form of association being able to be created and managed by minors: the juniors associations . It is acted in fact of an national association, created by 5 federations or associations working for the young people, and who grants his approval and his assistance to associations made up of young people from 12 to 18 years. These associations are in fact of the sections of national association having a great management and liberty of action.

Contrary to the local right of Alsace and the Moselle, no administration or public agency has the capacity to check the return of creation of an association. This declaration, as well as the modifying declarations, are it under the responsibility of those which sign the documents. The receipt delivered by the prefecture, or the sub-prefecture, is only the report of the presence of the elements envisaged by the law and the decree of 1901. It does not allot a precise legal authenticity to these declarations.

Categories of associations

There exists a great number of categories of associations. Many of these categories are the subject of particular conditions of creation, operation or adhesion imposed by legislative texts or regulatory. Some examples among these categories:

associations known as of general interest, which guarantee certain criteria: democratic organization, nonlucrative goal, activity conform to the object and the statutes of the organization… ;
the Associations recognized of public utility. This quality is allotted to the moral person by decision of the government after opinion of the Council of State. There would exist currently more than 2000 recognized associations of public utility and approximately 550 foundations;
sports associations affiliated with approved sporting federations. One distinguishes these approved sporting federations which can have delegation of public service mission entrusting to them the establishment of the technical and deontologic rules under delegation of the ministry in charge (generally Jeunesse and Sports). Such rules are transmitted to associations approved and made compulsory with the professionals carrying on any activity governed by the Federation (initiations, framing, physical preparation…) ;
defense associations of the environment and consumers' associations;
federations, generally made up of associations and natural persons. Name “union” is rather reserved for the regroupings of moral persons exclusively.

Statutes

The statutes, it is the contract which binds the members of association. It thus has the same force as the other contracts with respect to the Civil code French (it must in particular be carried out in good faith, cf Article 1134 of the civil code). The statutes comprise obligatorily:

the head office, place where the special register is consultable , raised of the important decisions (choice of the leaders, delegations of powers…) ;
the goal, or object, of association; the means implemented (inter alia the collection of funds) must be used to achieve this goal;
generally all information necessary for the deposit in prefecture.

There can be other obligatory mentions if association wants to be recognized of public utility (the givers can then deduce part of their gifts from their income declaration, Loi Coluche), if it is a sports association or organizing activities of youth, or if association wants to adhere to a federation (see then the statutes of the federation).

To allow a good performance, the statutes must allow operation from day to day, but also crisis management: to define which has the decision-making power, which can dissolve the association, how to solve a blockade situation, how to take again association if nobody occupies himself some during several years, which can adhere, how one loses his membership… Association can have an internal payment, which can change more easily than the statutes and makes it possible to adapt more quickly to new situations.

The Préfecture of the department where association domiciled records the creation of association and the modifications of statutes, of the leader members… But it does not have any power to control. She proposes sometimes statute-type which can be used as inspiration for the drafting of the statutes of association, but the elements are not to in no case obligatory: it is not obligatory to have an office, a board of directors, to have a democratic mode of decision… Even if by experiment they are the perennial solutions, in particular in the event of conflict within association, this is by no means obligatory. Note that if a person deposits a modification of statutes, a list of leaders or a report of general meeting to the prefecture, this one must record it but does not have the capacity to check that the person is entitled to make this recording; in the event of fraud, association must thus have recourse to a court, which will be pressed in particular on the statutes to cancel the recording and to condemn the usurper if necessary.

Any member has the right to have a specimen of the statutes, before adhesion or even afterwards.

Tax mode

The tax mode of associations is a mode of nonlucrativity involving the exemption of the commercial taxes (VAT, Corporation tax, Professional tax). However there exist many situations of exception to this nonimposition.

A priori , an association is with nonlucrative goal. But its tax mode can be requalified by the tax authorities, or a court, in association with lucrative goal. It loses its tax incentives then, is practically found with the tax obligations of the business firms but preserves the legal status of association and thus restricted legal capacity.

Which are the criteria which it is advisable to take into account to appreciate if an association can be or not subjected to these taxes? (ref.: instruction N° 170 of September 15th, 1998 - DGI) For this purpose, it is advisable to carry out the following analysis:

1- To examine whether the management of the organization is not involved (chapter first - section 1);

the organization is managed and managed on a purely voluntary basis by people, or by nobody having interposed themselves, any direct or indirect interest in the turnover;

the organization does not proceed to any direct or indirect distribution of benefit, in some form that it is;
the members of the organization and their having right cannot be declared assignees on the one hand unspecified of the credit, subject to the right of resumption of the contributions.

If management is interested, the organization is necessarily subjected to the commercial taxes.

2- If management is not involved, to examine whether the organization competes with the commercial sector (chapter first - section 2 - A); Can the public be indifferently addressed to a or not lucrative lucrative structure? (appreciates itself according to the geographical location of the organization)

If it does not compete with the commercial sector and that its management is not involved, the organization is not taxable.

3- If it competes with the commercial sector, to examine whether the organization carries on its activity according to methods of management similar to those of the business enterprises (chapter first - section 2 - B). For that, four elements must be taken into account, but their importance in the appreciation of the " negotiability " is not the same one. Thus, it is advisable to study in the decreasing order: the " Produit" proposed by the organization, the " Public" who is aimed, the " Prix" that it practices and the " Publicité" that it makes (rule of the " 4 P").

p roduits: the products (goods or services) are not available near lucrative companies or are it in a nonsatisfactory way;
p ublic: the sold services or goods must touch a public which cannot normally obtain the same service or, for example of the poor people, unemployed, single-parent families or dependant people;
p rix: the prices are lower than those of the market (but one can always call upon a reason for differentiation - real or fictitious - of the service );
p ublicity: association does not have recourse to publicity (the distinction between publicity and information of the public - expression in theory synonymous! - is at the very least fuzzy, that known as…).

It is not that if he carries on his activity according to methods similar to those of the business enterprises, that the organization will be subjected to the commercial taxes of common right.

Items 1 to 3 must be examined successively.

Attention, associations which carry on their activity with the profit of companies are, in all the cases, taxable with the commercial taxes.

An association which would not answer these criteria should then be taxed and be thus subjected to the commercial taxes. Certain people (including in administrations charged to advise the private individuals) consider sometimes that the constitution of an association makes it possible “to test” an activity before founding a company (association would be thus a “trial balloon”); that is not always true, association would be subjected to

the Corporation tax in the event of benefit;
an annual contractual tax if its sales turnover exceeds 76.224 euros;
the VAT if its sales turnover exceeds 76.224 euros for the sale of goods, of services of restoration or lodging, or 26.680 euros for all other lines of business;
the Professional tax, except frankness from 38.112 euros.

The company created later on could not recover way the simple - legally - activity of association (and in particular not the material). It would be rather indicated to create a " Joint venture " (SEP) in order to test a market, rather than an association.

An association does not distribute the benefit which it can make, but it preserves them in reserves: it is the criterion of nonlucrativity. The important difference is that this one cannot in no case to be distributed to the whole or part of its members.

The gifts with an association recognized general interest give right a tax cut. This one is of 60% for the gifts made by companies and of 66% for the gifts of the private individuals (75% in the case of associations known as " Coluche").

An association having an employee is seen automatically registered with the Sirene register (held by INSEE) by the Training center of companies (CFE) of the Taxes, and is thus seen allotting a Siren number; associations paying of the taxes or receiving State grants must require this inscription at the CFE. In the long term, it is probable that all associations receive a Siren number because of the installation of the national file data-processing Waldec.

Legal responsibility

Association can be condemned as a moral person, so much at the civil level (payment of damages) that at the penal level (payment of a fine, dissolution). Even if a leader represents association with the court, it is well association itself which is condemned. But the members of association can them also be condemned, for example for bad management. In addition, an association can be turned over against one or more of its members, to disunite themselves them, and to require so that members be condemned to the place of association. With regard to the leaders, their responsibility is appreciated by the court according to the facts; they can possibly be condemned for acts made by other people (article 1384 of the civil code: One is responsible not only damage which one causes by his characteristic made, but still of that which is caused by the fact of the people which one must answer, or of the things that one has under his guard ). The concept of responsibility is a complex concept; an association cannot reproach one its members for having missed with its functions (for example bad management) only if this person had a clear mandate on behalf of association (for example described in the statutes or in a resolution of the Board of Directors) and if this person had the means (material, financial, formation, experience) to conclude her mandate.

Of course, in all the cases, each member (responsible for association or not) must answer of his own acts according to the L121-1 article of the penal code ( No one responsible penally only for its characteristic is not made ) and of the articles of the civil code 1382 ( Tout made unspecified of the man, which causes with others a damage, obliges that by the fault of which it arrived, to repair it ) and 1383 ( Each one is responsible for the damage that it because not only by its fact, but still by its negligence or its imprudence ).

Article 1 to 5 of the law of July 1st, 1901

; Article 1

association is the convention by which two or several people share permanent way their knowledge or their activity with an aim other than to share benefit. It is governed as for its validity, by the general principles of the duty applicable to the contracts and obligations.

; Article 2

associations of people will be able to be freely formed without preliminary authorization nor declaration, but they will enjoy legal capacity only if they conformed to the provisions of article 5.

; Article 3

Any association founded on a cause or for an illicit, contrary object with the laws, the moralities, or the purpose of which would be to attack the integrity of the national territory and with the republican shape of the Government is null and of no effect.

; Article 4

Any member of an association which is not formed for a given time can be withdrawn some in any time, after payment of the fallen contributions and the current year, notwithstanding any contrary clause.

; Article 5

Any association which will want to obtain the legal capacity envisaged by article 6 will have to be made public by the care of its founders.

Associations of local right in Alsace and the Moselle

An association having its head office in one of the three departments of Alsace and the Moselle does not concern the law of July 1st, 1901 but of articles 21 to 79 of the local Civil law and possibly of the other provisions of this local right being able to be to him applied.

Association does not have a declaration to make with the prefecture or sub-prefecture. She asks her inscription the register of associations held by the magistrates' court. A double control is then carried out by justice and by the administration and this inscription can be refused. This control relates at the same time on the form and the bottom, particularly on the object.

The legal publicity of this inscription is done by the local newspapers having a heading of legal information.

An association can have as an aim a business practice and in this case it can be registered with the chamber of commerce or of the trades.

Different contained disposals in articles 21 to 76 of right local contain precise details on operation or organization of association (contrary to the law of 1901 which does not impose anything), like:

the legal and extra-judicial representation of association;
the designation of the direction by the assembly of the members;
the revocation of the leaders;
methods of decision makings by the direction or the general meeting;
decision-making power of a general meeting and her field of competence;
methods and procedure of modification of the statutes;
withdrawal of the right to vote of a member when the resolution having to be voted has as an aim a legal document between him and association;
it not transferability nor transmissibility of the membership;
methods of dissolution of association by the members;
the presence in the obligatory statutes of provisions;
…

The local right does not comprise (contrary to the law of 1901):

of provisions imposing the behavior of a special register nor of register of the deliberations;
of time of declaration of the statutory modifications but these modifications is applicable only if they were declared with the magistrates' court;
of sanctions for the case where these modifications would not be declared (this sanction is useless since that the modification is not applicable to the members and the thirds as long as she was not declared).

Associations of local right are subjected more and more to the general right as laws and payments of the general right are voted or decided, because these texts now systematically comprise a provision or an expect article that this law or this payment is applicable to associations concerned with the local right.

It is thus the case for the tax instructions of 1998 and 1999 relating to the concept of nonlucrativity and the tax consequences.

During some time, this statute appeared more advantageous than that of the law of 1901 and it happened that associations created their head office in one of these three departments to profit from this statute. That rarefies since the legislative measures or lawful general right extend to associations concerned with the local right.

See too

Association with nonlucrative goal

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