Definition of institutions and acquisition of legal personality
By Eleni Louka
The term institution is defined by The Societies and Institutions and other related Matters Law of 2017 (104(I)/2017) as the aggregate of property that is intended to serve a certain non-profit object and for its establishment, the worth of the dedicated property cannot be less than €1,000 (section 2 of the Law).
Institutions acquire legal personality as of the date of their registration in the Register of Institutions by the competent district officer of the relevant district who is responsible in relation to any matters in connection with the registration and operation of societies, clubs and institutions, and the issuance of the relevant registration certificate (sections 2, 5 and 26(1) of the Law).
Registration of institutions
For the purposes of establishing and registrating of an institution, a written application by the founders or the trustees of a trust or the executors of a will, must be filed with the registrar in the prescribed form and shall be accompanied by the constituent deed, as well as by the articles of association of the institution.
The constituent deed and articles of association must stipulate and/or include at least the following:
- The institution’s name, object(s) and registered office;
- The emblem of the institution (if any);
- Detailed reference to the mode of operation and/or administration of the institution;
- The aggregate of the institution’s property;
- The names and addresses of the members of the institution;
- The names and addresses of the members of the board of directors of the institution;
- The manner of succession of the members of the board of directors of the institution;
- A provision according to which no remuneration of any kind whatsoever shall be paid to any founding member or officer or member of the board of directors of the institution with regards to any services provided by them (sections 26(2) and 27(2) of the Law).
The registrar shall proceed with the examination of the relevant application for the institution’s registration, without any delay, and in any event within three months as of the date of submission of the relevant application and all the necessary, duly filled in forms and documentation (section 26(2) and 26(4) of the Law).
Provided that the requirements under the applicable law are met, the registrar will proceed with the registration of the institution in the Register of Institutions and the issuance of the relevant registration certificate in the prescribed form. The registration certificate shall be published in the Official Gazette of the Republic and will constitute conclusive evidence of the date of registration of the institution and of compliance with all legal requirements (section 26(5) of the Law).
Objects of institutions
An institution may be established and registered by the registrar, provided that the main objective thereof is to achieve one or more of the following objects (section 26(3) of the Law):
- The combat and/or alleviation of poverty;
- The promotion of education;
- The promotion of health and/or saving lives;
- The promotion of the community’s and citizens’ development;
- The promotion and/or flourishing of arts, culture, cultural heritage or science;
- The promotion of amateur sports;
- The safeguard and protection of human rights, the promotion of dispute resolution or reconciliation, as well as the promotion of religious and/or ethnic harmony, equality and diversity;
- The protection and/or safeguard of the environment;
- The relief of needs arising out of young or advanced age, health problems, disability, financial hardship or other disadvantage;
- The promotion of animal welfare and protection;
- For the achievement of any other object that benefits the public in general, or for the achievement of any purpose which is considered to be relevant to any of the aforementioned objectives.
Administration of institutions
Institutions must be administered by a board of directors consisting of at least three members. Unless otherwise provided in the articles of association of the institution, their decisions are taken by a simple majority of the members of the board of directors present at the meeting and, in the event of tied vote, the president of board of directors’ meeting shall have a casting vote (section 32(1) of the Law).
In case an institution is administered by three persons, the presence of all three persons is required for quorum purposes (section 32(1) of the Law).
Obligations of institutions
The members of the board of directors of any institution are bound to keep accurate and detailed books of account where all accounts of money received and paid on behalf of such institution shall be recorded and shall also, at the end of each financial year, prepare the following accounts:
- an account of the gross income of the institution during the financial year;
- an account of any surplus in hand at the commencement of the financial year and of all moneys received during the same year on behalf of the institution;
- an account of all money owing to or from the institution and an account regarding all payments made during the same financial year (section 49(1) of the Law).
The members of the of the board of directors of an institution are obliged to submit to the registrar, at the latest within seven months from the end of each financial year, the accounts and relevant report prepared by a certified auditor.
Eleni Louka is a legal consultant at A Karitzis & Associates LLC