NGO Law In Baltic States – Latvia
Concept of Associations and Foundations
According to Associations and Foundation Law, an association is a voluntary union of persons founded to achieve the goal specified in the articles of association, which shall not have a profit-making nature. A foundation, also a fund, is an aggregate of property that has been set aside for the achievement of a goal specified by the founder, which shall not have a profit-making nature. NGO obtain the status of a legal person at the moment when it is entered into the Register of Associations and Foundations.
An association and a foundation are liable to the extent of all its own property. An association is not liable for the obligations of a member. A member is not liable for the obligations of an association. A foundation is not liable for the obligations of a founder. A founder is not liable for the obligations of a foundation.
The name of an association and a foundation shall not be contrary to regulatory enactments and good morals, i. e., the name of a military body or the name of such organization or group which has been recognized as criminal or anti-constitutional, for example, “Hitler, The Nazi, etc. ” shall not be included therein, it shall not create a positive attitude toward violence, and similar.
The name of a foundation shall contain the word “foundation” or “fund”. The name shall differ clearly and distinctly from other names of associations and foundations already registered or under application for registration in the Register of Associations and Foundations. Only the letters of the Latin alphabet shall be used in the name of associations and foundations in Latvia. Misleading information regarding the purpose of activities, type of activities and legal form shall not be included in a name. The name of an association or a foundation shall not coincide with the names of State or local government authorities (institutions), as well as contain misleading information that the association or foundation is endowed with public power.
Rights to Perform Economic Activity
An association and a foundation have the right to perform an economic activity in the form of complementary activity, which pertains to the maintenance and utilization of its own property, as well as to perform other economic activity to achieve the goals of the association or foundation. The income of an association or of a foundation may be utilized only for the achievement of the goal specified in the articles of association. Profit obtained from the economic activity of an association or a foundation may not be divided among the members of an association or the founders of a foundation. If a person receives remuneration (consideration) for activity in an association or a foundation this remuneration (consideration) shall be determined in accordance with the scope of the duties of the respective person and the financial situation of the association or foundation. An association and a foundation, in order to achieve the goals laid down in the articles of association, have the right to perform activities which are not in contradiction with law, especially to distribute freely information regarding its own activities, to establish its own publications and other mass media, to organise meetings, street processions and pickets, as well as to perform other public activities.
An association and a foundation may apply to State and local government authorities in matters related to the goals of the activities of the respective association or foundation, as well as to maintain the rights of its members or interests protected by law in a court.
Founding of an Association
Natural persons and legal persons may be founders of an association, as well as partnerships with legal capacity. The number of founders may not be less than two. In order to found an association, the founders shall take a decision regarding the founding of the association. The following information shall be indicated in a decision regarding the founding of an association:
- The name of the association;
- The objectives of the association;
- The given name, surname and personal identity number of the founders, but for a legal person and partnership – the name, registration number, and legal address;
- The rights and obligations of the founders if the founders have agreed on such;
- An authorization (if such was given) for certain founders to sign the articles of association and an application to the Register authority; and
- Other information that the founders deem necessary. After the taking of the decision regarding the founding of an association the founders shall approve the articles of association of the association, elect an executive body of the association (hereinafter – the executive board), which may be collegial or single-member and other bodies if such have been provided for in the articles of association. A decision regarding the founding of an association shall be prepared in writing and it shall be signed by all of the founders of the association. His or her authorized person who has participated in the taking of the decision may sign the decision on behalf of a founder. The authorization in writing shall be attached to the decision. The articles of association of an association shall be prepared in writing. The articles of association shall specify – the name of the association, the objective of the association, the period of activity of the association (if an association is being founded for a certain period of time), preconditions for the entering into and removal from membership, the rights and duties of members, the procedures by which the rights and duties of a territorial or another division (if such are established) may be laid down, the procedures for the calling of a meeting of members and the taking of decisions, the name of the executive body, the quantitative structure thereof, prescribing the rights of the members of the executive body to represent the association individually or collectively and the structure, procedures for election, competence, procedures for the taking of decisions and terms of office of audit institutions of economic and financial activity or the procedures for the appointing and terms of office of a certified auditor. The founders shall submit to the Register authority an application for the entering of the association into the Register. A founder who has acted on behalf of an association before the entering of the association into the Register shall be liable for any obligations arising from this action. If several founders have acted on behalf of an association to be established, they shall be jointly liable. If a founder has not had the right to act on behalf of the association, any obligations arising from such action shall be transferred to the association if the meeting of members definitively approves these obligations.
An association shall consist of at least two members if the articles of association do not prescribe a greater number of members. The founders obtain the status of a member of the association upon the entering of the association into the Register. The executive board shall take a decision regarding the admission of a member into the association if it is not otherwise provided for in the articles of association. If the executive board or other body (except for a meeting of members), under the competence of which is the admission of members, takes a decision regarding the refusal to admit a member, the person wishing to become a member has the right to demand a review of the matter in accordance with the procedures prescribed in the articles of association. Obligations for members are redeemable only in accordance with procedures provided for in the articles of association. A member may withdraw from an association at any time by submitting a notification in writing to the executive board of the association if it is not stipulated in the articles of association that such notification is submittable to another administrative body.
Administrative Bodies of an Association
The administrative bodies of an association are the members’ meeting (general assembly) and the executive board. Other administrative bodies may be provided for in the articles of association, determining the procedures for the establishment and the competence thereof. The members’ meeting is the supreme body of an association. All members of an association have the right to participate in a members’ meeting. A member may participate in a members’ meeting also with the intermediation of a representative if it is not otherwise provided for in the articles of association of the association. An authorization to participate and vote at a members’ meeting shall be issued in writing. The competence of a members’ meeting shall include – the making of amendments to the articles of association, the election and recall of the executive board and audit institutions, if such rights are not granted to another administrative body in the articles of association, he taking of a decision regarding the termination, continuation or reorganisation of the activities of the association and other matters which under the Associations and Foundation Law or the articles of association are in the competence of a members’ meeting.
The basis for Termination of Activities of an Association- The activities of an association shall be terminated:
- by the decision of a meeting of the members;
- upon commencing bankruptcy procedures of the association;
- upon the diminishing of the number of members to a single member or to another number laid down in the articles of association;
- upon expiration of the term laid down in the articles of association (if the association was established for a specific period of time);
- by the adjudication of a court;
- on another basis specified in the articles of association.
The decision of a meeting of members regarding the termination of activities of an association is taken if more than one-half of the members present vote in favor thereof unless a higher voting majority is provided for in the articles of association. If the number of members diminishes to a single member or to another number laid down in the articles of association, as well as if the period of time specified in the articles of association for which an association has been established expires, the executive board of the association shall take a decision regarding the termination of the activities of the association.
The reorganization of Associations
An association may be reorganized by way of a merger or a division. Only associations may participate in the process of reorganization. It may be provided for in the articles of association that reorganization is or is not allowed under certain preconditions.
An association may be merged with another association through the course of incorporation or merger. Incorporation is a process by which an association (the association to be incorporated) transfers all of its property to another association (the acquiring association). A merger is a process by which two or more associations (the associations to be incorporated) transfer all of their property to a newly established association (the acquiring association). In the case of a merger the association to be incorporated ceases to exist without undergoing liquidation proceedings and obligations of the association to be incorporated transfer to the acquiring association. Members of the association to be incorporated become members of the acquiring association. If two or more already existing associations participate in a process of reorganization, they shall enter into a reorganization agreement. The agreement shall be entered into in writing.
Founding of Foundations
A foundation may be established by one or several persons. If a foundation has several founders, they shall implement their founders’ rights only jointly. Persons who have granted property to a foundation after the making of the entry thereof into the Register shall not be considered to be founders. The status of a founder is not inheritable and it cannot be transferred to third persons.
A foundation shall be established on the basis of a person’s decision regarding the founding of the foundation or a last will and testament. In establishing a foundation for the purposes of general good and charity on the basis of a will (testamentary foundation), the provisions of the Latvian Civil Law. The executor, heir or trustee of a will shall exercise the rights of a founder, manage the property transferred to the foundation to be established, as well as perform other activities until the appointment of the members of the executive board. The articles of association of a foundation shall specify:
- the name of the foundation;
- the goal of the foundation;
- the procedures by which property is transferable to a foundation;
- the procedures for the use of the resources of the foundation;
- the period of activity of the foundation (if a foundation is being established for a specified period of time);
- the procedures for distribution of the property of the foundation in case of liquidation of the foundation;
- the procedures for the appointment and dismissal of members of the executive board and the term of office thereof;
- the procedures for the appointment and dismissal of members of other administrative bodies (if such are provided for) and the term of office thereof;
- the structure, procedures for election, competence, procedures for the taking of decisions and terms of office of the economic and financial activities audit institution, or the procedures for the appointment and terms of office of a sworn auditor; and
- procedures for the making of amendments to the articles of association.
The range of beneficiaries may be prescribed in the articles of association. In case of doubt, a person to whom monies from the property of a foundation may be disbursed in accordance with the articles of association of the foundation is considered as a beneficiary. A foundation may not grant monies, provide guarantees, issue promissory notes to or otherwise finance founders, members of the executive board and other administrative bodies (if such have been established), as well as other persons who have a similar economic interest, especially spouses, relatives and brothers-in-law, sisters-in-law, counting kinship up to the second degree and affinity up to the first degree.
The administrative body of a foundation is the executive board. The formation of other administrative bodies may be provided for in the articles of association, prescribing the procedures for the establishment and the competence thereof, as well as the granting of management competence to other entities or bodies thereof (hereinafter – other administrative bodies). The executive board shall consist of at least three executive board members. If in accordance with the articles of association of a foundation another administrative body has been established and is acting, which consists of at least three members and the tasks of which include the supervision of the activities of the executive board, a single member may be in the composition of the executive board. If the interests of a foundation conflict with the interests of any executive board member or member of other administrative body, a spouse, a relative or brother-in-law, sister-in-law thereof, counting kinship up to the second degree and affinity up to the first degree, the matter shall be decided at the meeting of the body in which the member of the interested administrative body does not have the right to participate in a discussion of the matters, as well as he or she does not have a right to vote, and it shall be written into the minutes of the meeting of the administrative body. The member of the administrative body has a duty to notify regarding these interests before the meeting begins. The member of the administrative body has a duty to notify the administrative body regarding these interests also after the meeting of the body.
The activities of a foundation shall be terminated:
- by the adjudication of a court,
- upon expiry of the time period (if a foundation has been established for a specified period of time),
- upon commencing bankruptcy procedures of the foundation.
The activity of political parties, religious organizations, trade unions, professional organizations, and those associations which are autonomous entities of public law, as well as public foundations (funds) shall be regulated by other laws.