Associations

Characteristics of an association

An association is a collaborative arrangement between members. An association is often chosen by, for example, sports organisations, student clubs, charitable institutions and local communities because it offers considerable flexibility in regulating the rights and obligations of its members.

Purpose stated in the articles of association

The purpose of the association is recorded in its articles of association and indicates the area in which the association is active. Not everything is permitted; the law restricts the purposes that may be pursued. A purpose that is contrary to public order may lead to prohibition or dissolution.

Membership list

An association is a legal entity with members and is established by notarial deed. An association must have at least two members and the board is required to maintain a membership list. An association generally does not have a profit motive and it may not distribute profits to its members. However, lowering membership fees and providing services at a non-market-conforming price do not fall under the prohibition on profit distribution.

Types of associations

An association is established by notarial deed and its articles of association are recorded in this deed. A so-called formal association has full legal capacity. A board member of such an association is, in principle, not liable for the debts of the association, although exceptions to this rule do exist.

In addition to the formal association, there can be an informal association. This type of association exists where there is an independently organised collaborative arrangement aimed at a specific goal and that participates in legal transactions as a unit.

This type of association is well illustrated in a classic court ruling, in which both a parish and the parish choir claimed ownership of a drum kit located in the church. The choir argued that it was an informal association and as such could be the owner of the drum kit. The Arnhem Court of Appeal accepted this argument, classified the choir as an informal association and ruled that the drum kit was the property of the choir.

An informal association has limited legal capacity and cannot, for example, be an heir or acquire registered property such as buildings, aircraft or ships. After its establishment, an informal association may decide to record its articles of association in a notarial deed, in which case it can acquire full legal capacity.

Termination, expulsion and suspension

Membership can be ended by termination or expulsion (also known as removal) by the association. Suspension of a member is a measure that results in the member being unable to exercise membership rights.

Filing a petition with the Enterprise Chamber

In an inquiry procedure, the Enterprise Chamber of the Amsterdam Court of Appeal (the “EC”) may, upon request, order an investigation into the policy and affairs of the association if there are well-founded reasons to doubt the propriety of its policy.