Some legal aspects arising out of the regulation of ‘social purpose entities’ (otherwise known as voluntary organisations)

Abstract

In this short study I shall be considering some legal aspects that arise in connection with nonprofit organisations or, as more commonly known, voluntary organisations in Malta. I have decided to call these "social purpose entities" as I shall! be considering entities of whatever form or purpose which can be brought in within the concept of benefit to society and not limit the analysis to one type of organisation only. Generally social purpose entities are created to carry out a beneficial service to the community. The aim of such entities is not to make a financial profit, but to meet some need in society. Some of the activities that are performed by social purpose entities may result in some profit. However, such profit would be utilised for the benefit of the further growth and development of the particular entity's activities. In that way the entity will be in a better position to provide services to those in need. Chapter 1 deals with the different forms that a social purpose entity can take. In fact a social purpose entity can take the form of an association, a club, a trust, a foundation, a fund, a limited liability company or an unincorporated body amongst other forms. Is the form important? No matter what form an entity may take, as discussed in Chapter 1, its ultimate aim is to succeed in the social purposes for which it was created. We thus can appreciate that in actual fact, when the legislator grants exemptions or benefits, the form is not really important. The social purpose the entity actually performs seems to be more relevant than its actual form. Social purpose entities have been performing a variety of activities and services for the public benefit for many years. In Malta there is no specific law that regulates these entities, yet they have been given certain exemptions. Which are the laws that grant exemptions and that regulate these entities? This question will be answered in Chapter 2, where I shall consider some of the laws in which some special provisions have been made with regard to these social purpose entities. Different laws use different terms i.e. "charitable purposes'', "philanthropic organisations" and "public benefit". Is there any difference in the meaning of these terms or do they mean the same thing? This will also be discussed in Chapter 2. As our law in this area has not yet been developed I shall be looking at the laws regulating these entities in foreign countries. In some countries like the United Kingdom there are special laws which regulate all these social purpose entities. Are these laws necessary? Who do they regulate? and are they beneficial to the social purpose entities? In Chapter 3, therefore, I shall be looking at the situation in the United Kingdom, as well as in Italy. I shall also discuss briefly the effect of the European Union on domestic social purpose entities. Very recently a draft Bill entitled the Voluntary Organisations Act has been published by AZAD. The absence of such a law has been felt by the social purpose entities for years and a law that regulates these entities and which introduces registration procedures is seen to be essential. However before such an important law is enacted various considerations have to be borne in mind and in Chapter 4 I shall be commenting on some aspects of this proposed law. Finally, in Chapter 5 I shall be drawing my conclusions and making some further recommendations on what I feel should be considered in the proposed legislation.