Association’s purpose
Question
In our committee, a dispute has arisen in connection with the question of how old the association is. The association was founded 19 years ago. Five years ago, it was renamed, the purpose was altered slightly and the entire committee was replaced. The current chairperson claims that the association is only five years old rather than 19. Which age is correct?
Answer
The name of an association is part of the articles of association and in most cases is mentioned in the first article along with the purpose. The articles of association can be amended, meaning this is also the case for an association's name and purpose. This matter is addressed by law, however, in Article 74 of the Swiss Civil Code (ZGB): "No member may be forced against his or her will to accept a change in the objects of the association". If the purpose is changed (and not merely adjusted), a member is therefore allowed to immediately leave the association. However, the association continues to exist.
An indication that your association has existed since its foundation is the fact that the association was never dissolved. Conclusion: you can celebrate your association's 20th anniversary next year.
Question
When it is appropriate for a project to take on the form of a profit-oriented association rather than a GmbH (limited company) or an AG (public company)?
Answer
Under Swiss law (Article 60 ff. of the Swiss Civil Code [ZGB]), associations are not allowed to pursue an economic purpose. The purpose of the association is the pursuit of idealistic, non-economic purposes and may not provide its members with any economic advantages.
An economic purpose is deemed to exist if members are to be provided with an economic, financial advantage via the association's activities, for example through the payment of wages or the distribution of profits. The decisive factor here is not the articles of association and other association regulations, but rather the association's actual activities. However, it is absolutely allowed for an association to be economically active with respect to the funds it requires for the fulfilment of its idealistic purpose. It is allowed to employ people and conduct business in a commercial manner. In the latter case, it must be entered in the commercial register. Otherwise, an entry is voluntary.
Associations that already seek to pursue an illicit economic purpose at the foundation stage cannot be legally founded. Associations that go on to pursue an illicit purpose or engage in an illicit mixture of purposes at a later stage face the threat of liquidation or, in a liability case, the revocation of their legal form as an association.
