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Analysis of the Non-Profit Sector in the EU10 for Monitoring and Control

Arunas Rakauskas and Anjula Garg

EUR 23240 EN - 2008

European Commission

Joint Research Centre (JRC)

The mission of the JRC is to provide customer-driven scientific and technical support for the conception, development, implementation and monitoring of EU policies. As a service of the European Commission, the JRC functions as a reference centre of science and technology for the Union. Close to the policy-making process, it serves the common interest of the Member States, while being independent of special interests, whether private or national.

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Edited by: António Ribeiro

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JRC37902

EUR 23240 EN

ISSN 1018-5593

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Disclaimer

This report constitutes a comparative overview of the legal framework governing the non-profit sector in the Member States included in the study. It is intended as a basis for discussion and further research and is purely for informational purposes. Under no circumstances should it be viewed as a legal document or as a complete and accurate legal review.

The information contained in this report has not been confirmed as accurate or complete by competent legal experts in the aforementioned Member States and it should not, under any conditions, be considered as such.

The conclusions and recommendations of the report are purely on a research basis and do not reflect the official position of the European Commission.

The authors, the Joint Research Centre and the European Commission do not take any responsibility for the accuracy of the information provided, give no warranty in that regard and accept no liability for any loss or damage incurred through the use of, or reliance upon, this report or the information contained herein.

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Table of Contents

Disclaimer.............................................................................................................................. 5

Table of Contents................................................................................................................... 7

Index of Tables .................................................................................................................... 13

Acknowledgements.............................................................................................................. 14

Abstract ............................................................................................................................... 15

Executive Summary ............................................................................................................. 16

Abbreviations....................................................................................................................... 17

Chapter 1. Definitions in the National Laws of EU10 for Different Types of Entities ............. 18

1. Association...................................................................................................................... 18

1.1. Cyprus...................................................................................................................... 18

1.2. Czech Republic .......................................................................................................... 18

1.3. Estonia ..................................................................................................................... 19

1.4. Hungary.................................................................................................................... 20

1.5. Latvia ....................................................................................................................... 20

1.6. Lithuania................................................................................................................... 20

1.7. Malta ........................................................................................................................ 22

1.8. Poland ...................................................................................................................... 23

1.9. Slovakia.................................................................................................................... 24

1.10. Slovenia.................................................................................................................. 24

2. Foundation ...................................................................................................................... 24

2.1. Cyprus...................................................................................................................... 24

2.2. Czech Republic .......................................................................................................... 25

2.3. Estonia ..................................................................................................................... 25

2.4. Hungary.................................................................................................................... 26

2.5. Latvia ....................................................................................................................... 26

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TABLE OF CONTENTS

2.6. Lithuania................................................................................................................... 27

2.7. Malta ........................................................................................................................ 29

2.8. Poland ...................................................................................................................... 29

2.9. Slovakia.................................................................................................................... 30

2.10. Slovenia.................................................................................................................. 30

3. Non-Profit Organisations ................................................................................................... 30

3.1. Cyprus...................................................................................................................... 30

3.2. Czech Republic .......................................................................................................... 30

3.3. Estonia ..................................................................................................................... 30

3.4. Hungary.................................................................................................................... 31

3.5. Latvia ....................................................................................................................... 31

3.6. Lithuania................................................................................................................... 31

3.7. Malta ........................................................................................................................ 31

3.8. Poland ...................................................................................................................... 31

3.9. Slovakia.................................................................................................................... 31

3.10. Slovenia.................................................................................................................. 31

4. Non-Governmental Organisation ........................................................................................ 32

4.1. Cyprus...................................................................................................................... 32

4.2. Czech Republic .......................................................................................................... 32

4.3. Estonia ..................................................................................................................... 32

4.4. Hungary.................................................................................................................... 32

4.5. Latvia ....................................................................................................................... 32

4.6. Lithuania................................................................................................................... 32

4.7. Malta ........................................................................................................................ 32

4.8. Poland ...................................................................................................................... 32

4.9. Slovakia.................................................................................................................... 32

4.10. Slovenia.................................................................................................................. 32

5. Other legal forms ............................................................................................................. 32

5.1. Cyprus...................................................................................................................... 33

5.2. Czech Republic .......................................................................................................... 33

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TABLE OF CONTENTS

5.3. Estonia ..................................................................................................................... 33

5.4. Hungary.................................................................................................................... 33

5.5. Latvia ....................................................................................................................... 34

5.6. Lithuania................................................................................................................... 34

5.7. Malta ........................................................................................................................ 36

5.8. Poland ...................................................................................................................... 38

5.9. Slovakia.................................................................................................................... 38

5.10. Slovenia.................................................................................................................. 38

6. Definitions for Different Types of Entities in the National Laws of EU10 ................................... 39

Chapter 2. Analysis and Assessment of Existing Systems .................................................... 41

1. Registration..................................................................................................................... 41

1.1. Registration System ................................................................................................... 41

1.2. Country Overview ...................................................................................................... 41

1.3. Registration Systems.................................................................................................. 57

2. Accreditation/Seal of Approval ........................................................................................... 61

2.1. Accreditation System.................................................................................................. 61

2.2. Country Information ................................................................................................... 61

3. Monitoring....................................................................................................................... 63

3.1. Monitoring System ..................................................................................................... 63


4. Tax Status ...................................................................................................................... 73

4.1. Tax System ............................................................................................................... 73


5. Gambling sector............................................................................................................... 86

5.1. Gambling Sector System............................................................................................. 86


Chapter 3. Research Recommendations ............................................................................... 99

1. Registration..................................................................................................................... 99

2. Accreditation ................................................................................................................... 99

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TABLE OF CONTENTS

3. Monitoring......................................................................................................................100

4. Taxation ........................................................................................................................100

5. Gambling .......................................................................................................................100

Chapter 4. Conclusions ...................................................................................................... 101

Bibliography ...................................................................................................................... 102

1. Books ............................................................................................................................102

2. Open Sources .................................................................................................................102

Annexes............................................................................................................................. 105

Annex A. Presentations...................................................................................................... 106

Annex B. National Legislation and Other Material Concerning National Law ...................... 107

3. Cyprus...........................................................................................................................107

3.1. Law on Associations ..................................................................................................107

3.2. Law on Foundations...................................................................................................107

3.3. Law on NPO..............................................................................................................107

3.4. Law on NGO .............................................................................................................107

3.5. Law on Other Legal Forms..........................................................................................107

3.6. Other Laws...............................................................................................................107

4. Czech Republic ...............................................................................................................107



4.3. Law on NPO..............................................................................................................123

4.4. Law on NGO .............................................................................................................123


4.6. Other Laws...............................................................................................................131

5. Estonia ..........................................................................................................................150



5.3. Law on NPO..............................................................................................................195

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TABLE OF CONTENTS

5.4. Law on NGO .............................................................................................................195


5.6. Other Laws...............................................................................................................195

6. Hungary.........................................................................................................................263



6.3. Law on NPO..............................................................................................................269

6.4. Law on NGO .............................................................................................................269


6.6. Other Laws...............................................................................................................276

7. Latvia ............................................................................................................................302



7.3. Law on NPO..............................................................................................................322

7.4. Law on NGO .............................................................................................................325


7.6. Other Laws...............................................................................................................325

8. Lithuania........................................................................................................................374



8.3. Law on NPO..............................................................................................................385

8.4. Law on NGO .............................................................................................................385


8.6. Other Laws...............................................................................................................391

9. Malta.............................................................................................................................420



9.3. Law on NPO..............................................................................................................420

9.4. Law on NGO .............................................................................................................420


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TABLE OF CONTENTS

9.6. Other Laws...............................................................................................................440

10. Poland .........................................................................................................................451

10.1. Law on Associations.................................................................................................451

10.2. Law on Foundations.................................................................................................458

10.3. Law on NPO............................................................................................................464

10.4. Law on NGO ...........................................................................................................464

10.5. Law on Other Legal Forms ........................................................................................464

10.6. Other Laws.............................................................................................................464

11. Slovakia .......................................................................................................................481



11.3. Law on NPO............................................................................................................509

11.4. Law on NGO ...........................................................................................................518


11.6. Other Laws.............................................................................................................526

12. Slovenia.......................................................................................................................558



12.3. Law on NPO............................................................................................................565

12.4. Law on NGO ...........................................................................................................565


12.6. Other Laws.............................................................................................................565

13

Index of Tables

Table 1. Definitions in the national laws of EU10 for different types of entities ........................................ 39

Table 2. Registration Systems .......................................................................................................... 57

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Acknowledgements

Arunas Rakauskas would like to express his sincere thanks to all members of the project group. Firstly he would like to thank Thomas Barbas and Anjula Garg for their invitation to join the project and for supporting the writing of this report. He would like also to thank António Ribeiro, Dawit Meskel and Tanja Horvath for their support and help.

This work has been consistently supported by Sönke Schmidt, Nicholas Kaye and Dora Balazs from JLS in the context of the “European Forum for the Prevention of Organised Crime”. We would also like to thank JLS for inviting us to present this work at the workshop of 19 September 2005 in London, organised by the UK Presidency of the EU on “Regulation of Not for Profit Organisations workshop: Proposed EU Code of Conduct”.

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Abstract

The report “Analysis of the EU10 Non-profit Sector for Monitoring and Control” has been written in the context of the European Commission forum “Support against Terrorist Financing” by Directorate General Justice, Liberty and Security (JLS), and of a Joint Research Centre (JRC) research project to support monitoring and control for EU aid funds. The report’s purpose is to give an overview of the non-profit sector in EU10 with specific attention to the prevention of fraudulent use of funds in this sector, in general, and terrorist financing in particular. This report is complementary to the report “Analysis of the EU15 Non-profit Sector for Monitoring and Control” which sets out the context of the current work in detail and also contains information regarding the classification and definitions used for the non profit sector.

The main aim of the analysis is to present an overview of the non-profit sector in EU101 with regard to the prevention of fraudulent use of funds in the non-profit sector, in particular for financing of terrorism. The basic purpose of this report is to support EU regulatory work for the non-profit sector with a comparative analysis of information for standardisation of terms, requirements for registration, monitoring, accreditation and tax status of these organisations.

The regulatory framework for Non-Governmental Organisations consists of a series of different laws and regulations, including public benefit provisions, tax legislation and the legal framework for public participation. The majority of information on the non-profit sector was collected from state institutions and organisations of the Member States. Collected information was analysed and then compared. Due to the difficulties in handling various languages, the diversity of the non-profit sector and the short time available to complete this work, the report should be regarded mainly as a reference document. The information contained in this document may not be complete.

1 It includes the following countries: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia.

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Executive Summary

The expansion of the European Union marks a changing and defining period for the non profit sector of the accession countries. The issues related to expansion were numerous and complex. This process has resulted in the governments and parliaments of the accession countries creating institutions and mechanisms to facilitate the integration process.

The work “Analysis of the EU10 Non-Profit Sector for Monitoring and Control” contributes to the main objective of supporting EU regulatory work for the non-profit sector and the transparency and traceability for aid funds. This report is complementary to the report “Analysis of the EU15 Non-profit Sector for Monitoring and Control” which sets out the context of the current work in detail and also contains information regarding the classification and definitions used for the non profit sector.

Primarily the aim of this work is to present an overview of the non-profit sector in EU10 with regard to the prevention of fraudulent use of funds in the non-profit sector. The basic purpose of this report is to support the EU regulatory work for the charitable/non-profit sector through a comparative analysis of information with a view to standardising terminology, comparing requirements for registration, accreditation, and monitoring. The report also includes an overview of the tax status of Non-Governmental Organisations, as well as short overview of the gambling sector in the EU10.

This work can be seen as an auxiliary means to support transparency and traceability for aid funds. The work presented pertains to the JRC research project “Transparent Aid – A System to Support Monitoring of Aid Funds” (TR-AID) to build automated IT-based tools to support monitoring and control tasks for activities financed through aid funds. TR-AID started in 2004 in the Unit “Support to External Security” of the Institute for the Protection and Security of the Citizen, at JRC-Ispra. The main objective of TR-AID is to contribute towards the effective use of aid funds by helping to avoid the misuse of such funds. The data collection effort that it entails is meant to complement official aid activity databases. Sources of information will include European Commission databases, OECD databases, open sources (e.g. web sites of both non-profit and donor organisations) and third-party databases, such as company directories.

It needs to be noted that due to the language difficulties, the diversity of the sector and the short time available to complete this work, the report may not contain complete information regarding the non profit sector in the EU10.

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Abbreviations

AFF Article on Foundations and Funds, Act No. 227/1997, Czech Republic

CTDT Corporate Tax and Dividend Tax

EU 10 It includes the following countries: Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia

FIA Foreign Income Account

LCS Law on Charities and Sponsorship

LCSF Law on charity and sponsorship funds

LVAT The Law on Value Added Tax

MI Ministry of Interior

NGO Non-Governmental Organisation

NPO Non-Profit Organisation

NPOPBS Non-Profit Organisations Providing Publicly Beneficial Services

PBC Public Benefit Company

PBO Public Benefit Organisation

STI State Tax Inspection

VAT Value Added Tax

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Chapter 1. Definitions in the National Laws of EU10 for Different Types of Entities

Many diverse types of bodies are described as being NGOs. There is no generally accepted definition of an NGO and the term carries different connotations in different countries. At the same time there are some fundamental features. An NGO must be independent of the government, an NGO may not be constituted as a political party and it may be non-profit-making organisation.

In most EU10 countries, the two common fundamental NGO legal forms are associations and foundations. Association is recognised/accepted as a basic form of membership organisation and foundation is considered as a basic form of non-membership organisation. Other terminology has also been used in both common and civil law countries, including charities, funds, societies, non-profit organisations and others, such as public institutions in Lithuania, non-investment funds in Slovakia, institutes in Slovenia.

1. Association

Associations are membership-based organisations whose members, or their elected representatives, constitute the governing body of the organisation. They can be formed to serve the public benefit or the mutual interest of members. Associations can generally pursue activities directed for the public benefit or for the mutual interest of members.

An association’s highest governing body is the general assembly of its members (or for certain large associations, their duly elected representatives). Several countries require associations to have a management body in addition to the general assembly to deal with the everyday affairs of the association. Countries may also specify (or require the organisation’s statute to specify) a variety of other features of associations, such as the criteria for accepting/expelling members, members’ rights and duties, as authority to represent the NGO, and other issues of internal governance.

In order to found an association, laws of Hungary and Slovenia require ten founders for an association, and Poland requires fifteen. Estonia and Latvia require only two founders.

1.1. Cyprus

No information is available

1.2. Czech Republic

Associations of Citizens (hereinafter "Associations”) are membership organisations established by Czech Republic citizens to pursue common interests. Associations are generally regulated by the Law on Associations2. Associations are permitted to engage in both mutual benefit and public benefit activities3. Associations are, however, prohibited from engaging in functions reserved for the government or public administration4. Members of associations may be natural persons, including foreigners, and legal bodies.

At least three citizens, one of them should be over the age of 18, can form a Preparatory (Founding) Committee that may establish an association.

The association becomes a legal entity upon obtaining certification of registration from the Ministry of Interior, or it becomes a legal entity by default if the Ministry does not inform the Preparatory Committee of its negative decision within 40 days of submission of the Establishment Proposal.

The association must not resemble a political party or religious congregation, for which there are specific laws. There should also be no evident military or paramilitary activities inherent in the purpose and the Statute of the association, nor any membership’s restrictions, benefits or obligations, which would violate basic human rights and freedoms.

2 Act No. 83/1990 on Associating of Citizens (“Law on Associations”), as amended by Act. No. 68/1993, http://web.mvcr.cz/rs_atlantic/ftp/sbirka/1990/sb019-90.pdf

3 Article 4, Law on Associations.

4 Article 5, Law on Associations.

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DEFINITIONS IN THE NATIONAL LAWS OF EU10 FOR DIFFERENT TYPES OF ENTITIES

1.3. Estonia

A non-profit association is a voluntary association of persons, both physical and legal, the objective or main activity of which shall not be the earning of income from economic activity.

The income of a non-profit association may be used only to achieve the objectives specified in its articles of association. A non-profit association shall not distribute profits among its members. A non-profit association is governed by the members and its internal documents (e.g. the Articles of Association).

The Non-profit Associations Act5 regulates the activities of all membership non-profit organisations. The Act states clearly that profit cannot be the principal purpose of the not-for profit association and revenues raised may only be used to achieve statutory goals. The Act also specifies requirements for the members, order of admission, secession, exclusion of members, and the rights and obligations arising from membership. Members can be individuals as well as juridical persons.

Transformation of a non-profit association into a legal person of a different class is prohibited.

A non-profit association may be founded by at least two persons. The founders may be natural persons or legal persons.

In order to found a non-profit association, the founders shall enter into a memorandum of association. A memorandum of association shall set out:

1. the name, location, address and objectives of the non-profit association being founded;

2. the names and residences or locations, and the personal identification codes or registry codes of the founders;

3. the obligations of the founders with regard to the non-profit association;

4. the names, personal identification codes and residences of the members of the management board.

Upon conclusion of a memorandum of association, the founders shall also approve the articles of association of the non-profit association as an annex to the memorandum of association.

5 Non Profit Associations Act.

The memorandum of association and articles of association approved thereby shall be signed by all founders. A representative of a founder may sign the memorandum of association if the representative has been granted an authorisation document therefore. Articles of association shall be amended after entry in the register of the non-profit association and shall not require amendment of the memorandum of association.

The articles of association of a non-profit association shall be in writing. The articles of association shall set out:

1. the name of the non-profit association;

2. the location of the non-profit association;

3. the objectives of the non-profit association;

4. the conditions and procedure for membership in the non-profit association and for leaving and exclusion from the non-profit association;

5. the rights of members;

6. the obligations of members or the procedure for establishment of obligations for members;

7. upon the existence of departments, their rights and obligations;

8. the conditions and procedure for calling the general meeting and the procedure for adoption of resolutions;

9. the number of members of the management board or the maximum and minimum number of members;

10. the distribution of assets of the non-profit association upon dissolution of the association;

11. other conditions provided by law.

The articles of association may also prescribe other conditions which are not contrary to law. If a provision of the articles of association is contrary to a provision of law, the provision of law applies.

If the articles of association do not prescribe a term for the non-profit association, it shall be deemed to be founded for an unspecified term.

In the articles of association different names may be used for bodies and departments of non-profit associations than those provided by the law, however, in such case the articles of association shall indicate to which names provided by the law these names correspond to.

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CHAPTER 1 DEFINITIONS IN THE NATIONAL LAWS OF EU10 FOR DIFFERENT TYPES OF ENTITIES

1.4. Hungary

An association is a self-governed, voluntarily established organisation which is formed for a purpose defined by its charter and which organises its members’ activities in order to achieve its aim6. An association has members – called a "registered membership" under local law. At least ten natural persons and/or juridical entities are required to form an association7. An association cannot be formed for the primary purpose of performing economic activities, nor can it be formed for criminal, military, totalitarian, or unlawful purposes.

1.5. Latvia

Association is a voluntary association of persons, founded to realize the goals stipulated by the Statute and having an unprofitable nature.

The administrative bodies of an association are a general meeting (meeting of the members) and the board. The articles of association may also provide for other administrative bodies and determine the procedure for their creation and their competence.

The highest body of an association is a general meeting.

All members of an association have the right to participate in general meeting, unless otherwise provided for by law. A member may also participate in a general meeting with the intermediation of a representative, unless otherwise provided for by law. An authorisation to participate and vote in a general meeting shall be issued in writing.

The board shall call a general meeting in accordance with the procedures prescribed by law or the articles of association in the cases determined by law or the articles of association, or if the calling of a general meeting is necessary in the interests of the association.

The board shall manage and represent the association.

The board may consist of one member or more members. The general meeting shall elect a chairperson of the board from the board members

6 § 61 of the Act IV/1959, as amended by Act XCII of 1993 Act IV, http://www.icnl.org/library/cee/laws/hunactiv.htm#61, August 2005.

7 Act II/1989, Law on Associations § 2 (1) and § 3 (4), http://www.icnl.org/library/cee/laws/hunactii.html#2

unless otherwise provided for by the articles of association.

Board members shall be natural persons with legal capacity. Not less than half of the board members shall be persons whose place of residence is Latvia.

The board shall administrate and manage the affairs of the association. It shall administrate the assets of the association and shall deal with its funds in accordance with laws, the articles of association, and decisions of the board or other bodies.

The board shall organise bookkeeping accounts for the association in accordance with legislative enactments and shall carry out other responsibilities in accordance with its competence as set out in the articles of association.

An association shall consist of at least two members if the articles of association do not provided for a larger number of members. After the association is registered in the register, the founders of the association gain the status of members of the association.

Each association shall keep a register of its members which shall indicate the name, surname, personal identity code and home address (name and address of a legal person) of each member. Information about member of the association shall be accessible only to the members of the relevant association, and to controlling and law enforcement institutions.

1.6. Lithuania

The law on associations8 (Therein and after LA) defines the concept of an association revealing its main purpose - to coordinate the activities of the members of an association, to represent and protect the interests of the members of an association or to meet other public interests.

An association is a public legal person of limited civil liability, with objective to coordinate activities of the association members, meet, represent and protect public interests of the members of the association. The registered office of the association shall be situated in the Republic of Lithuania. The association shall maintain at least one bank account.

No less than three legal entities or natural persons may form an association. The applicable statutory requirements are based strictly on membership 8 Law on Associations.

21


and there is no capital requirement. There are also no provisions concerning a minimum age requirement for natural persons.

An association shall be a voluntary union of legal and natural persons which performs managerial, economic, social, cultural, educational, scientific research tasks and functions which are established by the association members.

The objectives of the activities, main functions and tasks of the association must relate to the activities or needs of the association members and must be laid down in its statutes.

Legal and natural persons may unite into associations by the type of activities, consumption, functions, and area. A person may be a member of several associations.

1.6.1. The Status of the Association

The association shall be a legal person from the day of its registration, having the seal with its name and a settlement account. The association shall be liable for its obligations to the full extent of its property and shall not be liable for the commitments assumed by its members.

The association shall be a non-profit organisation. It cannot distribute a gained profit among its members. A non-profit organisation shall be an entity possessing the rights of a legal person which has been set up in accordance with the procedure established by the laws and the objective of activities whereof is not profit seeking.

The name of the association must contain the word "association". The name of the association must conform to the requirements of the Regulations of Firm Names which are approved by the Government.

The association shall enjoy the freedom of activities, initiative and decisions, granted by the Constitution of the Republic of Lithuania, this and other laws of the Republic of Lithuania, decrees of the Government, and the determined duties, and in its activities shall abide by the association statutes registered in accordance with the procedure established by this and other laws.

1.6.2. Association Members

Legal and natural persons of the Republic of Lithuania and other states may be association members. Restrictions on membership of foreign legal and natural persons in the association may be set in the statutes.

The members must observe the association statutes. The person who pursues interests

contrary to the objectives of the association may not be admitted to the association.

The list of all the members must be held in the association, and the list of the members who belong to an affiliate must be held in that affiliate. Each association member shall have the right to familiarise himself with these lists.

The association member shall have the right to:

1. make use of the services rendered by the association;

2. acquire the information concerning the activities of the association;

3. use the information collected by the association;

4. dispute in court the resolutions of the general meeting of the members and the collective managing body, and the decisions of the administration.

1.6.3. Establishment

An association may be established on the initiative of legal and natural persons. The association shall consist of at least 3 members.

The initiators of establishment of the association must convene a constituent assembly in which the persons (representatives authorised by them) who have expressed in writing their desire to be the members of the association which is being established shall have the right to vote. The constituent assembly shall adopt the decision concerning establishment of the association, its statutes and shall elect managing bodies.

1.6.4. The Statutes

The statutes shall be a legal document which governs the activities of the association.

The following must be stated in the statutes:

1. the name of the association;

2. the registered office (address) of the association;

3. the objectives, functions and tasks of the association;

4. the rights and duties of the association members;

5. the procedure and conditions of admitting, withdrawal and expulsion of the members from the association;

22


6. the procedure for forming the managing bodies, their competence, functions and responsibility, the procedure for removing of the elective managing bodies and their members, the procedure for the payment for work of the members of the elective managing bodies;

7. the procedure for establishing and liquidating affiliates;

8. the sources of the property and funds;

9. control of financial activities;

10. the procedure for amending and supplementing the statutes;

11. duration of the activities of the association;

12. the procedure for reorganising and liquidating the association.

The statutes may also contain other provisions which are in compliance with the laws.

1.6.5. Affiliates

The association shall have the right to set up affiliates. They shall be set up in the procedure established in the statutes.

An affiliate shall be a subdivision of the association with a separate registered office. The affiliate is not a legal person and shall use the name of the association as a legal person. The affiliate shall operate in compliance with the association statutes and the powers granted by the general meeting of the members which must be specified in the statutes of the association and the regulations of the affiliate.

The affiliate shall be registered, re-registered and removed from the register in accordance with the procedure established by laws.

1.6.6. The Union of Associations

In order to solve their general tasks associations may unite into unions (confederations). The unions (confederations) of associations shall be established and operate in the manner prescribed by this Law.

An association shall join the union (confederation) at the resolution of the general meeting (conference, congress) of the members, which is adopted in accordance with the established procedure.

Enterprises, provided that they are not the members of the associations which are the

members of the union, may be the members of that union (confederation).

1.7. Malta

1.7.1. Overview

From a regulatory point of view, there is no overall authority responsible for NGOs. There are no provisions for their registration and there are no monitoring or supervisory structures. In Malta companies with the particular features of NGOs are currently affected by the absence of proper NGO legislation. There is no current full updated directory of NGOs in Malta, due mainly to the fact that there is no law that requires NGOs to register.

Malta volunteers operate either within organised bodies such as cooperatives, clubs, federations or outside such structures9

On 2005 some initiative was taken and all interested NGOs where brought together to propose recommendations for future NGO legislation in Malta. At present time Ministry for the Family and Social Solidarity presented the White Paper9 to the general public.

In order to fill substantial gaps in Maltese Non-Governmental sector, Ministry for the Family and Social Solidarity prepared and published sector related White Paper. Above mentioned White Paper briefly outlines the attached proposed legislation for the voluntary sector, namely, the Voluntary Organisations Act. The Voluntary Organisations Act assumes a detailed legal structure which emerges from another proposed Act which will amend the Civil Code.

The White Paper explains the rules on enrolment, outlines the functions of the Commissioner for Voluntary Organisations, of the Voluntary Organisations Fund and of the National Council for the Voluntary Sector. It addresses the important challenges of instilling and achieving transparency and accountability by allowing for monitoring without the need of undue interference.

1.7.2. Associations

According to the proposed amendments of the Civil Code some associations may be of private interest (such as when set up to support a specific person or group of named persons, or when it is set up to carry on a trade or profession) and

9 Ministry for the Family and Social Solidarity, http://www.msp.gov.mt/services/subpages/ content_index.asp?id=ngo&section=laws

23


others can have ‘social purposes’ or be ‘non-profit’, even if its purposes are not technically defined as being of a public nature.

Private Associations can register under this law and then the rules of law must be observed and all information required by law on registration and annually must be filed at the Registry. The law lists those items which must be stated in the statute and hence publicly disclosed for the various public interest reasons which have been mentioned above.

Associations are made up of persons. Persons associate together to achieve the purpose defined in the statute. These are organisations with members and need a democratic structure to determine decision-making powers (sports clubs, charitable or environmental groups and etc.).

1.8. Poland

1.8.1. Associations

Associations are membership organisations comprised of natural persons that are voluntary, self-governed and lasting non-profit unions10.

Sources of financing for Associations - Associations with legal entity can profit from different sources of financing:

1. public collections,

2. donations from companies and individuals, legacies,

3. subsidies form public administration,

4. incomes from real property, endowment or other capital revenues,

5. economic activity.

The right to found associations is vested in Polish citizens who have full capacity to conduct legal transactions and who have not been deprived of public rights.

At least 15 people who want to found an association adopt the association’s statute and select the founding committee.

The Law on Associations11 requires that an association’s statute must include:

10 Article 2, Law on associations, 7 April 1989, Journal of Law of the Republic of Poland, No. 20, item 104, Journal of Law of the Republic of Poland, 1990, No. 14, item 86.

1. a name of the association that distinguishes it from other associations, organisations, and institutions;

2. the seat and the territory of activities;

3. the goals of the association and the means for their achievement;

4. the ways of acquiring and losing membership, the rights and responsibilities of the members;

5. authorities of the association, the method of their election, the method of electing supplementary authority members, and the competence of the authorities;

6. the methods of representing the association and property obligations, as well as conditions under which resolutions of the associations are binding;

7. the ways of obtaining financial means and deciding upon members dues;

8. principles of changing the statute;

9. the method of dissolution.

If branches are contemplated, information about their creation and structure must also be stated.

(Article 40) A simple association must adopt regulations that specify its name, location, goals, territory, types of activities, and representative.

The highest authority of an association is a general assembly of its members. A general assembly of members decides upon all the matters on which the statute does not specify the competence of association’s authorities.

The statute may provide for a delegate’s assembly instead of a general assembly of members, or the substitution of a general assembly of members with a delegate’s assembly if membership of the association reaches a certain number specified in the statute. In such cases, the statute specifies the principles governing the election of delegates and their terms of office.

An association must have a board and an internal auditing organ.

The founding committee submits to the registry court a motion for registration with the following enclosures: the statute, a list of founders

11 Article 10.

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containing each founder’s first name, last name, date and place of birth, present address and signature, a protocol of founding committee selection and the address of the association’s temporary seat.

1.8.2. Simple Associations

A simple association is a simplified from of association, and it does not have the status of a legal person. At least 3 persons who wish to found a simple association adopt regulations for the association. The regulations must particularly specify the name of the simple association, its goals, territory, its kinds of activities, its seat, and representative. In writing, the founders notify the supervising agency that is appropriate for the seat about the founding a simple association. The notice must include the data mentioned in section 2 above.

If the activities of a simple association are not forbidden within 30 days from the day the supervising agency receives notice of the associations founding, the association may start its activities.

A simple association may not:

1. create local branches;

2. enter unions of associations;

3. include legal persons;

4. conduct economic activity;

5. accept donations, legacies or inheritances, receive public grants or use public support.

A simple association gains financial means for its activities from member contributions.

1.9. Slovakia

Associations are membership organisations created by citizens to pursue common interests. Three citizens are required to found an association (Article 6 (1), Law on Associations)12, and legal entities may be members of an association (Article 2(2), Law on Associations). No limitations are placed on the ability of foreign natural or legal persons to participate as members of associations.

Within broad parameters, associations are permitted to engage in both mutual benefit and

12 Act No. 83/1990 on Associating of Citizens (“Law on Associations”).

public benefit activities (Article 4, Law on Associations). Associations are, however, prohibited from engaging in functions reserved to the government or public administration (Article 5, Law on Associations), and they are banned from being established for military activities or for purposes violating the human rights of others.

According to the Act No. 83/1990 on Associating of Citizens, the members of an association may be natural persons, including foreigners, as well as legal entities. However, only citizens of Slovak Republic may form the Preparatory Committee of minimum three members, one of which must be adult, which submits the Establishment Proposal and Association’s Statute to the Ministry of Interior for registration in order to obtain the status of a legal entity.

1.10. Slovenia

Associations are membership-based organisations established by and consisting of natural persons to pursue common interests13. Associations are generally regulated by the Associations Law, although specialized associations such as political parties, political movements, churches, and religious organisations are regulated under separate legislation. Foreigners who are permanent residents of Slovenia as well as temporary residents who have resided in Slovenia more than one year may found an association14. Associations cannot be established for the purpose of generating a profit, although they may engage in economic activities if the activities are related to and help promote the association’s objectives15.

Associations may engage in both mutual benefit and public benefit activities

2. Foundation

Generally foundations require property dedicated to a specific purpose and are governed by a self-perpetuating board of directors. Foundations are generally described as capital based bodies without members. Most foundations must be dedicated to the public benefit.

2.1. Cyprus

No information available yet.

13 Associations Law, nos. 60/95, 49/98, 89/99, Article 1.



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2.2. Czech Republic

Foundations and funds are grant-making, asset-based organisations established by legal or natural persons for public benefit purposes16. Foundations must maintain an endowment of at least 500 000 Czech Koruna (approximately € 19.000). Funds have no endowment requirements and may use all of their assets to pursue their statutory purposes17. Although neither form may engage in economic activities, both foundations and funds may organise cultural, social, sporting, and educational events, as well as lotteries, in order to raise funds18. Foundations may hold up to 20% of the shares of joint stock companies and are subject to other investment rules. Funds are prohibited from investing in capital markets.

Self- perpetuating Board of Directors should govern both foundations and funds. The founder(s) should appoint the first board. Both must publish annual reports describing in detail their activities, income sources and use of property.

Both natural persons and legal bodies, including foreigners, may establish a foundation or a fund. To register, the founder(s) must present the proposal for registration to the district court, which is responsible for keeping the register of foundations and funds. The same court operates the register of commercial legal bodies. The proposal must be accompanied by the Articles of Incorporation in the form of a Founders' Agreement, if there are two or more founders, or in the form of a Notary Act, if the founder is a single person. The Founder’s Agreement must be signed on authority.

According to the Law on Foundations and Funds, the information provided in the Articles of Incorporation and in the Application for Registering must include the following:

1. the unique name of the foundation or the fund and address of its headquarters (seat);

2. the name of and other identification information about its founder(s) and their share in the property endowed;

3. the purpose for which the entity is being established (which must be for public benefit, compatible with examples set by the law);

16 Act No. 227/1997 on Foundations and Funds (“Law on Foundations”), as amended by Act No. 201/2002, Article 1(1).

17 Article 2(3) of Law on Foundations.

18 Article 23, of Law on Foundations.

4. in the case of a foundation, the list of endowment components and their identification together with certified overall value of listed endowment assets;

5. the names of the members of the first board of directors (no less than three natural persons) and of the supervisory board (for smaller funds there might be one single person – the Inspector);

6. the way in which the board of directors acts on behalf of the entity;

7. general rules by which the granting procedure to third persons will be regulated; and

8. a “ceiling” restricting the administrative expenses.

Within 30 days of registration, the board of directors of a foundation/fund must submit its Statute, which specifies in more detail the governing structure and proceedings, as well as grant-making rules and any other specific internal regulations.

2.3. Estonia

The Foundations Act states that a foundation is a non-membership legal entity set up to manage property and to pursue stated objectives. The Act sets limits on the activities of foundations, stating that a foundation is allowed to engage in economic activities, but that disbursements can only be made for charitable or social purposes. Founders of a foundation may be individuals as well as juridical persons, and further that it may be established by the last will and testament.

A foundation, recognized as a legal person in private law, is established to administer and use assets to achieve the objectives specified in its Articles of Association. Since a foundation has no members, it is governed according to the law and its Articles of Association. Upon the transfer of assets to a foundation, the founders’ right to direct their use is generally extinguished.

Founders of a foundation must adopt a foundation resolution, which may also be a part of a notarized will19. Registration takes place in the registration departments of city and county courts, where registers of non-profit associations and foundations are maintained. Foundations may be founded by only one person.

19 Estonian Foundations Act, Articles 6 and 7.

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A foundation shall be founded by a foundation resolution which shall set out:

1. the name, location and address of the foundation;

2. the names and residences or locations and addresses of the founders and their personal identification codes or registry codes;

3. the sum of money or other assets, and their value, to be transferred to the foundation by the founders;

4. the names, residences and personal identification codes of the members of the management board and supervisory board.

The founders shall also approve the articles of association of the foundation as an annex to the foundation resolution.

All founders shall sign a foundation resolution and the articles of association approved thereby. A foundation resolution and the articles of association approved thereby shall be notarised. A representative of a founder may sign if the authorisation document granted to the representative there for is notarised. Articles of association shall be amended after entry in the register of the foundation pursuant to the procedure provided for in Estonian Foundations Act.

2.4. Hungary

A foundation is an organisation established through a "Letter of Establishment" by any natural or legal person or by a business partnership without legal personality. A foundation must be established for long-term (or long-lasting) public interest purposes20. After establishing a foundation, founders have only a limited power over its operations.

Organisations based on designated property, without members and that have stipulated objectives that serve a long-term public interest; the principal purpose cannot be to perform economic activities. They can either be "closed" foundations where the founder contributes all capital at the creation of the foundation, or "open" foundations where contributions from donors other than the founder are permitted in the future.

20Act IV/1959, as amended by Act XCII of 1993, §74/A(1), http://www.icnl.org/library/cee/laws/hunactiv.htm#74A

Private persons, legal persons, and unincorporated business associations (jointly referred to hereinafter as "founders") shall be entitled to form a foundation in a charter in order to serve a long-term public interest. A foundation may not be formed for the principal purpose of performing economic activities. A foundation shall provide sufficient assets for achieving its objectives. A foundation is a legal person.

A foundation is deemed established once it has been registered by the court.

Founders may be "private persons, legal persons and unincorporated business associations."21 "Individuals or private organisations" may found public benefit companies22.

With regard to foundations, registration applications must be submitted by the founder together with the organisation’s charter. The charter must contain the group’s name, purpose, location, available assets and the manner in which the assets will be used. An open foundation needs to show sufficient capital to start operations, while a closed foundation must have enough capital to achieve its objectives. The law does not state a precise minimum amount or the manner by which it is calculated. In practice, the amount has generally been low, e.g., for open foundations, approximately € 1.100 is often considered sufficient. The amount needed for a closed foundation will vary depending upon its objectives. The founder may not withdraw a foundation after it is registered23.

A foundation’s founder has significant powers. The founder appoints and can change the governing body while retaining controlling influence on the use of assets and only the founder is entitled to amend the charter "without causing any injury to the foundation's name, purpose, or assets"24.

2.5. Latvia

Foundations an aggregate of property that has been detached to achieve the goals set by founders and that has a non-profit nature.25

A foundation, also fund, is a body of assets which has been set aside to achieve the objective

21 Act IV/1959, as amended by Act XCII of 1993, Article 74A(1).

22 Act IV/1959, as amended by Act XCII of 1993, Article 71.

23 Act IV/1959, as amended by Act XCII of 1993, Articles 74A and 74B.

24 Act IV/1959, as amended by Act XCII of 1993, Article 74B, 74C.

25 Latvian Association and Foundations Law.

27


determined by the founder, and which is not of a profit gaining nature.

The administrative body of a foundation is the board. The articles of association may provide for the creation of other administrative bodies, prescribing the procedure for their creation and their competence, and the granting of administrative competence to other subjects or their bodies.

Founders

A foundation may be founded by one or more persons. If a foundation has several founders, they shall realise their founder rights only jointly. Persons, who have granted assets to the foundation, after it has been registered in the register, shall not be considered founders.

A foundation is founded based on the decision of a person to found a foundation or on a will.

The articles of association of the foundation shall set out:

1. the name of the foundation;

2. the objective of the foundation;

3. the procedure according to which assets shall be transferred to the foundation;

4. the procedure according to which the funds of the foundation shall be used;

5. the period of operation of the foundation (if the foundation is set up for a specific time period;

6. the procedure for division of assets in the case of liquidation of the foundation;

7. the procedure for appointing and recalling board members and the term of office;

8. the procedure for appointing and recalling members of other administrative bodies (if such are provided for) and the term of office;

9. the structure of the business and financial operations auditing body, procedure for election, competence, procedure for adopting decisions and term or office, or the procedure for appointing a sworn auditor and term of office; and

10. procedure for making amendments to the articles of association.

The articles of association may prescribe a set of beneficiaries. In case of doubt, a beneficiary shall

be considered to be a person to whom funds may be paid from the assets of the foundation in accordance with the articles of association of the foundation.

A founder shall submit an application to the register institution to register the foundation in the register. The application shall be signed by the founder, and when founding a foundation based on a will, the executor of the will, heir of guardian.

Attached to the application shall be:

1. the founding decision;

2. the articles of association;

3. the written consent of each board member to be a board member.

2.6. Lithuania

Charity and sponsorship funds are established primarily to fund charitable and sponsorship-type efforts. They are the only forms of not-for-profit organisations that are permitted to provide aid to natural persons. While business organisations may provide such support, the funds they provide can only come from their after-tax profits.

According to the “Law on Charity and Sponsorship Funds”26 (therein and after LCSF) such a fund is a separate organisational form different from associations, community organisations, and public institutions. Charity and sponsorship funds are not permitted to engage in economic activities. Furthermore, there are no minimum capital or membership requirements for the creation of charity and sponsorship funds.

A fund is a public legal person of limited civil liability having its own name and the objective of providing charity and/or sponsorship and other support to legal and natural persons in the fields of science, culture, education, arts, religion, sports, health care, social care and assistance, environmental protection as well as in other fields recognised as selfless and beneficial to society.

The name of the fund shall contain the words “charity” or “sponsorship” or “charity and sponsorship”. Office of the fund shall be situated in the Republic of Lithuania. The fund shall maintain at least one bank account.

26 Law on charity and sponsorship funds, http://www3.lrs.lt/ cgi-bin/preps2?Condition1=30964&Condition2=

28


The founders of a fund may be legal and natural persons who have concluded a memorandum of association and who have undertaken, prior to the fund’s registration in the Legal Entities’ Register, an obligation to make monetary or property contributions and provide services to the fund. Where the fund is established by a single person, he shall execute a founding act, instead of a memorandum of association, subject to the requirements applied to the memorandum of association.

The memorandum of association (founding act) of the fund shall be signed by all of its founders. All founders of the fund shall become its stakeholders as of the date of the fund’s registration in the Legal Entities’ Register.

The following shall be indicated in the fund’s memorandum of association (founding act):

1. the founders (full names, personal identification codes and addresses of natural persons, business names and identification codes of legal persons as well as their registered offices, full names or business names and personal identification codes (identification codes) of their representatives);

2. the name of the fund;

3. property and non-property obligations of the founders;

4. the fund’s objectives;

5. the date of the memorandum of association (founding act).

The memorandum of association (founding act) may also specify:

1. the procedure of compensation of founding costs;

2. the procedure of settlement of disputes between the founders;

3. persons who have the right to represent the fund, their rights and powers;

4. the procedure for convening a founding meeting and the procedure of adopting decisions by the founding meeting;

5. other provisions that do not contravene this Law and other laws27.

27 LCSF Article 5.

The fund shall hold general meetings of stakeholders and shall set up a managing body. The fund may also set up other structural bodies.

The general meeting of stakeholders shall be the supreme governing body of the fund28.

The general meeting of stakeholders shall:

1. amend the fund’s Articles of association;

2. make decisions on the removal of stakeholders from the fund and conferring stakeholder rights to supporters;

3. elect (appoint) and remove members of a collegiate managing body and single-person managing body, the chairman of a collegiate managing body and the auditor, unless otherwise provided by the Articles of association;

4. elect (appoint) and remove members of other collegiate bodies, where such bodies are stipulated in the fund’s Articles of association and where the Articles do not provide otherwise;

5. approve the annual financial accounts of the fund;

6. decide on the restructuring or dissolution (reorganisation or liquidation) of the fund;

7. decide on the establishment of other legal persons or becoming member of other legal persons, unless otherwise provided by the Articles of association.

The fund shall be registered in the Legal Entities’ Register29. The fund may be registered only after its memorandum of association (founding act) has been concluded, its founding meeting has been convened, its Articles of association have been adopted, at least one of its managing bodies has been set up and other obligations stipulated in the memorandum of association (founding act) have been fulfilled. The following documents shall be submitted to the Legal Entities’ Register for the registration of a fund: memorandum of association (founding act) and Articles of association of the fund. The fund shall be deemed to be established as of the date of its registration in the Legal Entities’ Register. The Legal Entities’ Register shall also include the following information concerning the fund:

28 LCSF Article 8.

29 LCSF Article 6.

29


1. period of activity, if limited;

2. dates of the beginning and end of the financial year.

The fund shall hold general meetings of stakeholders and shall set up a managing body (single-person and/or collegiate).

All of the stakeholders shall have the right to vote at the general meeting of stakeholders, each of the stakeholders having one vote. Members of the managing bodies and other collegiate bodies of the fund, where they are not the fund’s stakeholders, may attend a general meeting of stakeholders without the right to vote.

2.7. Malta

According to the Malta White papers Foundation is dedicated to a purpose for the benefit of persons and administered by administrators. All Foundations must register as legal persons. These are artificial persons and are treated as persons.

The proposed Civil Code deals in detail with Foundations. These could be for a private interest with beneficiaries or for a “social purpose” and established as “non-profit making”. Foundations can be created by public deed or will, which must contain statutory information about various matters listed in the law, and must be registered in the Public Registry.

Foundations must be established with at least 500 Lira and additional funds can be endowed after establishment.

It is possible for a purpose Foundation to have beneficiaries only when the dominant purpose of a Foundation is to support a class of persons which constitute a sector within the community as a whole. In that case the public interest overcomes the problem of private interest of the individual beneficiaries.

The provisions then deal with rights of founders, administrators and beneficiaries including the rights of information of beneficiaries. It should be noted that as the Continental Law of Foundations is not very developed in so far as it relates to rights of beneficiaries, the proposed provisions of the Civil Code track those in the Trusts and Trustees Act where beneficiaries are very much the focus. This also results in harmony within the legal system for similar cases.

2.8. Poland

Foundations are organisations established "to pursue socially or economically useful objectives

that are consonant with the basic interests of the Republic of Poland”30. Foundations in Poland operate according to the Law on Foundations, which came into force in 1984 (See annex). Any individual and legal person (including an association) can establish a foundation.

Foundations have to be registered in the National Judicial Register (KRS)

The foundations statute must include: its name, address, assets, purposes, principles, forms and scope of activity, composition and organisational structure of governing board, and the procedure for appointing members of that body, as well as the responsibilities and powers of that body and its members. The statute may also contain other provisions, in particular those concerning the foundation's conduct of economic activity, the admissibility and terms of its linkage with another foundation, changes in objectives or amendments to the statute, and it may also provide for establishing other foundation bodies in addition to the governing board31.

For both associations and foundations the description of purposes and activities in the statute is important as work determined to be outside of these provisions may result in restrictions or sanctions.

Governing structures: The Law on Associations states that an association independently sets its structures32 but goes on to state general requirements including:

The highest authority is the general assembly of members or in some situations, an assembly of delegates33.

There must be a board and an internal auditing organ.

The Law on Foundations states only that the structure of a foundation is to be determined by the founder and identified in its statute and that the governing board shall direct a foundations activities and represent it to the world34.

30 Article 1 of the Polish Law on Foundations, 6 April 1984 (Journal of Law of the Republic of Poland of 1991 No 46, item 203).

31 Law on Foundations, Article 5.

32 Law on Foundations, Article 2(2).

33 Law on Foundations, Article 11.

34 Law on Foundations, Articles 5 and 10.

30


2.9. Slovakia

According to the Act No. 34/2002 on Foundations and Amendments of the Civil Code35, the Foundation is an interest association of property, which serves to public benefit (see below). The Foundation is a legal entity incorporated into the Foundation Register kept by the Ministry of Interior of the Slovak Republic (hereafter only “MI”). Any natural or legal person (hereafter only “the founder”) may establish a foundation. To do so, the founder(s) need sign under authority the Foundation Deed, which must contain the unique name containing the word “nadácia”, its public benefit purpose, identification of all founders, value of the endowment and proportions of it as endowed by individual founders, identification of its first Board of Directors and the basic procedural rules for decision-making and grant giving to third persons.

In the case of Foundations the law is based on the principle of the first choice left to the founder(s) as regards the members of the Board of Directors and the Supervisory Board, as well as the person appointed as Custodian of the Foundation, who is the Chief Executive Officer employed by the Foundation. However, according to § 22 of the Foundation Act the founder(s) may specify in the Foundation Deed the length of the term of service in the boards, as well as to specify the prerequisites for the membership. Therefore, long-term membership is possible and as a prerequisite for membership may be e.g. the nomination by a certain body or person. However, general principle calls for separation of the Foundation from its founder(s) and a shift of the control to the boards representing general public.

2.10. Slovenia

Foundations are grant-making, asset-based organisations established by foreign or domestic legal or natural persons36 for generally beneficial or charitable purposes. “Generally beneficial” activities are those in the fields of science, culture, sport, education, health care, child and disabled care, social welfare, environmental protection, conservation of natural and cultural heritage, or religion37. A foundation may engage in economic activities to the extent they advance the purpose for which the foundation was established38.

35 Act No. 34/2002 on Foundations and on the Change of Civil Code, as amended (“Law on Foundations”).

36 Foundations Law, no. 60/95, Article 4.



Foundations are required to pursue public benefit objectives

3. Non-Profit Organisations

Non-profit organisations are legal or social entities created for the purpose of producing goods and services whose status does not permit them to be a source of income, profit, or other financial gain for the units that establish, control or finance them.

Non-Profit Organisations could be defined as organisations that:

1. are not-for-profit; that means that Non-Profit Organisations are organisations that do not exist primarily to generate profits, either directly or indirectly.

2. do not distribute any benefit they may generate to those who own or control them; that means that Non-Profit Organisations may be profit-making, but they are “non-profit distributing.”

3. are institutionally separate from government; that means that the organisation is not part of the state machinery and does not exercise state authority in its own right.

4. are self-governing; that means that the organisation is able to control its own activities and is not under the effective control of any other entity.

5. non obligatory. That means that membership and contributions of time and money are not required or enforced by law.

3.1. Cyprus

No definition for NPO could be found for Cyprus.

3.2. Czech Republic

No definition for NPO could be found for Czech Republic.

3.3. Estonia

No definition for NPO could be found for Estonia.

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3.4. Hungary

Non-profit companies are legal persons, serving the common interests of society on a regular basis, without aiming to acquire profits or accumulate assets. Non-profit companies may carry on business-type economic activities in the interest of promoting their non-profit activities. Profits generated by a company's activities may not be distributed among the members.

In respect of non-profit companies, the common regulations pertaining to business associations and the provisions on limited liability companies prescribed in the Act on Business Associations shall be duly applied, with due regard to the differences set forth in this Act.

The articles of incorporation of non-profit companies shall specify the public service activities and, when applicable, any business-type economic activities performed by the non-pr

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