Associations and their governance is a topic that is both relevant and unfair to those who deal with it: if, on the one hand, the lack of regulation allows almost anything, on the other it can become problematic when it comes to decision-making, especially when it comes to less professional associations.
It should be remembered that associations are regulated under the old Civil Code (CC) and therefore there are some questions and issues that now arise and must be addressed, which did not arise at the time. So much so that it is necessary to resort to both soft law and the Commercial Companies Code (CSC) to ensure that association governance is as efficient and transparent as possible.
Once this introduction has been made, it is important to analyse what the Companies Code stipulates as mandatory for the organization of Associations and, based on this analysis, to understand, in the light of the rules of good governance, what is or is not relevant to import from other regimes. Associations, whatever their activity, must have a management body and a supervisory body.
The management body - typically known as the Board of Directors - will have to be made up of an odd number of people, one of whom will be the Chairman, who will have the casting vote in the event that not all the members are present at a decision. On the other hand, the supervisory body can be one of two: either a sole auditor or a supervisory board, with the rules above applying to the latter (1).
Alongside these, there is the General Meeting, made up of all the members, which must meet once a year and extraordinarily, when called by the board or when requested by one or more members, in one of two situations: either in the event that the board should have called it and failed to do so or by a group of members not less than one fifth of the members, under the terms of article 173 of the CC, when they consider it necessary to do so in order to deliberate on a legitimate purpose.
Before moving on to an overview of the competence of the different bodies, we feel it is imperative to clarify some of the issues that often haunt Associations when it comes to choosing members for the different bodies, especially with regard to the Board of Directors, using know-how from other sources.
There are three central questions on this subject that we feel it is important to address here: (i) the first is whether or not the governing bodies can be made up of people who are not members, (ii) the second has to do with whether or not the governing bodies are remunerated and, finally, (iii) what link exists between the member of the governing body (especially the Board of Directors) and the Association.
We would like to clarify that there is no obligation for the members of the governing bodies to be members, so the administration of the association can be carried out by other members. We also point out that this solution could guarantee the separation of powers: members versus management, which could be beneficial in some situations. In a different opinion, there are those who believe that making it compulsory for board members to be members ensures that the association's mission and what motivated its creation is guaranteed. Therefore, this decision must necessarily be the subject of reflection by the founding members, in the light of what they want to ensure, and it is important to weigh up interests, which can only be done by them and on a case-by-case basis.
On the other hand, with regard to the remuneration of the governing bodies, we don't think that there is any impediment to the management body being remunerated (2), which means that the articles of association can provide for its remuneration or not and the General Meeting can decide on its remuneration or not.
Finally, a note on the relationship to be established between the Association and the member of the Board of Directors. It seems to us that the accumulation of links should be avoided, i.e. the same person should not be an employee and a director of the Association, using the provisions of the CSC on the accumulation of these functions in the context of public limited companies. We would point out, however, that there may be specific situations in which maintaining the two roles may make sense, but that this should not be the rule or cover the majority of the members of the body.
A final note (which will be further developed at a later date) on the powers of the bodies: pointing out that the Board of Directors must administer the day-to-day life of the Association, and this administration is overseen by the supervisory body; the General Meeting, in turn, has subsidiary powers, except in relation to what is expressly provided for in Article 172(2) of the CC and in relation to the powers conferred on it by the articles of association.
(1) Under the terms of Article 171(1) in fine of the Companies Code, both the management body and the supervisory board can only meet if a majority of their members are present. Thus, the legislator imposes both a constitutive and deliberative quorum.
(2) We note that this matter will be duly revisited at a later date in the light of the legislation applicable to Social Solidarity Institutions.
