Understanding Austrian Association Law

• Vereinsrecht outlines the legal framework for associations.

Definition of an Association (§ 1 VerG)

• A union is a voluntary, long-term association of at least two people, organized based on statutes, pursuing a specific purpose.
• Its rights resemble those of companies and it can rent premises and incur debts.
• An association cannot be for profit, with its assets used solely for the association's purpose.

Association Characteristics

• Associations are based on the principles of voluntariness and have no profit orientation.
• Require a minimum of two members and pursue an ideal purpose (e.g., sports club, communal).
• Associations have a long-term arrangement and are organized (chairman, etc.).

Austrian Association Life & Members

• Sport clubs are the most popular in Austria at 33% (-1%).
• Red Cross/Caritas associations account for 25% (+9%).
• Singing, music, and cultural associations represent 22% (+).
• Volunteer fire departments account for 22% (+1%).
• Alpine/hiking clubs are 16% (+3%)
• Animal/environmental protection organizations represent 14% (+1%).
• Political parties are 13% (+5%).
• The average association member in Austria is 61% male.
• The average association member is between 15 and 29 years old (62%).
• The average association member has a high school diploma or university degree (64%).
• 33% of association members are in sports clubs.
• Most members have a high income (63%).

Relevant Laws

• UGB (Austrian Commercial Code) regulates rights, accounting, commercial transactions, and corporate structures.
• It defines a company as any organization with ongoing independent economic activities.
• GewO (Trade Regulation Act) defines commercial activity as independent, regular, and profit-oriented.
• VerG (Associations Act) contains the association definition.

Private vs. Public Law

• Public Law (Legality) dictates the state has authority, gives orders enforced by state power, and is only applied with a legal basis.
• Private Law (Private Autonomy) is based on private contracts with mutual declarations of intent.
• Private autonomy is free unless there are regulations; associations fall under private law.

Other Legal Principles

• Regulations for corporate governance and competencies, as well as bylaws are defined in the association's statutes.
• Association statutes are the charter/articles of association for private sector companies.

Founding an Association

• Local jurisdiction lies with the State Police Directorate or District Administration.
• Jurisdiction depends on the association's headquarters.

Formal Requirements for Founding an Association

• Associations must have written documents with a notice of establishment.
• A federal fee of €14.30 and an attachments fee of up to €21.80 are required.
• Associations can be rejected if they do not meet statutory requirements.
• A decision is made within four weeks.
• Rejection reasons may include illegal purposes, an inadmissible name, or statute violations.
• Appeals against decisions are possible.

Successful Foundation

• If the authority does not respond within four weeks, it implies consent.
• The authority registers the association in the Central Register of Associations (ZVR).
• The association receives a free copy of current statutes and an excerpt from the ZVR.

Starting Association Activities

• Association activities can commence after the four week period.

Constituent Assembly

• A constituent assembly initiates the association's first meeting of members.
• Actions include initial information, resolutions, and election of the board.
• The association is a legal entity; acting persons are personally liable before the meeting.

Joining an Association

• Joining requires a declaration as per private agreement.
• Declarations can either be written, oral, or tacit.

Association Statutes

• The statutes must include the associations name and headquarters.
• States the purposes and how funds are raised.
• Acquisition and termination of membership, member rights and duties, and the association's bodies and tasks.
• States the method of appointing its bodies, the duration of their terms, requirements for resolutions, external representation, dispute resolution, and dissolution.

Association Name

• Naming doesn't have as many legal restrictions as the UGB.
• There must be no risk of confusion and it must reflect the purpose of the association.
• Fantasy names can be added if the user would like.

Association Headquarters

• According to § 4 of the Associations Act, the association must be located in Austria.
• Only the location without requiring a precise address is required.
• The headquarters equal the place where its main administration is located.

Association Purpose

• The purpose must be non-material and legally permissible, clear, complete, and specific.
• A precise enumeration prevents statutes from being exceeded.
• Carefully consider how the necessary funds can be raised should be written in the statutes.

Joining & Leaving

• Membership is voluntary.

Types of Members

• Ordinary members
• Extraordinary members
• Sponsoring members
• Honorary members

Membership Admission

• The process is managed by the association and must not violate basic rights.

Membership Exclusion

• Exclusion applies to certain groups, using discretion.

Membership Termination

• Members can leave at any time with an appropriate notice period in the statutes.
• Statute regulations define when membership is lost or terminated.

Rights & Responsibilities of Association Members

• Rights include the right to vote, use the association's facilities, attend events, and elect/get elected.
• Rights include the right to access information.

Obligations of Members

• Members are obligated to pay dues, avoid damaging the association, adhere to statutes, and possibly pay an enrollment fee.

Association Bodies

• Management of an association can include the board, general assembly, supervisory board, arbitration board, auditors, liquidators.

Supervisory Board

• The Supervisory Board is recommended for large associations.
• Consists of at least three members.
• If >300 employees are employed for 2 years, 1/3 must come from the staff if statues include an audit.

General Assembly

• The General Assembly is the highest authority comprised of all regular members.
• The assembly's Tasks, voting rights, convocation methods, and meeting frequency are defined in the statutes.
• Assemblies must be held at least every 5 years.

Liquidators

• Liquidators properly dissolve the association and manage its assets.

Association Board

• The association's board is the management/executive committee.
• It manages the business and represents the association externally.
• It consists of at least two natural persons.
• The board handles information dissemination, management, finances, and member meetings.

Auditors

• Two auditors are required for an association.
• Auditors do not need to be members.
• Professionalism know how is preferable for role.
• Relevant documents must be made available.

Financial Auditors

• Financial auditors are responsible when income/expenses exceed €3,000,000 or donations exceed €1,000,000 for two consecutive years.
• Financial auditors conduct an extended annual audit (balance sheet, profit and loss statement).

Disputes

• The right to legal action cannot be excluded, as resolution is often in the statutes.
• Arbitration is an option with potential for bias.

Association Dissolution

• The statutes must clarify dissolution requirements and how association assets are handled.
• A special resolution may be needed.
• Assets cannot be distributed among members and must be used for non-profit.
• Must make it available to charitable/ecclesiastical purposes, or distributed to entities with similiar goals.

Additional Rules

• Fines can enforce member interest, so long as the monetary damages "do not overshoot the goal".
• Actions in this nature must be porportional to the allegation.
• Challenges must occur at the ordinary court level.
• Association fines must be written in the association rules.
• One shoulf include in the constitution for recourse only when the arbitration court orders a fine.

Power of Attorney & Management

• Power of Attorney can be granted and the association must register under the Austrian Commercial Code.
• Representative and Delegates are selected in large assemblies.
• Supervisory boards are chosen by the members in the Assembly if in the charter.
• It must have at least 3 members and >300 members must have 1/3 member.

Organizational Structures

• Umbrella organizations that group associations with similar interests.
• Federations group associations of the same type.
• Branch associations are subdivisions of the parent association that are both geographically separate and subordinate
• Sections are branches that are legally independent and autonomous in their organization

Association as a Stakeholder

• An association comes into existence with the positive decision of the association authority.
• It has a declarative effect.
• The Central Register of Associations (ZVR) number is required for public activities
• The association is similar to a corporation.
• Associations are legally capable of owning assets/properties. Associations can acquire rights (borrow money) and become obligated.

Legal Capacity

• It is upheld that an association rights/responsibilities remain always.
• This capacity requires the involvement of people for it to act.
• Its operations are managed by human members, but are bound by the entity of the association.
• There is a difference between how declaratory and co constitutite business is written in the book.

Declaration Action

• It must be determined and testified that it already has a right.

Constitution Action

• This creates a legal basis and does not take effect unless enacted.

Association as Employer

• Employment contracts need to have all typical characteristics, and need to be at minimum: a trainer's right to issue instructions, the right to a salary and providing the means to enable the job is.
• Service and work contracts as the option to create a non-employee hire.

Association as Entrepreneur

• Economic/Business activity comes with limitations that need to be followed.
• If boundaries are crossed, the Business authorities will desolve the union, particularly when transparency and open-book accounting is not practiced.
• "Incidental purpose" is for ancillary purposes and if they are not listed as its primarily activity.
• Setting up a trade is also an option- but those are subject for inspection and can have weight in deciding its standing
• Customer Protection Act is important for businesses and its customers

Consumer Protection Act

• It grants withdrawal rights with reasonable terms - that cannot arbitrarily changed by a company.
• It cannot make you waiver liability for other factors in its terms.

Penalties

• Violations of the Associations Act are administrative offenses.
• The District Administration or Federal police are responsible to uphold law.

§ 31 of the Associations Act specifies penalties for:

• Failure to report the establishment of an association.
• Practicing activities despite prohibition.
• Failure to announce changes to the statutes (charter).
• Failure to report and publish voluntary dissolution.
• Failure to show the Central Register of Associations number.
• Fines range between €218 and €726.
• Appeals must be introduced with recourse in two weeks.