Legislation

Charities and Societies Proclamation (proc. no.621/2009)

SECTION THREE CHARITIES
Sub-Section One
General
14. Definition
1) “A Charity” means an institution, which is established exclusively for charitable purposes and gives benefit to the public.
2) “Charitable Purposes” shall include:
a) the prevention or alleviation or relief of poverty or disaster;
b)the advancement of the economy and social development and environmental protection or improvement;
c) the advancement of animal welfare;
d) the advancement of education;
e)the advancement of health or the saving of lives;
f)the advancement of the arts, culture, heritage or science;
g)the advancement of amateur sport and the welfare of the youth;
h)the relief of those in need by reason of age, disability, financial hardship or other disadvantage;
i)the advancement of capacity building on the basis of the country’s long term development directions;
j)the advancement of human and democratic rights;
k)the promotion of equality of nations, nationalities and peoples and that of gender and religion;
l)the promotion of the rights of the disabled and children’s rights;
m) the promotion of conflict resolution or reconciliation;
n)the promotion of the efficiency of the justice and law enforcement services; and
o) any other purposes as may be prescribed by directives of the Agency.
3/ A public benefit shall be deemed to exist where:
a) the purposes of the Charity can generate an identifiable benefit to the public;
b)the purposes of the Charity do not create a situation wherein its benefits exclude those in need; and
c)any private benefit of individuals and organizations could be acquired only incidentally and as a secondary consequence of the organization’s activities.
4/ The Agency may determine the details of charitable purposes and the public benefit by directives.
5/ Those who can take part in activities that fall under Sub-article 2 (j), (k), (l), (m) and (n) of this Article shall be only Ethiopian Charities and societies.
15. Types of Charities
1/ A Charity may be formed as:
a)a Charitable Endowment;
b)a Charitable Institution;
c)a Charitable Trust; or
d)a Charitable Society.
2/ Without prejudice to the provisions of Subsection five of this Section concerning Charitable Committees it shall be necessary to form and acquire a Registration and License Certificate in order to carry out charitable acts.
3/ Charities may form a consortium Charity to co-ordinate their activities. Particulars shall be determined by the directives of the Agency.
Sub-Section Two Charitable Endowments
16. Definition
A “Charitable Endowment” is an organization by which a certain property is perpetually and irrevocably destined by donation or will or the order of the Agency for a purpose that is solely charitable.
17. Application for Registration
1/ The registration of a Charitable Endowment may not be sought during the lifetime of the founder, except by the founder herself/himself or a person designated for that purpose.
2/ After the death of the founder, it shall be sought by the person to whom the founder has entrusted such task and who has accepted it or the executors of the founder’s will.
3/ In default of the persons in Sub-article (1) and
(2), it shall be sought by those persons who have drawn up the act of Endowment or who have been witnesses to it or who hold that act in deposit.
4/ Where the persons who are bound to seek the registration of the Charitable Endowment fail to do so, the registration of the Charitable Endowment may be sought, three months after the death of its author, by any interested party or by the Agency.
5/ The Agency shall draw up model rules for Charitable Endowments that may be of aid to those wishing to use such model.
18. Revocation of an Act of Charitable Endowment
1/ The founder of an endowment may revoke it so long as the Charitable Endowment has not been registered by the Agency.
2/ The heirs of the founder may only exercise such right of revocation where the Charitable Endowment has not been registered by the Agency within 6 months from an application having been made to Agency with a view to obtaining its registration.
19. Structure of Charitable Endowments
Any Charitable Endowment shall be organized with the structure of Board of Management, Manager, Auditor and other departments as may be necessary
20. Composition of the Board of Management
1/ Where the members of the Board of Management are not appointed by the founder or by a person designated by the founder the Agency shall facilitate the appointment of such members.
2/ Where a member of the Board is, for any reason, unable to perform his duties, a new member shall be appointed according to the
rules of the Endowment.
3/ The number of members of the Board shall in no case be less than three.
21. Powers and Functions of the Board of Management
The Board of Management shall have the following powers and functions:
1/ it shall be the supreme organ of the Charitable
Endowment;
2/ appoint a Manager who shall be responsible to manage the Endowment or dismiss the same; and
3/ administer the Endowment as per its rules.
22. Meetings of the Board of Management
1/ The Board of Management shall meet as prescribed by the rules of the Charitable Endowment.
2/ The decisions of the Board of Management shall be taken by majority.
23. Remuneration of Board Members
1/ A Member of the Board shall not be entitled to remuneration unless a provision about his entitlement to remuneration has been made, by the Charitable Endowment’s rules or by any law.
2/ Payments made in connection with covering costs incurred by Board Members for the purpose of attending Board meeting shall not be considered as remuneration.
24. Powers and Functions of the Manager
The manager of the Endowment shall:
1/ direct the work of the Charitable Endowment and administer the Endowment pursuant to its rules;
2 represent the Endowment in all its dealings
with the third parties;
3/ follow up and supervise the implementation of the decisions of the Board of Management;
4/ submit work plan and budget as well as reports on the activities and finance of the Endowment to the Board of Management;
5/ study conditions that will promote income generating activities of the Endowment and impement such where approved by the Board;
6/ sign on the bank account opened in the name of the Endowment in accordance with its rules; and
7/ discharge other related tasks which may be given to him by the Board of Management.
25. Powers and Functions of the Auditor
The Auditor shall:
1/ monitor the financial and proprietary administration of the Charitable Endowment;
2/ prepare the internal audit report of the organization in accordance with standards acceptable in Ethiopia;
3/Notwithstanding the provisions of this Proclamation regarding external audits the Charitable Endowment may at any time use an external Auditor.
26. Determining the Beneficiaries
Where the beneficiaries are not sufficiently determined by the founder, the Board may determine such beneficiaries as it deems consistent with the intention of the founder.
Sub-Section Three Charitable Institutions
27. Charitable Institution
1/ A Charitable Institution is a Charity formed by at least three persons exclusively for charitable purposes.
2/ The Provisions of this Proclamation relating to the structure of Charitable Endowment shall apply, with the necessary adjustments, to Charitable Institutions.
3/ Notwithstanding sub-article (2) of this Article, the rules of the Institution may; however, provide that the Charitable Institution be structured in the form of a Society as provided for in section four of this Proclamation.
28. Duties and Responsibilities of Members
1/ Each member of a Charitable Institution and any new member shall make guarantee to contribute to the assets of the Institution, in the event of its being dissolved while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the Institution contracted before he ceases to be a member and of the charges and expenses of winding up such amount as may be required, not exceeding a specified amount.
2/ The Agency may by directives determine the minimum amount of guarantee required for the registration of Charitable Institutions.
29. Application for Registration
Persons with the intention of forming a Charitable Institution shall apply to the Agency in accordance with Article 68 of this Proclamation.
Sub-Section Four Charitable Trusts
30. Definition
A “Charitable Trust” is an organization by virtue of which specific property is constituted solely for a charitable purpose to be administered by persons, the trustees, in accordance with the instructions given by the instrument constituting the charitable trust.
31. Formation
1/ A Charitable Trust may be constituted by a donation or by a will or by order of the Agency.
2/ A donation or will under Sub-article (1) of this Article shall be subject to civil law provisions.
3/ An implied provision in the donation or will shall suffice for the constitution of the Charitable Trust.
32. Perpetuity of a Charitable Trust
1/ A Charitable Trust may be constituted for a definite period. However, those assets obtained from income generating activities, public collections or any other sources shall not be used for purposes other than those for which the trust is instituted.
2/ Where a Charitable Trust is constituted for an indefinite period, it shall be perpetual and irrevocable.
3/ The charitable trust shall keep separate books of account for assets obtained from income generating activities, public collections or any other sources.
33. Application for Registration by Trustees
1/ Trustees shall be appointed in accordance with Article 35 Sub-article (1) and such trustees shall apply, in the manner provided in Article 68, to the Agency for a certificate of license and registration.
2/ The trustees shall apply for the registration of the Charitable Trust within 3 months of constitution of the Charitable Trust.
3/ The trustees may not perform any acts involving third parties before acquiring a certificate of registration except those acts necessary for transferring the funds mentioned in the donation or will to the possession or ownership of the Charitable Trust.
34. Number of Trustees
1/ The number of trustees shall not in any case be lower than 2 and more than 5. Where less than 3 persons are named ,the Agency shall facilitate the appointment of the number of people required to fulfill this requirement.
2/ Where more than 5 persons are named as trustees, the 5 first named and who are able and willing to act shall alone be the trustees, and the other persons named shall not be trustees unless appointed on the occurrence of a vacancy.
3/ Notwithstanding sub-article (1) of this Article, the Agency may allow less than 3 persons as trustees where one or more of such trustee is a Charity.
4/ At least one of the trustees appointed under this Article shall be an Ethiopian domiciliary.
35. Appointment of Trustees
1/ The trustees may be appointed by the person constituting the Trust, or by the person designated by him. In default of such person the Agency shall facilitate the appointment of such person.
2/ Where the trustee so appointed refuses his agency or is for any other reason unable to perform the trusteeship, a new trustee shall be appointed according the rules of the trust.
36. Appointment of a Charity as a Trustee
1/ A person constituting a Charitable Trust may appoint a Charity as a trustee in which case the officers of the Charity will administer the trust.
2/ The Charity provided in Sub-article (1) shall administer the trust by the terms of the will, donation or order of the Agency and distinguish it from other donations or income that it utilizes to achieve its purposes.
37. Structure of a Charitable Trust
1/ Where the person constituting the Charitable Trust does not designate a trustee manager, a trustee treasurer and a trustee auditor or does not appoint a person to do the same, the trustees shall among themselves make such designation.
2/ The Agency shall make such designation where the trustees fail to make such designation or are unable to give decision.
3/ Where there are more than three trustees those who have not been designated under Sub-article (1) or
(2) shall have all the rights and obligations of the other trustees except those rights and obligations inhering in the designated responsibilities
4/ The trustees shall among themselves choose the person who shall serve as the chairperson in the meetings of the trustees.
38. Administration of a Charitable Trust
1/ The trustee manager shall perform all acts of management without the approval of the other trustees except where at least one of the trustees submits a written protest concerning any administrative act.
2/ Decisions beyond acts of management and those decisions protested to under Sub-article
(1) shall be taken by majority where at least three of the trustees are present.
3/ Where opposing notions are supported by an equal number of trustees, the final determination shall lie with the chairperson of the meeting.
4/ Those who are against a decision taken under Sub-article (2) and (3) may require that their dissenting opinion be recorded in the minutes.
5/ The trustees shall be individually liable for the ultra vires acts they take as officers of the charitable trust.
39. Powers of Trustees
1/ The powers of the trustees on the Charitable
Trust are those of an owner.
2/ Without prejudice to any provision to the contrary in the act of constitution of the Charitable Trust, the trustees may not alienate immovable property without prior notification to the Agency.
3/ Subject to the provisions on small charities the trustees may not alienate the property of a Charitable Trust by a gratuitous title.
40. Representation of a Charitable Trust
1/ The trustee manager shall represent the Charitable Trust. The trustee manager shall nominate the trustee who shall act in his stead and may also appoint an advocate to represent the Charitable Trust in any proceedings.
41. Remuneration of Trustees
1/ A trustee shall not be entitled to remuneration unless a provision about his entitlement to remuneration has been made, by the trust instrument or by any law.
2/ Notwithstanding sub-article (1) of this Article, a trustee who acts in a professional capacity shall be entitled to receive reasonable remuneration out of the trust funds for any services that he provides to or on behalf of the trust if all the trustees have agreed in writing and approved by the Agency that he may be remunerated for the services.
3/ Notwithstanding sub-article (1) of this Article a trustee is entitled to indemnity for all personal expenses and obligations arising out of the administration of the Charitable Trust.
42. Liability of Trustees
The trustees shall be liable for the good management of the Charitable Trust, in accordance with the provisions relating to agency, to the beneficiaries of the Charitable Trust and where applicable to the persons who are to receive the property at the termination of the Charitable Trust.
43. Resignation of a Trustee
1/ A trustee shall be liable for any consequent loss to the Charitable Trust where he does not notify the other trustees and the Agency of his intention to resign two months prior to his resignation.
2/ A trustee shall remain liable for the administration of the charitable trust until he hands over the trusteeship.
3/ Where a trustee applies for resignation, a new trustee shall be appointed by the person constituting the trust, by the person on whom such power has been conferred, or in default of any such person, by the Agency 1 month prior to the expiry of the notice prescribed in sub-article (1).
44. Attaching Charitable Trusts
1/ The creditors of beneficiaries may in no case attach a Charitable Trust or any allowance to which a beneficiary is entitled.
2/ The creditors of persons who are to receive the property forming the object of the Charitable Trust constituted for a definite period may at the dissolution of the Charitable Trust attach such property, or may replace the debtor at the time of termination.
3/ Notwithstanding Sub-article (2) of this Article, the creditors shall not have rights on those assets obtained from income generetaing activities, public collections or any other sources under subarticle (1) of Article 32(1) of this Proclamation.
45. Rights of Beneficiaries
1/ The beneficiaries may claim from the Charitable Trust the making over of the interest, which, according to the act of constitution of the Charitable Trust, is to accrue in their favor.
2/ Without prejudice to the provisions of Sub-article (1) of this Article where the rights of beneficiaries are jeopardized, they may apply to the Agency for the dismissal of the trustee or to compel him to give appropriate guarantees.
3/ The beneficiaries of the Charitable Trust have no right to dispose of or to administer the property forming the object of the Charitable Trust.
4/ Notwithstanding the provision of Sub-article
(3), they may only do those acts which preserve their rights, such as the interruption of a prescription in relation to such property.
5/ The beneficiaries may make publications with a view to informing third parties of the fact that certain property forms the object of the Charitable Trust.
6/ Where the beneficiaries are not sufficiently determined by the founder, the trustees may determine such beneficiaries as they deem consistent with the intention of the founder.
Sub-Section Five Charitable Societies and Charity Committees
46. Definition
1/ A “Charitable Society” shall mean a Society which is established for charitable purposes.
2/ A “Charity Committee” is a collection of five or more natural persons who have come together with the intent of soliciting money or other property from the public for purposes that are charitable.
47. Charitable Society
1/ All appropriate Provisions of this Proclamation concerning the structure and working of Societies shall apply to Charitable Societies.
2/ Without prejudice to the provisions of Sub-article (1) of this Article all appropriate provisions of this proclamation concerning Charities shall apply to Charitable Societies.
48. Approval of Charity Committees
1/ Charities Committees may not collect funds or perform any other activities without acquiring an approval from the Agency.
2/ Sub-article (1) of this Article shall not apply to activities necessary for the formation of a
Charity Committee.
3/ The Agency shall consider Articles 69 and 70 of this Proclamation when approving a Charity Committee;
49. Statement of Accounts
1/ A Charity Committee shall submit its annual statement of accounts that conform to acceptable standards to the Agency.
2/ A Charity Committee should submit its statement of accounts at its dissolution where the length of time for which the Charity Committee is formed is not longer than one year.
50. Structure of a Charity Committee
1/ The decision granting the approval of the Charity Committee shall specify the particulars of persons who constitute the Charity Committee and those who shall act as president, treasurer and auditor of the Charity Committee.
2/ The decision shall specify the purposes of the Charity Committee and the time within which it has to achieve them.
3/ The decision shall determine, where appropriate, the manner in which the activities of the Charity Committee may be carried out and prescribe such measures as are necessary to control the amount and the use of the funds collected by the Charity Committee. Particulars shall be determined by directives.
51. Liability of Members
1/ The members or officers of a Charity Committee shall be jointly and severally liable for obligations and debts arising out of its activities.
2/ Any donor, member, beneficiary, the Agency or the Sector Administrator shall have standing for the purpose of sub-article 1.
52. Insufficient Fund and Property
1/ Where the money or property collected by the Charity Committee is insufficient to attain the object which the Charity Committee proposed to achieve, or where achievement of its purpose becomes impossible, such money or property shall have the destination prescribed by the decision which has approved the Charity Committee.
2/ In default of Provision to that effect the money or property shall be placed at the disposal of the Agency and shall be destined for a similar charitable purpose in accordance with the Provisions of this Proclamation.
3/ Persons who have donated money or property to the Charity Committee may not claim it back.
53. Balance
1/ Where the money or property collected by the Charity Committee amounts to more than what is necessary for the attainment of the proposed purpose, the balance shall have the destination prescribed by the decision of the Agency approving the Charity Committee.
2/ In the absence of any Provision to that effect, it shall be placed at the disposal of the Agency and shall be destined for a similar charitable purpose in accordance with the provisions of this Proclamation.
3/ Persons who have given money or property to the Charity Committee may not claim it back.
54. Change into a Charitable Endowment
1/ Where under the decision approving the Charity Committee the money or property collected by the Charity Committee is to be destined to a specific lasting object, a Charitable Endowment shall be constituted for the attainment of such object.
2/ Where the money or property collected by the Charity Committee is significantly larger than what is necessary for the attainment of the proposed purpose, the members of a Charity Committee may seek permission and apply to the Agency for registration as a Charitable Endowment.

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3 replies »

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