The Charter of a Public Association: How to Retain Control
Founders of a public association hold no protected status after registration. How membership categories, voting rules and charter amendment procedure keep control with the founders.
You have set up a public association, either a public organization (громадська організація) or a public union (громадська спілка), invested your time and your reputation in it, and brought in the first members. Two or three years later, the general meeting may be dominated by a majority you have never met. And it is that majority that will decide who runs your organization next.
The key points in 30 seconds
- Unlike shareholders in a limited liability company, the founders of a public association hold no automatically protected status once the association is registered.
- The Law on Public Associations allows membership categories to be defined flexibly: full, associate and honorary members, each with a different scope of rights.
- Voting rights at the general meeting should be reserved for full members alone, and admission to full membership should require a unanimous decision of the existing full members.
- Election and dismissal of the head of the association should be tied to that same protected group.
- The procedure for amending the charter should be shielded by an elevated quorum and a qualified majority.
- Review the charter before you admit new members, not after they have acquired the right to vote.
How governing a public association differs from governing an LLC
In a limited liability company, the founders automatically become shareholders, they form the supreme governing body, and they retain control of the company until they themselves decide to hand it over.
Public associations follow a different rule. Law of Ukraine No. 4572-VI of 22 March 2012 "On Public Associations" grants founders no special status after state registration. Creating a public association is not in itself a guarantee of continued control over it. If you are only planning to set one up, take this into account while the documents are still being drafted: the registration procedure itself is covered in our guide to online NGO registration in Ukraine.
“4572-VI of 22 March 2012 "On Public Associations" grants founders no special status after state registration.”
How founders lose control
Several people set up a public organization or a public union, invest time and resources in it, build up its activities and recruit members. After a while it turns out that they no longer control their own organization: the new members hold the majority of votes, replace the head of the association, rewrite the charter or push the founders out of any position of influence.
The usual cause is boilerplate wording under which all members of the association hold equal voting rights and together form the general meeting. At the outset this looks democratic. Once the organization starts actively admitting new members, however, their number quickly exceeds the number of people who actually founded it.
Can control be recovered if the charter no longer protects the founders? Yes, but only up to the moment the charter is amended by a majority you no longer command.
What the Law on Public Associations permits
Compared with Law of Ukraine No. 2275-VIII of 6 February 2018 "On Limited and Additional Liability Companies", the Law on Public Associations leaves far more room to shape the governance structure: membership categories, voting procedure, the powers of each body. That freedom has to be used while the charter is still being drafted, because reworking a finished document once the organization has grown is considerably harder.
How to separate the membership categories
The charter may provide for full members and associate members. The decisive vote, and the composition of the general meeting, stay with the full members. Associate members take part in the work and the events of the association, but without influence over management decisions.
| Category | Voting right | Influence on governance | How the status is acquired |
|---|---|---|---|
| Full member | Decisive | Elects the head, forms the supreme body | Unanimous decision of the existing full members |
| Associate member | Advisory | None | Application, decision of the executive body |
| Honorary member | Advisory | None | Decision of the meeting for distinguished service |
I recommend tying the election and dismissal of the head of the association to the circle of full members alone, rather than to all members without distinction. Do not leave the phrase "decided by the general meeting" standing without specifying the category. Wording of that kind automatically extends to every person who holds member status at the moment of the vote, including someone who joined the day before.
Sample wording from a charter
The principle set out below applies equally to a public organization and to a public union, since the law prescribes the mandatory content of the charter (Article 11) for both forms without distinction. It is convenient to illustrate it with an extract from a real charter of a public union. Bear in mind that in the charter of a public organization the equivalent clauses are worded without the word "Union", but follow the same logic:
3.5. The persons who founded the Union automatically acquire the status of full members of the Union from the moment of the state registration of the Union.
3.6. Thereafter, the status of full member is granted solely by a decision of the General Meeting of full members adopted unanimously.
3.7. Admission to associate membership of the Union takes place on the basis of a written application addressed to the President of the Union, by a decision of the President adopted within one month of the date the application is submitted. The President has the right to refuse to admit a person to associate membership.
Clause 3.6 protects the circle of full members against dilution: admitting a new full member requires unanimity among all the existing ones. A single vote against blocks the admission.
The powers of the supreme body in the same charter:
5.3.1. Full members take part in the General Meeting in person or through an authorized representative acting under a power of attorney. Each full member of the Union has one vote. The General Meeting is duly constituted if a majority of the full members of the Union is present.
5.3.5.6. [The exclusive competence of the General Meeting of full members includes] the election and dismissal of the President of the Union.
This construction closes three vulnerabilities at once: who votes, who joins the circle of voters, and who elects the head of the association. All three answers are tied to a single protected group of people.
Three features of a charter worth revisiting immediately
Feature No. 1. Voting rights with no distinction between categories
If the charter simply states that "members have the right to vote", without separating full members from associate members, every new member automatically votes on equal terms with a founder.
Feature No. 2. A simple majority for admitting new full members
If full membership is granted by a simple majority rather than unanimously, a handful of allied votes can gradually dilute the founding circle with new loyal members.
Feature No. 3. A simple majority for amending the charter
If the rules of governance can be changed by a simple majority, even a carefully designed protective model is dismantled in a single vote. For decisions of that kind, set an elevated quorum and a qualified majority, three quarters of the votes for instance.
Important: check these three clauses in exactly that order. Fixing only one of them leaves a loophole, because a fresh vote will undo the protection you have just introduced.
A few years ago a boilerplate charter for a public association rarely raised questions. Today, when such associations are actively recruiting members and attracting funding, a poorly considered charter turns into a ready-made script for a hostile takeover. The risk logic is the same as in business: a decision taken without regard for its consequences is later challenged or unwound — as happens with fraudulent transactions.
Frequently asked questions
Is a public association obliged to have several membership categories?
No, the law does not require it. Without a distinction between categories, though, all members automatically receive an equal right to vote, including those who joined recently.
Can the charter be amended after control has already been lost?
Formally yes, but doing so requires a majority that the original founders may no longer command. Protection through the charter works only as a preventive measure.
Who decides on the admission of a new full member?
The safest model is a unanimous decision of the existing full members rather than a simple majority.
Is it enough simply to list different categories of members in the charter?
No. The categories, the procedure for acquiring each status, the powers of the governing bodies and the procedure for amending the charter itself all have to be drafted consistently with one another.
Take care of the charter before the first outside member appears in your organization.
