Associations may operate as informal or registered associations. Registered associations are part of the register of associations maintained by the National Board of Patents and Registration of Finland (PHR). The registered name of the association is followed by the abbreviation ry.
In accordance with the law, the difference is that an association which operates informally is like any group of friends, while a registered association is considered a legal person. A registered association may
- Make contracts, open a bank account, sign a rental lease, join an umbrella organisation and so on. In unregistered associations, members who have made commitments are personally responsible for them.
- Acquire property, apply for assistance or obtain a permission to collect funds. In unregistered associations, persons who apply for grants, property owners or persons responsibe for property are association members as private persons.
Thus, in accordance with the law, the association board in a registered association is responsible for association activities. In case of damage compensation, the association as a whole is responsible. In other associations, each member of the association is personally responsible for activities. If activities of a registered association cause damage, for example, the association will have to compensate for it, whereas in an unregistered association individuals who have caused the damage will compensate for it.
Registration brings stability and continuity to the association. However, small associations can often operate more easily without bureaucracy required by registration, as the changes of authorised signatories or rule amendments must always be reported to PRH and it costs money to make these changes. In practice, being unregistered does not necessarily prevent you from getting a bank account. Thus registration is not always necessary or practical for small, informal associations.
Registration means that the association is entered into PRH’s register of associations. The register of associations is public and contains information on all registered associations in Finland. Anyone can receive information from the register. You can find out whether an association is registered, who is the chairperson of the association or who are authorised to sign on behalf of the association.
Registration is made with a basic notice form. Forms and instructions are available from the register of associations, your local register office or in an electronic form on the website of PRH. Filling out the basic notice costs EUR 85. (Choose the option “no preliminary check of rules” – previewed rules only apply to the situation where the subsection of an umbrella organisation is registered under the same rules as the umbrella organisation. AYY is not such an umbrella organisation and AYY’s model rules are not previewed.)
The charter and rules of the association are required for registration. In addition, you have to provide information on persons who are authorised to sign on behalf of the association (contact details of persons who are authorised to sign on behalf of the association in accordance with the association rules). Therefore, in order to submit the form, you will need their contact details and personal identity numbers. Note that English cannot be the registering language or determined as the official language of a registered association (ry). This is outruled by the Association Act in accordance to Finland’s official legislative languages (Finnish and Swedish).
After submitting the form, PRH reviews the association rules to ensure that the purpose and function of the established association are in accordance with law and good manners. It usually takes a few months for PRH to review new associations. If PRH requires corrections to the rules, a request for correction is submitted to the contact person provided in the application. In this case, rules should be corrected for those parts which were commented on and resubmitted to PRH in accordance with instructions provided with the request for correction. Changes must be made in accordance with the association rules, that is, in the association meeting.
The association will be notified when the rules are approved in PRH. After an approved decision by PRH, the association may use the abbreviation ry in its name and the rights of a registered association will begin immediately.
If the association needs the Business ID for making contracts, for example, the ID must be separately applied for from the Finnish Business Information System (YTJ). Non-profit associations are not automatically joined to the system after the registration. Associations, which engage in small-scale non-profit activities, do not usually need the Business ID.
A registered association must notify PRH about amendments concerning rules or persons who are authorised to sign on behalf of the association. The amendment notice is subject to a charge. The amendment notice can be made electronically by choosing the option “change of persons authorised to sign for the association” (€20) or “amendment of rules” (€85), depending on the reported amendments.
In practice, the persons authorised to sign on behalf of the association change every time when the board members of the association change, as in most association rules one or several board members are the persons who are authorised to sign on behalf of the association.
If associations make any amendments to their rules, the rules must be first accepted in accordance with the association rules (usually in two consecutive association meetings) and then submitted to PRH for review. Rules of a registered association enter into force only after PRH has accepted them, therefore all rule amendments must be reported to PRH.
The discontinuation of an association must also be reported to PRH. Otherwise the association is still considered active.
If your association has already registered but you have forgotten to submit amendment notices in recent years, the latest information should be updated to PRH as soon as possible. In this way, you can guarantee the legality of association activities.
Many associations operating within AYY have been operating unregistered for several years. The registration of such an association works in the same manner as registering a completely new association.
If the charter or rules are displaced and cannot be found from the drawers of previous members, the association must be formally re-established. This means that the founding meeting must be held again and a new charter must be drafted.
According to the Associations Act, an unregistered association cannot own property. Therefore, if you want to ensure that there are no legal problems concerning property, it is advisable to formally transfer the property under the name of the association after the registration. You can do this by having the previous members of the association from the period when the property was acquired to donate property to the association in an association meeting, for example. In this way, the process can be recorded in announcements section in the minutes and the ownership transition will be recorded for the future generations.
Similarly, in accordance with the Associations Act, agreements cannot be made under the name of an unregistered association (rental agreement for storage or club facilities, for example) but agreements are legally under the name of the association members who have signed the agreement. It is advisable to notify other parties involved in the agreement about the registration. However, in practice, the situation is not often this difficult and being unregistered does not necessarily make the association activities more difficult.
Good to know: registration is not relevant in terms of association membership. Therefore, the membership right of those persons who have joined the association before the registration will remain the same after the registration.