Legislation Relevant to the Non-Profit Sector

For optimal readability, we highly recommend downloading the document PDF, which you can do below.

Document Information:

Year: 2007
Country: South Africa
Language: English
Document Type: Publication
Topic: CSO Framework Legislation,Economic Activities

This document has been provided by the
International Center for Not-for-Profit Law (ICNL).

ICNL is the leading source for information on th e legal environment for civil society and public
participation. Since 1992, ICNL has served as a resource to civil society leaders, government
officials, and the donor community in over 90 countries.

Visit ICNL’s Online Library at
https://www.icnl.org/knowledge/library/index.php
for further resources and research from countries all over the world.

Disclaimers Content. The information provided herein is for general informational and educational purposes only. It is not intended and should not be
construed to constitute legal advice. The information contai ned herein may not be applicable in all situations and may not, after the date of
its presentation, even reflect the most current authority. Noth ing contained herein should be relied or acted upon without the benefit of legal
advice based upon the particular facts and circumstances pres ented, and nothing herein should be construed otherwise.
Translations. Translations by ICNL of any materials into other languages are intended solely as a convenience. Translation accuracy is not
guaranteed nor implied. If any questions arise related to the accuracy of a translation, please refer to the original language official version of
the document. Any discrepancies or differences created in the tr anslation are not binding and have no legal effect for compliance or
enforcement purposes.
Warranty and Limitation of Liability. Although ICNL uses reasonable efforts to include ac curate and up-to-date information herein, ICNL
makes no warranties or representations of any kind as to its a ccuracy, currency or completeness. You agree that access to and u se of this
document and the content thereof is at your own risk. ICNL discl aims all warranties of any kind, express or implied. Neither ICNL nor any
party involved in creating, producing or delivering this document shall be liable for any damages whatsoever arising out of access to, use of
or inability to use this document, or any e rrors or omissions in the content thereof.

Legislation relevant to the non-profit sector
Prepared by:
Ricardo Wyngaard

for the:

NON-PROFIT CONSORTIUM

January 2007

Contact Information:

1 st Floor, Horizon House 15 Pepper Street
Cape Town, 8001 South Africa
Tel: +27 21 422 3413
Fax: +27 21 422 3329
E-mail:
info@npc.org.za

Copyright 2007 2
Index
1. Introduction Page
2. Entity Establishment/Registration 3.
2.1
2.2
2.3
2.4
2.5 Nonprofit Organisations Act, No. 71 of 1997,
Communal Property Associations Act, 28 of 1996
The Co-operatives Act
Labour Relations Act, No. 66 of 1995
Electoral Commission Act, No. 51 of 1996 3.
4.
5.
6.
6.
3. Funding/Cooperation for NPOs 7.
3.1
3.2
3.3
3.4
3.5
Development Bank of Southern Africa Act, No. 13 of 1997,

Lotteries Act, No. 57 of 1997,
National Research Foundation Act, No. 23 of 1998,
National Development Agency Act, No. 108 of 1998,
South African Social Security Agency Act, No. 9 of 2004 7.
7.
8.
8.
9.
4. Taxation Laws
10.
4.1
4.2
4.3
4.4

Income Tax Act, No. 58 of 1962
Value Added Tax Act, No 89 of 1991
Transfer Duty Act, No.9 of 1949 Local Government: Municipal Property Rates Act, No. 6 of 2004

10.
10.
11.
11.
5. Legislation Promoting Dialogue and Interaction 12.
5.1
5.2
5.3
5.4 National Economic Development and Labour Council Act, No.
35 of 1994
Advisory Board on Social Development Act, No. 3 of 2 001, and
Local Government: Municipal Systems Act, 32 of 2000,
National Advisory Council on Innovation Act, 55 of 1997 12.
12.
14.
14.
6. General Compliance
15.
6.1
6.2
6.3
6.4
6.5
6.6 Promotion of Access to Information Act, No. 2 of 2000
,
Promotion of Equality and Prevention of Unfair Discrimination Act, No 4 of 2000,
Financial Intelligence Centre Act, No. 38 of 2001,
Prevention of Organised Crime Act, 1998 (Act 121 of 1998,
Prevention and Combating of Corrupt Activities Act, No . 12 of 2004,
Local Government: Municipal Management Finance Act, No. 56 of 2003 15.
15.
16.
17.
17.
18.
7. NPOs as Employers
18.
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8 Income Tax Act, No. 58 of 1962,
Labour Relations Act, No. 66 of 1995,
Basic Conditions of Employment Act, No. 75 of 1997,
Compensation for Occupational Injuries and Diseases Act
, No. 130 of 1993,
Employment Equity Act, No. 58 of 1998,
Skills Development Levy Act, No. 9 of 1999,
Skills Development Act, No. 97 of 1998, and
Employment Insurance Contribution Act, No. 4 of 2002 18.
19.
19.
19.
19.
20.
20.
21.
8. Legislation prior to 1990
21.
8.1
8.2
8.3
8.4
8.5 National Welfare Act, No. 100 of 1978
Trust Property Control Act, No. 57 of 1988, Companies Act, No. 61 of 1973, and
Heraldry Act, No. 18 of 1962
Friendly Societies Act, No 25 of 1956 21.
21.
22.
22..
23.
Copies of this document can be made without prior w
ritten permission from the NPC only when used for educational and
training purposes on a non-commercial manner. The w ritten permission must be obtained from the NPC for all other
purposes, whether commercial or non-commercial use.

1. Introduction

Various new laws have been enacted since our democr atic dispensation which affects the non-
profit sector. Some of these laws are directly aime d at the non-profit sector whilst others affect the
sector indirectly. This document is aimed at identi fying some of the most important legislation
that came into operation since 1990 which directly and indirectly relates to or affects non-profit
organisations (NPOs). The NPC has endeavoured to be all-inclusive in compiling this list, but
cannot guarantee that this is an exhaustive list of all the laws affecting the non-profit sector that
were passed since 1990. The document is not aimed at dealing with legislation that is sector-
specific, i.e., education or sports.
The purpose of this document is three-fold: 1. It is important for those involved with NPOs to be aware of and understand how these
laws will affect their organisation. This should ac cordingly serve as a helpful guideline for
those involved with organisations to be aware of su ch legislation.

2. Section 3 of the Nonprofit Organisations Act, No. 7 1 of 1997 (the NPO Act) provides that
within the limits prescribed by law, every organ of st ate must determine and co-
ordinate the implementation of its policies and measur es in a manner designed to
promote, support and enhance the capacity of nonprof it organisations to perform their
functions . It is anticipated that this will serve as a tool that will guide further policy
development in line with this obligation.

3. To encourage synergy within the legal system that w ill promote and support the creation
of an enabling environment for the non-profit secto r.

Note: This document makes reference to non-profit organisations being voluntary associations,
non-profit trusts and section 21 companies and registered non-profit organisations being the
aforementioned that are registered in terms of the provisions of the NPO Act.

2. Entity Establishment/Registration

2.1 Nonprofit Organisations Act, 71 of 1997
Objectives of the legislation

Section 2 of the Act provides that the objects are to encourage and support nonprofit
organisations in their contribution to m eeting the diver se needs of the population of the
Republic by—
(a) creating an environment in which nonprofit organisat ions can flourish;
(b) establishing an administrative and regulatory fra mework within which
nonprofit organisations can conduct their affairs;
(c) encouraging nonprofit organisations to maintain ade quate standards of
governance, transparency and accountability and to im prove those standards;
(d) creating an environment within which the public m ay have access to
information concerning registered nonprofit organisat ions; and
(e) promoting a spirit of co-operation and shared respo nsibility within
government, donors and amongst other interested per sons in their dealings
with nonprofit organisations

Relevance of legislation to sector

This is one of the most relevant pieces of legislat ion for the non-profit sector as it is
directed towards creating an enabling environment f or NPOs and providing a registration
facility for NPOs.

Duties imposed on sector

Organisations have to report and comply with regula tory duties once registered in terms
of the Act.
The more significant part of the Act relates to the duty that it imposes on all organs of
state:
3. State’s responsibility to nonprofit organisati ons.—Within the
limits prescribed by law, every organ of state must determine and co-
ordinate the implementation of its policies and mea sures in a manner
designed to promote, support and enhance the capaci ty of nonprofit
organisations to perform their functions.

NB: In 2006 the Department of Social Development releas ed the results of an impact
assessment that was conducted on the NPO Act. Impor tant recommendations are
contained within the report.

2.2 Communal Property Associations Act, No. 28 Of 1996:

Objectives of the legislation

After a community has successfully proved their cla im against land in terms of the Land
Restitution Act they will have an option to establi sh a communal property association
(CPA) to hold and manage the property for their ben efit. The legislation is aimed at
enabling communities to form juristic persons, to b e known as CPAs in order to acquire,
hold and manage property on a basis agreed to by me mbers of a community in terms of a
written constitution.
Relevance of legislation to sector

In addition to the CPA, this Act allows the Ministe r of Land Affairs to register a “similar
entity ” which is identified as a trust, association of pe rsons or company registered in
terms of section 21 of the Companies Act, 1973 (Act No. 61 of 1973). This entity may serve
the same function as the CPA, but can be made subje ct to qualifications or conditions as
the Minister may determine.
This means that a non-profit entity can be utilised as a legal vehicle to acquire, hold and
manage property in common for the benefit of a comm unity. An NPO can therefore be
governed in terms of the provisions of the CPA Act if it is registered as a similar entity in
terms of that Act.
Duties imposed on sector

The legislation lists specific duties on similar en tities that are registered under the Act.

NB: Section 21 companies are required upon dissolution to transfer all its remaining
assets, after the satisfaction of all its liabiliti es, to another association or institution with
similar objectives. This may defeat the purpose for which CPAs are registered, as the aim
would be to keep such property for the benefit of t he members and not to have it
transferred to another association upon dissolution .

Section 21 companies may however be established wit h the main object of promoting
communal or group interests. The property of the se ction 21 company can therefore be
applied towards the promotion of this object before dissolving the company.

The Purpose of the Co-operatives Act is set out in section 2 thereof and reads is to:

Promote the development of sustainable co-operative s.
Promote equity and greater participation by black p ersons, women, persons with
disability and youth.
Facilitate the provision of support programmes that target emerging co-
operative.
Promote development support programmes by all the a gencies of national
departments.
Ensure the design and implementation of the co-oper ative support measures
across all spheres of government.
Relevance of legislation to sector

There are different kinds of co-operatives, includi ng: housing, worker, social, agricultural,
financial and consumer co-operatives. The social co -operative is defined as a “non-profit
co-operative which engages in the provision of social se rvices to its members, such as
care for the elderly, children and the sick .”
Duties imposed on sector

Registration can only take place if the co-operativ e complies with the following co-
operative principles laid down section 3 of the Act :
Membership of that co-operative is open to persons who can use the services of
that co-operative and who are able to accept the re sponsibilities of membership.
In the case of a primary co-operative, each member has only one vote.
To the extent feasible, members provide the capital required by that co-operative.
The return paid on member capital is limited to the maximum percentage fixed in
accordance with the constitution of that co-operati ve.
At least five per cent of the surplus is set aside as a reserve in a reserve fund and
is not divisible amongst its members.
It provides education and training to its members a nd employees.

Registration
At least five persons must apply.
Constitution with required clauses.
List of founder members.
List of Directors.
Payment of a prescribed fee.

NB: Some important aspects of the Act include:
The constitution of the co-operative must contain c ertain specific clauses.
Amendments to the constitution must comply with req uirements contained in
the Act.
Keeping of records & minutes of meetings and accoun ting records.
Specific regulation of annual meetings.
Co-operatives must do an annual audit. The financia l statements must be
approved by the members of the cooperatives.
The co-operative can apply for exemption from the a uditing requirements, but
must comply with certain requirements.
Provides for the amalgamation, division, conversion (of companies to co-
operatives) and transfer of co-operatives.
Must provide for a reserve fund.
No limits on number of members.

Copyright 2007 6
It is further important to note that although the Co-operatives Act provides for a non-
profit co-operative, the NPO Act does not make prov ision for non-profit co-operatives to
become registered NPOs, neither does the Income Tax Act make provision for co-
operatives to become approved Public Benefit Organi sations.

2.4 Labour Relations Act, No. 66 of 1995
(Trade Unions and Employer Organisations) Objectives of the legislation

The Labour Relations Act is aimed at governing the employment relationship between the
employer and employee. It makes provision for the registration (not establishment ) of
trade unions (TU) and employer organisations (EO).

Relevance of legislation to sector

This is relevant to the sector as both TUs and EOs must, in terms of the LRA, be
associations not for gain before it can be registered in terms of the LRA. S o, a NPO in the
form of an association not for gain must first come into existence before a TU/EO can
become registered.

Duties imposed on sector

The LRA lists specific requirements to be complied with for the registration of TUs and
EOs
NB: Important aspects to take into account:
1. Although a non-profit entity must first exist befor e a trade union can be registered,
the LRA does not seem to make provision for a non-p rofit trust to become a
registered TU/EO. The language used in the LRA does not allow for such
interpretation, as it firstly requires a TU/EO to b e an association not for gain. A trust
is not an association, but a legal institution, sui generis. Secondly, section 97 of the
LRA provides that a certificate of registration for a TU/EO is sufficient proof that
such registered trade union or registered employers ’ organisation is a body corporate.
According to common law, a trust is not a body corp orate, but a legal institution, sui
generis.

2. The LRA does not provide for the establishment of a TU/EO (as an association not for
gain) but only for its registration as a TU/EO.
Trade unions and employer organisations are therefo re established as associations
not for gain either in terms of the Companies Act o r common law, but are dissolved in
terms of the LRA.

2.5 Electoral Commission Act, No. 51 of 1996
Objectives of the legislation

The Electoral Commission Act makes provision for th e establishment and composition of
an Electoral Commission to manage elections for nat ional, provincial and local legislative
bodies and referenda. It also deals with the regist ration of political parties with the
Commission.
Relevance of legislation to sector

Political parties are constituted as NPOs and this act makes provision for the registration
(not establishment) of political parties. Political parties can be established in the form of
either a voluntary association, a non-profit trust or a section 21 company. The registration
of political parties takes place in terms of sectio n 15(6) of the Electoral Commission Act of
1996 and is further regulated in terms of the Regul ations for the Registration of Political

Copyright 2007 7
Parties of April 1998. In terms of section 2(1) of the Regulations, a party submitting an
application for registration must provide the follo wing:
Copy of its Constitution
Deed of Foundation (50 signatures of South African citizens eligible to vote vouching
that they know of the existence of this party)
Two sets of logos in colour attached to a prescribe d form provided by the IEC
Payment of a registration fee
A proof of advertisement for intended application p ublished in the Government
Gazette

Effect of registration:
A registered political party is entitled (1) to be represented on a party liaison committee
contemplated in the Regulations on Party Liaison Co mmittees, (2) have free access to any
voters’ roll compiled and maintained by the Elector al Commission and (3) entitled to
protection by the Commission of its name, distingui shing mark, symbol and abbreviation,
if any, of the name of the party.

3. Funding for non-profit organisations

3.1 Development Bank of Southern Africa Act, No. 13 Of 1997

Objectives of the legislation:

The Act provides for the reconstitution of the Deve lopment Bank of Southern Africa as a
development finance institution with the primary pu rpose of promoting economic
development and growth, human resource development and institutional capacity
building by mobilising financial and other resource s from the national or international
private and public sectors for sustainable developm ent projects and programmes.

The relevant objects of the Bank are the support of development projects and
programmes in the region by facilitating the partic ipation of the private sector and
community organisations in development projects and programmes.

For this purpose the Bank has set up the Developmen t Fund (a section 21 company) that was
incorporated in December 2001 to addr ess sustainable capacity building at municipal level,
and to support municipalities in enhancing service delivery and local economic development.

Relevance of legislation to sector

The Act presents the non-profit sector with opportu nities to access funding for
development projects. DBSA plays a triple role of f inancier, advisor and partner, by
mobilising finance and expertise for development pr ojects. Most of these projects provide
communities with access to affordable basic service s such as water and sanitation,
transport, electricity and communication. Although it prioritises infrastructure backlogs,
the Bank also funds projects that support social, i nstitutional and economic
infrastructure development.

3.2 Lotteries Act, No. 57 of 1997
Objectives of the legislation:

This Act regulates lotteries and sports pools and e stablishes a National Lotteries Board
(NLB). The Act further makes provision for a Nation al Lottery Distribution Trust Fund.

Relevance of legislation to sector:

The non-profit sector can make application to the N LB for the allocation of funding for
specific defined categories. NPOs can also run thei r own lotteries in terms of the
provisions of the Act.

Copyright 2007 8
Section 26 of the Act makes provision for certain percentages of the money from the NLB
to be paid to the National Lottery Distribution Tru st Fund, and allocated to categories of
projects of a non-profit nature. NPOs can apply for funding by directing applications to
the National Lotteries Board which will direct it t o the different distribution agencies
appointed by the Minister of Trade and Industry for consideration.

Duties imposed on sector

The Act imposes a number of standard conditions tha t NPOs must comply with in order
to access funding.
NB: The application form issued by the NLB requires NPO s to submit three years’ of
audited financial statements when applying for fund ing. This requirement has been
inserted on the application form and is not a requi rement in terms of the Act.

NPOs registered with the Directorate for NPOs are n ot required to prepare audited
financial statements, but may prepare financial sta tements that are certified by an
accounting officer. This means that a registered NP O may not necessarily be qualified to
access funding at the National Lotteries Board.
There is therefore a need to realign the requiremen ts of the NLB with that of the NPO Act.

3.3 National Research Foundation Act, No. 23 Of 1998
Objectives of the legislation

The legislation is aimed at promoting research, bot h basic and applied, and extending
and transferring of knowledge in the various fields of science and technology and
indigenous technology; and to provide for the estab lishment of a National Research
Foundation.
The relevant object of the Foundation is to support and promote research through
funding.
Relevance of legislation to sector

The relevant functions of the Foundation include ob taining and allocating funds for
research and promoting and supporting research by t he awarding of contracts, grants,
scholarships or bursaries to persons or research in stitutions. This provides a means for
research institutions to obtain funding to do resea rch.

3.4 National Development Agency Act, No. 108 of 1998
Objectives of the legislation

The objective of the Act is to establish a National Development Agency that is aimed at
promoting an appropriate and sustainable partnershi p between the Government and civil
society organisations to eradicate poverty and its causes.

Relevance of legislation to sector

The Act is one of the few pieces of legislation tha t is only targeted at civil society. The
establishment of the National Development Agency cr eates an important state-funded
agency for the non-profit sector. The main aim of t he NDA is to contribute towards the
eradication of poverty and its causes by granting f unds to civil society organisations for
the purposes of carrying out projects or programmes aimed at meeting development
needs of poor communities and strengthening the ins titutional capacity of other civil
society organisations involved in direct service pr ovision to poor communities.

Duties imposed on sector

No specific duties are imposed upon the sector, but the Act provides for an opportunity
through which NPOs can obtain funding
NB: There are a few issues that possibly need further refinement or alignment, namely:
i. Section 4 of the Act requires all organisations tha t have received a grant from the
NDA to submit audited financial statements in respe ct of that grant. The NPO Act
only requires certification by an accounting office r when NPOs are registered in
terms of the NPO Act.

ii. The NDA must create and maintain a database on civi l society organisations,
including, but not limited to, the scope and subjec t matter of their work and their
geographical distribution, and share the informatio n in that database with
relevant organs of state and other stakeholders. Th is is a similar duty that is
imposed upon the Directorate for NPOs within the NP O Act. The legislature
should avoid the duplication of essentially the same function.
iii. The Act does not include a procedure whereby NPOs c an appeal against decisions
taken by the NDA. The Act should create the space for such appeals to be made.
iv. The act should make provision to compel the NDA to respond to applications for
support within a specified time period.

3.5 South African Social Security Agency Act, No. 9 of 2004

Objectives of the legislation

The Act makes provision for the South African Socia l Security Agency which is to act,
eventually, as the sole agent that will ensure the efficient and effective management,
administration and payment of social assistance.
Relevance of legislation to sector

The Act may relate to NPOs insofar that the Agency may with the concurrence of the
Minister of Social Development enter into an agreem ent with any person (including an
NPO) to ensure effective payments to beneficiaries, and such an agreement must include
provisions to ensure: the effective, efficient and economical use of funds de signated for payment to
beneficiaries of social security;
the promotion and protection of the human dignity of applicants for and
beneficiaries of social security;
the protection of confidential information held by the Agency other than as is
contemplated in section 16;
honest, impartial, fair and equitable service delivery;
mechanisms to regulate community participation and co nsultation; and
financial penalties for non-compliance with the provisi ons of the agreement.

4.1 Income Tax Act No. 58 of 1962– as amended
The Taxation Laws Amendment Act, No. 30 of 2000 introduced the reform of the tax
laws relating to NPOs and introduced the concept of public benefit organisations. Further
amendments were made in subsequent years.
Objectives of the legislation

The Income Tax Act is relevant to NPOs mainly at th e following levels:

(a) Income tax exemption : Section 10 deals with various kinds of organisati ons that can
qualify for income tax exemption. The most relevant section to the non-profit sector is
section 10 (1) (cN) which allows public benefit org anisations (PBOs) to obtain income tax
exemption. The requirements for PBOs are listed in sections 10 & 30 of the Act. PBOs
may however be tax when they exceed the trading lim itations imposed under section 10
(1) ( cN) of the Income Tax Act. Political parties are also exempted from income tax in
terms of section 10 of the Act upon compliance with certain conditions.
(b) Donor deductible status : This is covered for under section 18A of the Act which lays
down further requirements that must be complied wit h.
(c) Capital Gains Tax : Schedule Eight to the Act provides for capital ga ins tax to be levied
on certain deemed transactions/events. Special prov ision is made for public benefit
organisations under these provisions. (d) Donations Tax: The Act levies donations tax on all donations made to persons or
organisations. It lists a number or exemptions, whi ch include donations made to public
benefit organisations.
Relevance of legislation to sector

The Taxation Laws Amendment Act, No. 30 of 2000 dea lt predominantly with the non-
profit sector as it allows NPOs to access benefits after complying with specific conditions.
Duties imposed on sector

The sector has to comply with a number of obligatio ns in order to access the benefits.

NB: – The Non-Profit Consortium has produced a Research Paper that deals with the
important issues in the Income Tax Act that would r equire further advocacy efforts in
relation to NPOs.

4.2 Value Added Tax Act, No. 89 of 1991
Objectives of the legislation

This Act makes provision for the imposition of valu e-added tax which is a tax indirectly
levied by vendors on the supply of goods and servic es.
Relevance of legislation to sector

The Act makes special provision for welfare organis ations and associations not for gain.
Associations not for gain are treated in the same w ay as other commercial entities if it
generate taxable supplies, but the following specia l provisions will apply:
1
No output tax is payable on any “unconditional gifts” received. For example,
where a club member donates money to cover the cost s of a new kit and
footballs to be used by the club’s soccer side;
The association may be registered on the payments basis of accounting for VAT
on supplies. This assists those associations using simp le accounting systems;
1 Vat 414, Value Added Tax Guide for Associations Not for Gain and Welfare Organisations – SARS

Copyright 2007 11
Certain goods which are forwarded free of charge to a n association not for gain
are exempt from VAT on importation if used exclusivel y for educational,
religious or welfare purposes or for medical or scienti fic research;
Different activities of associations not for gain can be regarded as separate
persons for VAT purposes. This can be used to reduce the impact of VAT;
The sale of any donated goods or services, or other manufactured goods where
donated goods and services constitute at least 80% of the value thereof are
exempt from VAT; and
Certain subsidies or grants received from National or Provincial Government
(public authority) will be zero-rated.
In addition to the special concessions described un der associations not for gain, welfare
organisations also enjoy the following advantages:
2
Even where no charge is made for supplies, the organi sation may still register
for VAT and obtain input tax relief on its purchases.
Subsidies or grants received from the Government (or l ocal authorities) will be
zerorated if it relates to the carrying on of welfar e activities.
Duties imposed on sector

The Act requires NPOs that carries on an enterprise in which the total value of all taxable
supplies made by that person exceeds or will exceed R300 000 in a twelve-month period,
to register as a vendor for VAT purposes. Such orga nizations will thereafter have to
comply with the requirements of the Act.

4.3 Transfer Duty Act, No. 9 of 1949

Objectives of the legislation

This Act makes provision for the imposition of tran sfer duty upon the transfer for
immovable property.
Relevance of legislation to sector

The legislation provides for certain exemptions to the payment of transfer duty. Section 9
(1)(c) of the makes PBOs eligible for exemption fro m paying transfer duty if the property
will be used for the purposes of one or more public benefit activities.
Duties imposed on sector

This benefit is not automatic but granted per trans action and will be considered after
having received the approval letter issued by the C ommissioner for the South African
Revenue and details that confirm that the assets wi ll be used to conduct public benefit
activities. The public benefit organisation will th erefore have to apply for this benefit and
ensure that the property is used to conduct its pub lic benefit activities.

4.4 Local Government: Municipal Property Rates Act, No. 6 of 2004

Objectives of the legislation:

This Act is aimed at regulating the power of a muni cipality to impose rates on property
and to make provision for municipalities to impleme nt a transparent and fair system of
exemptions, reductions and rebates through their ra ting policies.
Relevance of legislation to sector
:
Prior to this legislation no unified system existed in terms of which rates were imposed on
property. Certain NPOs were either exempted or allo wed to pay reduced property rates.
2 Same as above.

Copyright 2007 12
This act now introduced a consistent means of regulating the imposition of rates on
property. It also makes provision for the reductio n of rates with reference to certain
public benefit organisations.

Section 8 of the Act provides that a municipality m ay in terms of the criteria set out in its
rates policy levy different rates for different cat egories of rateable property, which may
include properties owned by public benefit organisa tions and used for any specific public
benefit activities listed in Part 1 of the Ninth Sc hedule to the Income Tax Act.
The Act also requires municipalities to follow a pr ocess of community participation
before adopting its rates policy. After having adve rtised the availability of its draft rates
policy the local community ( which include NGOs dealing with local government affa irs),
can submit comments and representations to the muni cipality concerned within a
specified period.

5. Legislation promoting dialogue and interaction

5.1 National Economic Development and Labour Council Ac t, No. 35 of 1994.

Objectives of the legislation

The Act makes provision for the establishment of a national economic, development and
labour council. The council consists of four chambe rs namely; public finance and
monetary policy; trade and industry; labour market; and development chambers.

Relevance of legislation to sector

The council consists of members representing; organ ised business, organised labour,
organised community and development interests and t he state. The members
representing organised business and labour are appo inted by the Minister of Labour in
consultation with those sectors, whereas the member s representing organised community
are appointed by the “Minister without Portfolio” i n the Office of the President from
persons nominated by the organisations of community and development interest
identified by that Minister.
These organisations must represent a significant co mmunity interest on a national basis,
have a direct interest in reconstruction and develo pment; and are constituted
democratically
The relevant duties of the council are to strive to promote the goals of economic growth,
participation in economic decision-making and socia l equity, seek to reach consensus and
conclude agreements on matters pertaining to social and economic policy and to
encourage and promote the formulation of co-ordinat ed policy on social and economic
matters

5.2 Advisory Board on Social Development Act, No. 3 of 2001
Objectives of the legislation:

The legislation is aimed at providing a national ad visory structure in the social
development sector with the aim of building and con solidating partnership between
government and civil society. This Act defines soci al development as the process of
planned institutional or structural change to mainta in a balance between human needs
and social policies and programmes including empowering individuals and
communities to become self-reliant.
It provides for the establishment a body to be know n as the Advisory Board on Social
Development and to provide for the objectives, duti es and composition of the Board.

Although this legislation is only restricted to the social development sector it still provides
a very significant tool for building partnership be tween government and civil society. On
paper, this Act is a good example for other sectors and the effectiveness thereof must be
monitored.

Objectives of Board
3. The objectives of the Board are—
(a) to advise the Minister on— (i) measures to promote the transformation and cont inuous improvement of
social development services; (ii) measures to promote social development initiat ives;
(iii) measures to include local government in the p rovision of integrated
service delivery at local government level;
(iv) proposals for new legislative frameworks for t he social development
sector and amendments to existing legislation; and (v) the introduction of local and international bes t practices in social
development services;

(b) to act as a consultative forum for the Minister to discuss social development
matters, including—
(i) improving the quality of provincial and nationa l social development;
(ii) the introduction of new policy and successful policy implementation in the
government and non-governmental environment; (iii) facilitating consultation between stakeholder s and government regarding
the implementation of social development;
(iv) ensuring effective review of formulation, impl ementation and evaluation of
social development policies, programmes and legisla tion, as informed by the
needs and priorities of society;
(v) inputs from the social development sector to in ternational forums and
protocols.
Duties imposed on sector

Although there are no specific duties imposed on th e sector the Act does impose duties on
the board once it has been established.

Duties of Board 4. (1) The Board, in order to achieve its objective s, must—
(a) respond to, and advise the Minister on, social development issues identified
by, or referred to, the Board;
(b) identify, promote, monitor and evaluate policy, legislation and programmes
with regard to social development and its impact on the quality of life of the
people and the delivery of services to people;
(c) facilitate dialogue between government and civi l society on social development
issues;
(d) promote stakeholder participation in social dev elopment, particularly
consumer and grassroots sector participation;
(e) submit a report— (i) on the activities of the Board to the Minister at least once a year, which
report must also be tabled in Parliament; and
(ii) whenever requested by the Minister;
(f) make formal reports available to the public to ensure the commitment of the
Board to transparency and accountability;
(g) keep abreast of international developments in s ocial development policy.

(2) The Board must establish clear lines of communication, including formal
meetings, with structures that it interacts with, i ncluding the parliamentary
committees on Social Development of the National As sembly and the National
Council of Provinces.
(3) Any advice or recommendation to the Minister mu st include the minority views
of one or more members of the Board.
(4) Nothing in this section precludes the Board fr om considering any matter
pertaining to social development policy.
NB: It is not clear if the board is in operation and ho w effective it is operating. The
implementation of the Act needs to be monitored to ensure the potential of the Act is
maximised. This may even call for an evaluation of the board in the appropriate time.

5.3 Local Government: Municipal Structures Act, No. 32 of 2000
Objectives of the legislation

The relevant objectives of this Act include; providing for the core principles, mechanisms
and processes that are necessary to enable municipal ities to move progressively
towards the social and economic upliftment of local c ommunities and to provide for
community participation .

Relevance of legislation to sector

The Act provides for a mechanism that allows commun ities (including in the form of
NPOs) to participate in governance at local governm ent level. The definition of a local
community includes any civic organisations and non- governmental, private sector or
Iabour organisations or bodies which are involved i n local affairs within the municipality.

Duties imposed on sector

Section 5 of the Act sets out the rights and duties of a local community which includes;
contributing to the decision-making processes of th e municipality, submitting written or
oral recommendations, representations and complaint s to the municipal council.

The local community also has the duty to observe th e mechanisms, processes and
procedures of the municipality, to respect the muni cipal rights of other members of the
local community and to comply with by-laws of the m unicipality applicable to them.

The Act makes provision for specific areas that req uires community participation. These
include the preparation of an integrated developmen t plan, the establishment,
implementation and review of performance management systems and the municipal
budget.

5.4 National Advisory Council on Innovation Act, 55 of 1997

Objectives of the legislation

This Act provides for the establishment of a Nation al Advisory Council on Innovation
(NACI), the determination of its composition and ob jects and functions; and the
regulation of its financial and staff matters.
The objective of the NACI is to advise the Minister of Arts, Culture, Science and
Technology on the role and contribution of science, mathematics, innovation and
technology, including indigenous technologies, in p romoting and achieving national

Copyright 2007 15
objectives, namely to improve and sustain the quality of life of all South Africans, develop
human resources for science and technology, build t he economy, and strengthen the
country’s competitiveness in the international sphe re.

Relevance of legislation to sector

The Act provides for a definition of the non-profit sector which reads all private persons
who and institutions which act without gain . This terms is included in the Act’s
definition of sectors which include the government sector, higher education sector,
business sector and non-profit sector.
The functions of the NACI include:
a. advising the Minster on strategies for the promotio n of technology innovation,
development, acquisition, transfer and implementati on in all sectors , and
b. the funding of the science, and technology system i n respect of its contribution to
innovation, including the funding of research and d evelopment in all sectors
These sectors would by definition also include the non-profit sector.
The Act also requires that the NACI be broadly repr esentative of all sectors and will be
constituted in a manner that will ensure a spread o f expertise and experience including
research and development in all sectors.
6 General Compliance

6.1 Promotion of Access to Information Act
Objectives of the legislation

This Act is aimed at giving effect to the constitut ional right of access to any information
held by the State and any information that is held by another person and that is required
for the exercise or protection of any rights. The A ct fosters a culture of transparency and
accountability in public and private bodies by givi ng effect to the right of access to
information.

Relevance of legislation to sector

The provisions of the Act are applicable to all private bodies, which includes all former or
existing juristic persons. This would include all forms of NPOs.

There are two points of relevance:
The non-profit sector can firstly, make use of the legislation in order to access cer tain
information held by the state or other private bodi es. The Guide on how to use the Act, as
published by the Human Rights Commission, sets out the process on how NPOs can make
use of the provisions of the Act to obtain certain information.

Secondly , he provisions of the act with regards access to r ecords private bodies are also
applicable to NPOs. So if someone requires the reco rds for the protection of any rights
and complies with the procedural and substantive re quirements of the Act, the NPO must
provide such access.

6.2 Promotion of Equality and Prevention of Unfair Disc rimination Act, No. 4 of
2000

Objectives of the legislation

The Act is aimed at giving effect to the letter and spirit of the Constitution, in particular to
the equal enjoyment of all rights and freedoms by e very person, the promotion of equality
and the prevention of unfair discrimination and pro tection of human dignity.

Copyright 2007 16
Relevance of legislation to sector
This Act is applicable to the state and all persons . Persons as described in the Act include
juristic persons and non-juristic entities and woul d accordingly include all NPOs. The
legislation prohibits unfair discrimination by pers ons on a number of grounds. NPOs will
have to ensure that they do not have any practices or policies that will result or promote
unfair discrimination.
Duties imposed on sector

The Act lists a number of specific prohibitions in relation to unfair discrimination based
upon the specific listed grounds. Section 26 also r equires all NGOs and CBOs to promote
equality in their relationships with other bodies a nd in their public activities and (for
certain organisations) to prepare equality plans as may be prescribed.

Social commitment by all persons to promote equalit y
27. (1) Pursuant to section 26, all persons, non-govern mental organisations,
community-based organisations and traditional insti tutions must promote equality
in their relationships with other bodies and in the ir public activities.
(2) The Minister must develop regulations in relati on to this Act and other
Ministers may develop regulations in relation to ot her Acts which require
companies, closed corporations, partnerships, clubs , sports organisations,
corporate entities and associations, where appropri ate, in a manner proportional
to their size, resources and influence, to prepare equality plans or abide by
prescribed codes of practice or report to a body or institution on measures to
promote equality.
Section 29 of the Act also has an illustrative list of some unfair practices in certain
sectors. The following is one of the practices on t he list:

Clubs, sport and associations
10. (a) Unfairly refusing to consider a person’s ap plication for membership of the
association or club on any of the prohibited ground s.
(b) Unfairly denying a member access to or limiting a member’s access to
any benefit provided by the association or club.
(c) Failure to promote diversity in selection of re presentative teams.

6.3 Financial Intelligence Centre Act, No. 38 of 2001
Objectives of the legislation

This Act is aimed at combating money-laundering act ivities and to impose certain duties
Relevance of legislation to sector

The Act places obligations on certain institutions referred to as accountable institutions
to verify the identity of their clients, keep recor ds of such clients for a specified period,
provide the Financial Intelligence Centre with acce ss to such records and to report certain
incidents.
The Act may in particular be relevant to non-profit trusts as the Act regards A board of
executors or a trust company or any other person th at invests, keeps in safe custody,
controls or administers trust property within the mea ning of the Trust Property Control
Act, 1988 (Act 57 of 1988) as an accountable institution.

NB: Trustees will have to be vigilant in complying with these requirements as
the act also impose stringent sanctions in the even t of non-compliance.

The Act is aimed at introducing measures to combat organised crime, money laundering
and criminal gang activities, to prohibit certain a ctivities relating to racketeering activities
and to provide for the prohibition of money launder ing.
Relevance of legislation to sector

This is a law of general application and applies to the non-profit sector. It is especially
important for NPOs that receive gifts and donations from people or companies. When
someone knows or ought reasonably to have known tha t property is or forms part of the
proceeds of any unlawful activities and enter into any agreement or transaction with
anyone in connection with that property, such perso n shall be guilty of an offence.

A number of other offences are created in terms of the Act which also allows for the
confiscation of certain property used for criminal activity.

6.5 Prevention and Combatting of Corrupt Activities Act , No. 12 of 2004

Objectives of the legislation

The Act, among others, aims to provide for the stre ngthening of measures to prevent and
combat corruption and corrupt activities; the estab lishment and endorsement of a
Register in order to place certain restrictions on persons and enterprises convicted of
corrupt activities relating to tenders and contract s; and to place a duty on certain persons
holding a position of authority to report certain c orrupt transactions.

Relevance of legislation to sector

It is stated in the preamble of the Act that the prevention and combatting of corruption
and related corrupt activities is a responsibility of al l States requiring mutual
cooperation, with the support and involvement of individ uals and groups outside the
public sector, such as organs of civil society and non -governmental and community-
based organizations . if their efforts in this area are to be efficient and effective.
The legislation is relevant to the sector as organi sations have to be aware of the offences
listed in the act and it can cooperate with the sta te in preventing and combating corrupt
activities.
Duties imposed on sector

The Act prohibits everyone from getting involved in corrupt activities as defined in the
Act. A general offence for corruption is created w hich is applicable to everyone. This
offence would naturally be applicable to the non-pr ofit sector.

In addition to the general offence of corruption, a number of specific corrupt activities
relating to specific persons and matters are listed in the Act. Although these activities
relate to specific persons it apply to all persons who are involved in such corrupt
activities. These include offences relating to cont racts and tenders.

The Act also imposes a duty to report corrupt trans actions in cases where a person in
authority or someone knows, ought to reasonable hav e known or suspected such activities
to have taken place. The definition of person in authority includes the directors of a
section 21 company or the CEOs (equivalent officers ) of a voluntary association or trust.

Objectives of the legislation

The object of the Act is to secure sound and sustai nable management of the financial
affairs of municipalities and municipal entities by establishing norms and standards and
other requirements.
Relevance of legislation to sector

The act becomes relevant to the sector firstly when municipalities are transferring funds
to NPOs and secondly when NPOs operate as municipal entities as provide d under the
Local Government: Municipal Systems Act. Thirdly, the Act also sets out a number of
conditions for the entering into of public private partnerships.
Duties imposed on sector

Section 67 (1) of the Act requires that certain req uirements must be met before money
can be transferred to NPOs from municipalities, the se include that the organisation:
(a) has the capacity and has agreed- (i) to comply with any agreement with the municipal ity,
(ii) for the period of the agreement to comply with all reporting, financial
management and auditing requirements as may be stip ulated in the agreement,
(iii) to report at least monthly to the accounting officer on actual expenditure
against such transfer; and
(iv) to submit its audited financial statements for its financial year to the
accounting officer promptly;
(b) implements effective, efficient and transparent financial management and internal
control systems to guard against fraud, theft and f inancial mismanagement, and
(c) has in respect of previous similar transfers co mplied with all the requirements of this
section. There are some exceptions to this rule which are also set out in the Act.

NB: This Act also requires audited financial statements , without making provision for
accounts certified by accounting officers. This req uirement appears to be linked to the
specific agreement and NPOs that are part of PPP ag reements should make provision for
the payment of audit fees when negotiating the term s of the agreement.

7. NPOs as Employers There are a number of laws that affect NPOs having employees. These laws apply to all
employers and do not provide any exclusion for NPOs as employers. Neither NPOs nor their
employees are afforded any special benefits in term s of these laws. This part will only set the
main relevant features of these laws. No further re commendations are being made.

7.1 Income Tax Act, No. 58 of 1962

Objectives of the legislation

The Fourth Schedule to the Income Act deals with th e payment of employees’ tax. This
part of the Act is aimed at ensuring that deduction s are made from the remuneration of
all employees and paid over to the South African Re venue Services.
Relevance of legislation to sector

NPOs with employees have to register with the South African Revenue Services and they
will have to make the required monthly deductions a nd submit the prescribed reports.

The Labour Relations Act is aimed at governing the employment relationship between the
employer and employee.

Relevance of legislation to sector

NPOs with employees are required to respect the rig hts of employees as entrenched in the
LRA. The important rights of employees include; fre edom of association, participation in
forming a trade union, to join a trade union and no t be unfairly dismissed.

Duties imposed on sector

NPOs with employees must abide by the duties impose d upon them in relation to their
employees.
7.3 Basic Conditions of Employment Act, No. 75 of 1997
Objectives of the legislation

This Act makes provision for basic conditions for e mployees. It governs therefore basic
conditions relating to working time, leave and keep ing records of specified particulars.

Relevance of legislation to sector

NPOs must respect the basic rights of their employe es afforded to them in terms of the
legislation.
Duties imposed on sector

NPOs have to comply with these basic conditions and ensure that appropriate systems are
in place that will ensure compliance.

7.4 Compensation for Occupational Injuries and Diseases Act, No. 130 of 1993

Objectives of the legislation

The act provides for the compensation of certain oc cupational injuries and diseases.
Relevance of legislation to sector

The act creates a system that provides a form of in surance for employers if their
employees are injured at the workplace. The provisi ons of the Act also bind NPOs.
Duties imposed on sector

NPOs have to register in terms of the Act, pay an a nnual levy and submit annual returns.
to ensure that occupational injuries and diseases a re covered in terms of the provisions of
the Act. All workplace injuries have to be reported in the prescribe manner.

7.5 Employment Equity Act, No. 58 of 1998

Objectives of the legislation

This Act is aimed at achieving equity in the workpl ace by promoting equal opportunity
and fair treatment in employment through firstly, the elimination of unfair
discrimination and secondly, the implementation of affirmative action measures to
redress the disadvantages in employment experienced by designated groups. The latter is
being done in order to ensure their equitable repre sentation in all occupational categories
and levels in the workforce.

Copyright 2007 20
Relevance of legislation to sector
Employers may not unfairly discriminate, directly o r indirectly, against an employee in
any of its employment practices or policies on spec ific grounds listed in the act (e.g. race,
gender, religion, HIV/AIDS).
Employers are also required to take steps to promot e equal opportunity in the workplace
by eliminating unfair discrimination in any employm ent policy or practice.
Duties imposed on sector

Employers will have to scrutinise their policies an d practices to eliminate any direct or
indirect discriminatory practices and take steps to eliminate such.

7.6 Skills Development Levy Act, No. 9 of 1999

Objectives of the legislation

The act must be read in conjunction with the Skills Development Act which is dealt with
under paragraph 7.7. The Skills Development Levies Act provides for the imposition of a
levy to which both employee and employer contribute .
Relevance of legislation to sector

NPOs must deduct one percent of the remuneration of their employees and contribute a
further one percent towards the skills development levy. Special provision is made for
certain public benefit organisations to be exempted from this requirement. Only public
benefit organisations carrying on certain activitie s are exempted from deducting and
paying over the skills development levy.
NB: Only certain PBO are exempted from the payment of t he skills development levy.
The reason for this is not clear and may require fu rther lobbying that will enable other
public benefit organisations to also be exempted.

7.7 Skills Development Act, No. 97 of 1998
Objectives of the legislation

The main objective of the Act is to provide a frame work to devise and implement
strategies to develop and improve the skills of the South African workforce. This is done
in conjunction with other laws like the South Afric an Qualifications Authority Act, 1995
and the Skills Development Levies Act.
Relevance of legislation to sector

The Act makes provision for the establishment of a National Skills Authority (NSF) which
has the function of advising the Minister of Labour on a national skills development
policy and strategy and the implementation thereof. The NSF consists of various
representatives from different sectors. At least fi ve of the at least 27 members are
nominated by NEDLAC and appointed by the Minister t o represent organisations of
community and development interests, which must inc lude:
a. a woman who represents the interests of women;
b. a person who represents the interests of the youth; and
c. a disabled person who represents the interests of p eople with disabilities;
NPOs as employers may also be part of learnerships and establish skills programmes as
provided for under the Act and access grants and su bsidies for such purpose.

Duties imposed on sector

The Act encourages employers the use of the workpla ce as an active learning
environment, to provide employees with the opportun ities to acquire new skills, to

Copyright 2007 21
provide opportunities for new entrants to the labour market to gain work experience and
to employ persons who find it difficult to be emplo yed.

7.8 Unemployment Insurance Contributions Act, No. 4 of 2002

Objectives of the legislation

The act makes provision for the deduction and payme nt of an unemployment insurance
levy.

Relevance of legislation to sector

NPOs, like other organisations, have to comply with the provisions of the act. No
provision is made for exemptions for NPOs.

Duties imposed on sector

NPOs that are employers have to deduct and pay over contributions for the benefit of the
Unemployment Insurance Fund.

8 Legislation prior to 1990

8.1 National Welfare Act, No. 100 of 1978

Objectives of the legislation

The Act provides for the establishment of the South African Welfare Council and of
regional welfare boards and the registration of wel fare organisations.

Relevance of legislation to sector

The Act is relevant to the non-profit sector at var ious levels.
Firstly it provides for the establishment of the South Afr ican Welfare Council. The
Council’s function includes advising the Government in relation to the rendering of social
welfare services by welfare and other organisations .
Secondly , the Act provides for the establishment of regiona l welfare boards by the
Minister. The functions of these boards include the encouragement, promotion and
coordination of the rendering of social welfare ser vices by welfare organisations in its
region and to stimulate the development of such ser vices. The boards are also responsible
for the regulation and registration of welfare orga nisations.
Thirdly, welfare organisations are governed in term s of the provisions of the Act.

Duties imposed on sector

Although no specific duties are being imposed on th e non-profit sector, the Act recognises
the role of the sector on issues concerning social welfare.

NB: It is uncertain whether a South African Welfare Cou ncil is operational and
functional. No regional welfare boards are seemingl y in operation.

8.2 Trust Property Control Act, No. 57 0f 1988

Objectives of the legislation

This Act makes provision for the registration and r egulation of trusts.
Relevance of legislation to sector

Non-profit trusts are established and regulated in terms of this legislation. The non-profit
trust is one of three basic legal entities availabl e when setting up NPOs. The provisions of
this Act accordingly govern the non-profit trust.

Legislative duties are being imposed upon trustees when a trust is registered in terms of
the provisions of the Act.
NB: Trusts are being registered with the different off ices of the Master of the High Court
in an uncoordinated manner and no single register e xists for such non-profit trusts. The
sector may benefit from having a single registry fo r non-profit trusts. The identification of
trusts can be incorporated into the application pro cess.

8.3 Companies Act, No. 61 of 1973

Objectives of the legislation

The act makes provision for the establishment and r egulation of companies.
Relevance of legislation to sector

The Act provides for the establishment of a non-pro fit company. Section 21 of the Act
provides for a company without share capital. Secti on 19 of the Act provides that the non-
profit company is deemed to be a public company whi ch means that it will have to comply
with much of the same regulatory requirements as a commercial public company.

The Act also makes provision for a company or other association of persons, incorporated
(or unincorporated) outside the Republic of South A frica, to be incorporated under
section 21 provided that it complies with the requi rements of section 21.

Duties imposed on sector

The directors and members of a section 21 company m ust comply with much of the same
regulatory requirements as a commercial company whe n setting up and operating a non-
profit company.
NB: The Act is in the process of being reviewed.

8.4 Heraldry Act, No. 18 of 1962
Objectives of the legislation

The Act makes provision for the for the registratio n and protection of coats of arms,
badges, other emblems, names and uniforms which can be done at the Bureau of
Heraldry which is based in Pretoria. The Act also l ists a number of offences for violations
of the coats, arms, badges and other emblems.

Relevance of legislation to sector

This Act provides for a facility where an NPO can a pply to have its name reserved for its
exclusive use. NPOs must submit an application form as prescribed under the Act and pay
the prescribed fee in order to retain the proposed name for its exclusive use.
Duties imposed on sector

Not to use the same name, uniforms, arms and badges that have been approved in terms
of the Act.
NB: It may be advisable to have protected names of regi stered NPOs reflected on the
NPO Directorate’s register.

8.5 Friendly Societies Act, No. 25 of 1956

Objectives of the legislation

The Act is aimed at providing for the registration, incorporation, regulation and
dissolution of friendly societies. The Act sets out the various objects for which friendly
societies may be established.
Relevance of legislation to sector

Although friendly societies are primarily establish ed to operate for the benefit of their
members, this does not seem to be in contradiction with the objectives as contained in
section 21 of the Companies Act.
A non-profit trust is seemingly not able to registe r as a friendly society as section 49 of
the Act provides that the Trust Property Control Ac t, No. 57 of 1988 shall not apply to a
society registered under the Act. This implies that a registered society cannot have its
operating entity as a trust.
Duties imposed on sector

Once a friendly society becomes registered it must comply with the provisions of the Act.
Some of these requirements include, having a regist ered office and a principal officer, a
founding document stating specific clauses and subm it prescribed documentation with
the registrar. These clauses include reference to s ocieties that may have a share capital.

NB: Section 38A makes provision for the conversion of a friendly society into a
company. This may create a problem if it is a NPO t hat wants to convert to a profit-
making entity. The Act does not seem to prohibit th is. Although it is not allowed under
the Companies Act, these provisions in the Companie s Act would not apply to voluntary
association.