Role of Clubs and Societies

Tuesday May 6, 2008
Role of clubs and societies
ARTICLES OF LAW WITH BHAG SINGH
The recent media spotlight on Balkis has drawn public attention to the rights of a society and the parameters from which it operates.
THE goings-on in the Wives of Selangor Assemblymen and MPs Welfare and Charity Organisation (Balkis) have attracted much attention of late. This has also drawn attention to the existence of Organisations of Wives of State Assemblymen and Members of Parliament in other states in the country.
There are many organisations that engage in charity work. Not all of them come up for public discussion though some do, albeit for a limited period of time.
As such, organisations and their activities come into public discussion, people are keen to know the different issues involved. Whilst the law provides the parameters for their existence and the constitution provides guidance, this alone might not provide all the answers.
What has resulted in particular attention being drawn in the case of Balkis is the transfer of a large of sum of money to another organisation, following the unfavourable outcome of the recent elections.
The issues
If those who head the organisation and those who speak on their behalf are listened to, then all is proper and well and nothing contrary to law has been done. On the other hand, if you listen to those who have publicly criticised the transfer of funds, it would appear to suggest that all is not well.
Leaving aside the allegations and counter-allegations, it would help us to understand the situation better if the mechanics of such activities and undertakings are appreciated and understood.
In our country, if seven or more people are involved in any common activity, they are required to register as a society under the Societies Act 1984. Except for a limited number of situations, charity work is usually carried out by entities registered as societies.
A society is, by law, defined as any club, company, society, partnership of seven or more persons but excludes from its definition any company incorporated under any law, a trade union or any other association for carrying on business that has as its object acquisition of gain for its members.
A society would therefore be a group of people desiring to engage in and advance their interest in matters such as sports, religion, recreation, and cultural activities. Of course, it also provides for registration of religious bodies of those who are not Muslims; political parties are also registered as societies.
It would appear that Balkis is registered as a society. This being the case, the members would no doubt be governed by the Societies Act 1984, and the constitution, which they have adopted.
Nature of a society
A society is entitled to act and conduct its activities within the framework of its constitution, as long as it does not contravene the parameters set out in the Act.
In most cases, a society’s constitution will provide for the holding of a general meeting to decide on such issues as the dissolution of the society and in consequence, the disposal of its assets. Of course, such a decision may not be completely in the hands of its members. If, for example, the organisation has obtained tax-exempt status from the revenue authorities, guidance from such authorities will be essential.
Otherwise the affairs of the society are entirely in the hands of its members. If a general meeting of members is required to dissolve the society, it is likely that the stipulated number of days' notice will need to be observed.
If the required number of days' notice is not given, then the convening of the meeting would be irregular but not illegal. The difference is that an irregularity can always be waived by the members present if the constitution provides for it, and in many cases it does.
Even if the irregularity of the meeting is not challenged, the decision of the meeting will still stand, albeit as a decision that is irregular. Only a member of the society has the locus standi to challenge the irregular decision; a person who is not a member will not have the locus standi.
Charity front
However, what has been said earlier is in relation to how a society exists and function as well as the rights of its members.
The basis and general position would apply in an absolute sense where, for example, a society is registered by fishing enthusiasts to interact among themselves and engage in activities that are of interest to them and which they enjoy.
In such a situation it is up to the members to decide on the subscription they want to collect from themselves, whether to approach people who like to help them in the enjoyment of their hobby, how they want to spend their money, where they want to fish and how they wish to dispose of the fish, whether by selling or consuming it among themselves.
And if they feel that they do not want to continue, they can dissolve the society. As long as they do not contravene the Act or the law of the land, no one has any right to question them.
However, the matter takes on a different dimension if an organisation is set up and funds are sought from the public, more so if the public are led into believing that they are donating for charity. Beyond the legal issue, there is the matter of ethical consideration and moral responsibility to fulfil the expectations of donors on the basis of representations made.
Real situation
In order to establish any wrong-doing, it is necessary to know the constitutional framework of the organisation involved. It is relevant to know whether only the name of the organisation has the word “charity” or are its objects to concentrate its activities on charity, or is charity one of its activities?
Or is it the case that the funds were collected on the basis that they were expressly to be used for charity and kept as a separate fund? Were representations made to donors that their money would be used exclusively for charity? It is necessary to be aware of all these aspects with regard to each organisation to be able to say whether there has been any wrongdoing or improper conduct.
In the case of the recent controversy, the real answers can only be obtained and conclusions made following a full disclosure of the relevant facts that relate to the constitutional framework and administrative decisions that have been made.
That apart, the “controversy” was partly precipitated by the haste with which the monies were disposed. The public is left wondering why there is a need to dissolve the association if the wives of these state assemblymen and members of parliament were genuinely inclined to do charity work. They could merely have changed the name and carried on with their charity work!