Registration of nonprofi

1. Importance of Articles of Incorporation

The Articles of Association are the core document of a nonprofit's registration, not only having legal force but also serving as a foundational framework for its operations. When registering a nonprofit, the content of the articles of association must comply with local laws and regulations, otherwise it may lead to failure to register and legal risks in subsequent operations.

1. Legal Effect of the Articles of Association

Once the charter is approved by a government department, it becomes a legally binding document. For example, the articles of association must be filed with the Commercial Movable Property Registry for examination, and after approval, they will have legal force for the organization and its members. If your organization is involved in cross-border activities (such as working with Australian companies), you should also pay attention to whether the articles of association comply with the legal requirements of both parties, especially tax issues (such as the impact on cross-border capital flows).

2. Contents and specifications of the articles of incorporation

A well-crafted bylaw should include the following core content:

 

 

• Aims and objectives: to clarify the non-profit nature of an organization, such as education, charity, or social welfare.
• Management: Includes the composition of the Board of Directors, decision-making procedures, and the rights and obligations of members.
• Financial terms: Sources of funds and rules of use to ensure compliance with the requirements of Macau's "Non-Profit Organizations Act".

3. How to write complete bylaws

We recommend hiring a professional lawyer to assist you with drafting and refer to the following steps:

 

1. Clarify the organization's purpose and business scope to avoid confusion with commercial activities.
2. Clarify membership and exit mechanisms to reduce future disputes.
3. Add a dissolution clause stipulating the method of asset disposal (such as transfer to a similar institution).

2. Directors and Responsibilities of Directors

The board of directors is the core of a nonprofit's decision-making, and the legal responsibilities of its members must be strictly clarified. In Macau, for example, according to Article 174 of the Civil Code, directors who fail to fulfill their duty of loyalty may face civil compensation or criminal liability.

1. Legal Responsibilities of Directors

Directors are responsible for the finances and compliance of the organization. For example, if an organization accepts donations from abroad (such as sponsorships by Australian companies), directors must ensure that the source of funds is legal and report taxes (note the difference with Macau). The common risks in practice are:

 

• Failure to submit the annual report on time was subject to a fine.
• misappropriation of funds constitutes a crime of breach of trust.

2. Avoid conflicts of interest

Macau law requires directors to disclose potential conflicts of interest. For example, if the director is also employed by a cooperative enterprise (business partner), the relevant decisions must be avoided. We recommend that you develop a "conflict of interest policy" that clarifies:

 

situation	processing
Directors are associated with suppliers	You must make a public statement and waive your right to vote
Personal business and institutional competition	Protecting the interests of the institution is a priority

3. Appointment and Replacement of Directors

The articles of association must provide for the term of office of directors (usually 2-3 years) and restrictions on re-election. If there is a change of directors, a general meeting shall be held and the change shall be registered in accordance with Article 214 of the Macao Commercial Code. In practice, there are common omissions, such as not updating business registration information and invalidating legal documents.

3. Source and Use of Funds

Financial management for non-profit organizations is a key focus of regulation, especially when setting up a company in Macau involves cross-border financing (such as accepting donations from Australian companies), and it must comply with regulations in both countries.

1. Legal and compliant funding methods

Macau's Non-Profit Organisations Act allows the following forms of fundraising:

 

• Public Fundraising: Apply for permission from the Bureau of Identification Services.
• Corporate sponsorship: A written agreement indicating the purpose of the funding is required (if specified for an educational project).

If the funds come from an Australian company, pay attention to whether the donation will affect the tax return (if it is eligible for tax deductions) and keep proof of tax payment.澳洲公司稅率

2. Financial management system

It is proposed to create an independent finance committee and implement the following measures:

 

1. Separate accounting and cashier operations to avoid fraud.
2. It adopts accounting standards recognized by the Monetary Authority of Macau.
3. Large expenditures (more than 5 Macau) must be resolved by the Board of Directors.

3. Transparency in the use of funds

Regular disclosure of financial statements is key to building credibility. For example, the Hong Kong Council of Social Welfare requires member organisations to disclose their annual income and expenditure breakdowns, and although there is no mandatory obligation in Macau, they must at least report to their members. You can refer to the following formats:

 

item	Amount (MOP)	percentage
Educational activities	1,200,000	45%
Management fees	300,000	11%

4. Annual Audit and Reporting Requirements

Macau law stipulates that non-profit organizations with annual revenue exceeding 50 Macau are subject to mandatory audits. Audits are not only compliance requirements but also help institutions find loopholes in management.

1. The Importance of Auditing

Taking the 2022 report of the Macau Independent Anti-Corruption Commission as an example, one association lost more than $1 million due to unaudited misappropriation of funds. Auditing can achieve the following objectives:

 

• Verify the authenticity of financial statements.
• Ensure compliance with tax obligations (e.g., tax-exempt status) when registering as a nonprofit.

2. How to choose the right auditor

We recommend prioritizing the following:

 

1. Professional with Macau auditor license.
2. Familiar with the management of non-profit organizations (e.g., audited educational institutions).
3. International auditing standards are required when cross-border funds are involved (e.g., Australian company financing).

3. Contents and Submission of Annual Report

Macau non-profit organizations must file with the Financial Services Department within four months of the end of the financial year.

 

• Audited financial statements.
• Activity report (including service number and actual data).
• Statement on changes in board members.

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5. Impact of Violations of Laws and Regulations

Macau's regulations on non-profit organizations are becoming increasingly stringent, and violations can lead to the following consequences:

1. Potential Penalties

 

 

• administrative penalty: Failure to submit the report on time will result in a fine of 5,000 to 50,000 Macaro won.
• Tax Risks: If it is determined to be a disguised profit, it is subject to profits tax (see Macau corporate tax rate of 12%).
• Criminal liability: Illegal fundraising is punishable by up to 8 years in prison.

2. How to avoid legal risks

Practical Suggestions:

 

1. Regularly review your Articles of Association to ensure compliance with the latest laws and regulations (such as amendments to Macau's Non-Profit Organisations Act).
2. Legal advice before important decisions (such as accepting large donations from Australian companies).
3. Purchase liability insurance for directors and pass on some of the risk.

6. Reference to relevant laws and regulations

Nonprofits should pay close attention to the following regulations when operating:

 

• Macau Non-Profit Organisations Act (Law No. 6/97/M)
• The Macau Commercial Code regulates the governance of legal entities
• 澳洲《Income Tax Assessment Act 1997》(涉及跨境捐贈稅務)

非牟利機構 註冊

If your organization operates in both Macau and Australia (for example, if you set up a company in Macau but are funded by Australia), it is recommended to entrust a team of multinational lawyers with a compliance plan, especially the coordination between the Australian corporate tax rate and the Macau tax system.