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In a non-profit corporation, the "agency problem" is even more difficult than in the for-profit sector, because the management of a non-profit is not even theoretically subject to removal by the charitable beneficiaries. The board of directors of most charities is self-perpetuating, with new members chosen by vote of the existing members.
By convention, most common law jurisdictions divide the constitutional documents of companies into two separate documents: [1]. the Memorandum of Association (in some countries referred to as the Articles of Incorporation) is the primary document, and will generally regulate the company's activities with the outside world, such as the company's objects and powers.
Unlike for-profit corporations that benefit from broad and general purposes, non-profit organizations need to be limited in powers to function with tax-exempt status, but a non-profit corporation is by default not limited in powers until it specifically limits itself in the articles of incorporation or nonprofit corporate bylaws.
In Australian law, incorporation occurs under the Corporations Act 2001, and includes: [4] a branch of an overseas company not incorporated in Australia (often the name ends in corporation) incorporated associations which are incorporated under an Act of one of the States and territories of Australia, and; incorporated charitable institutions.
However, these are not bound to adhere to a nonprofit legal structure, and many incorporate and operate as for-profit entities. In Australia, nonprofit organizations are primarily established in one of three ways: companies limited by guarantee, trusts, and incorporated associations.
A further requirement is that the members are not associated together for profit. This distinguishes an unincorporated association from a partnership. An unincorporated association emerges from contract, and without a relationship of contract there can be no association - so a group of friends are not an unincorporated association, no matter ...
Therefore, it cannot obtain IRS 501(c)(3) non-profit status as a charitable organization. [4] [5] A mutual-benefit corporation can be non-profit or not-for-profit, but it still must pay regular corporate tax rates. A mutual benefit corporation will pay the same taxes as a regular for-profit corporation, with C corporation tax rates.
The Model Nonprofit Corporation Act (MNCA) is a model act prepared by the Nonprofit Organizations Committee of the Business Law Section of the American Bar Association. [1] ...