Changing Objectives of an Amuta
An amuta (plural amutot) is the most common form of nonprofit association in Israel. When registering with the Registrar of Amutot, an amuta must define and gain approval for each objective. The registered objectives define and dictate an amuta’s activities, and the amuta must perform only those activities that are within the framework of the approved objectives. Therefore, the amuta must seek approval for any change in its stated goals. While an experienced legal professional at Decker, Pex, Levi should be consulted to get the best possible result, we will address the processes for changing objectives under both categories.
Why Change an Objective?
If an amuta wants to receive donations for a purpose other than one of its registered objectives, the amuta must change its objectives to include the new purpose. Under Amutot Law, this change must be done in a manner that is both orderly and transparent. Section 19 of Amutot Law requires that an amuta have a General Assembly, and Executive Board, and an Audit Committee. Section 11 of Amutot Law requires that the amuta’s General Assembly (which includes all members of the amuta) vote on the change. While any change can only be furthered if a majority of the General Assembly votes in its favor, the amuta will still need approval, either from the Registrar of Amutot or a Court, before the amuta can receive donations for any change to its objectives.
Role of the General Assembly and Executive Board When Changing Objectives
As stated earlier, the General Assembly is comprised of all members of the amuta. When the amuta wants to change an objective, the General Assembly must vote on each change, with each change requiring approval by the majority of the assembly. During this General Meeting, minutes must be taken. The minutes include the subjects discussed during the meeting, the percentage of the members in attendance, and the results of each vote. Additionally, the minutes must be signed by two members of the Executive Board, which is comprised of the founders of the amuta. Once the vote is held and the minutes are taken and signed, the amuta can then request to change objectives.
Criteria for Changing the Objectives of an Amuta
Changing objectives of an amuta includes adding, removing, or modifying existing objectives. However, under Amutot Law, changing objectives is not an absolute privilege and will only be allowed if the amuta can prove that the changes are “just and proper” under two categories: (1) the change closely resembles an existing objective; or (2) the change does not closely resemble an existing objective. In the first case, the change is approved by the Registrar of Amutot. In the second case, the change must be approved by the court.
In either case, the amuta’s Executive Board must first present the requests to its General Assembly, including vis a vis donors, to ensure that the proposed changes will not adversely affect any party. Once the general assembly adopts a resolution regarding the change, it will be submitted to the Registrar or the court.
Changing an Objective Through the Registrar of Amutot
When an amuta wants to change an objective closely resembling an existing objective, an amuta must petition the Registrar of Amutot and gain approval for each change. The amuta can only act in a manner consistent with its new objectives after approval by the registrar, and the amuta must still promote only its registered objectives. If the Registrar of Amutot decides that the requested change is not closely related to an existing objective, it may deny the request. If the requested change is denied on this basis, then the proposition falls under the second category and may be submitted to the consideration of the court.
Changing an Objective Through a Court
When an amuta wants to change an objective in a way that does not resemble existing objective, it must petition a Court and gain approval for each change. The Court may give great deference to the Registrar of Amutot when determining whether to approve a requested change which is not closely related to an existing objective. If the Court finds that the request is not justified, then the amuta cannot act in a manner which supports the request, and the amuta might be able to be dismantled through a variety of means, including liquidation.
Sometimes the Court will make changing objectives contingent upon certain conditions. These conditions include, but are not limited to, approval of the requested changes by the main donors of the amuta, creating a separate bank account with its own accounting system for a limited number of years to ensure the funds are only used to enhance the new objectives, and to have the amuta’s independent bank account and financial reports audited by a CPA to determine specifically which funds are used for each new objective. These conditions are implemented by the Court for changing objectives prior to their approval to protect the amuta’s investors and verify that the funds are being adequately used.
While the steps for an amuta to change objectives seems relatively straightforward, the process involves broad discretion from both the Registrar of Amutot and a Court, if need be, to determine whether the requested change is justified under the proper management guidelines and bylaws. Having experienced legal representation to advocate on your behalf will increase your results while minimizing errors in such a nuanced area of law.