Corporate bodies based on personal membership: Legal nature, concept and significance
Concept and fundamentals of the personal membership corporation
The personal membership corporation is a legal form found in German public law and, in part, in private law. In this form of corporation, the composition of the membership—the so-called personal substrate—is of central importance for the corporation’s legal existence and continuity. In contrast to a territorial corporation, where membership is determined by geographic criteria, membership in a personal membership corporation is generally based on belonging to a particular profession, social group, or other personal criteria.
A personal membership corporation is a legal entity under public law that is granted legal personality by statute or on a statutory basis. It is an independent bearer of rights and obligations and, as such, possesses the capacity to act, to have rights, and to be a party to proceedings.
Distinction from other types of corporations
Distinction from territorial corporations
The key point of distinction between a personal membership corporation and a territorial corporation lies in the basis for membership. While membership in territorial corporations (e.g., municipalities, districts) arises from residence or physical presence within a certain area, membership in a personal membership corporation is based on personal attributes or the exercise of certain activities (e.g., as students, civil servants, chamber members).
Distinction from public law institutions and foundations
A public law institution is characterized by a stock of material assets and personnel (e.g., broadcasting corporations). A public law foundation, on the other hand, is based on a specific endowment dedicated to achieving a foundation’s purpose. In contrast, a personal membership corporation combines natural or legal persons into a lasting legal entity.
Legal status and organizational structure
Legal capacity and capacity to act
Personal membership corporations possess legal capacity by statutory allocation. They can independently participate in legal transactions, enter into contracts, acquire property, and sue or be sued in court. Within their designated spheres of responsibility, they possess autonomy and have their own organization, power to enact statutes, and their own administrative bodies.
Membership and internal organization
Membership typically arises by operation of law, not through voluntary joining (e.g., medical chambers, student bodies). The internal organization—that is, the rights and obligations of members, as well as the organs, tasks, and decision-making procedures—is mainly governed by law and by statute. Members frequently exert influence on the formation of the corporation’s will and administration through elected representatives.
Organs
Typical organs of a personal membership corporation include the general assembly of members (or a representative assembly), a board or presidium, as well as other committees or commissions as established by the statutes. The election of these organs and the distribution of tasks are governed by the relevant statutory provisions and the corporation’s statutes.
Tasks and functions of personal membership corporations
Personal membership corporations carry out sovereign tasks on behalf of the state. These include, in particular:
- Self-administration of matters relevant to a particular group (e.g., professional chambers)
- Determination and assurance of the quality and regulation of certain activities
- Supervision and representation of specific professional interests
- Granting of licenses, examination and admission procedures
- Organizational and disciplinary matters
Classic examples include chambers of crafts, medical chambers, chambers of lawyers, universities with student self-administration, as well as churches as public law personal membership corporations.
Legal particularities: Membership, rights and obligations
Compulsory membership
Membership in a personal membership corporation is often mandatory (compulsory chamber membership), where statutory provisions so require. It cannot be terminated voluntarily but usually ends when the requirements for affiliation cease to exist (e.g., ceasing the profession).
Rights of the members
Members enjoy participatory rights in the organs, the right to propose motions and vote, and substantive rights to partake in self-administration. They have a say in decisions regarding professional standards, representation of interests, and qualification matters.
Obligations of the members
Typically, there are obligations to pay contributions, to participate in self-administration, and to comply with professional or statutory requirements.
Examples of personal membership corporations
Corporations in professional law
- Medical chambers: Responsible for the proper practice of medicine, sets standards, issues professional identification, exercises disciplinary jurisdiction.
- Chambers of crafts: Regulates concerns of the crafts profession, master craftsman examinations, representation of interests.
- Chambers of industry and commerce: Support for the regional economy, training, representation of interests.
Student bodies and sports associations
Universities, as personal membership corporations, have the student body as a sub-corporation, which ensures the self-administration of students. In some cases, sports confederations or social security providers are also organized as personal membership corporations.
Churches
Church personal membership corporations are historically significant due to their membership and the special constitution of religious affairs (Art. 140 in conjunction with Art. 137 para. 5 WRV GG).
Supervision and state oversight
Personal membership corporations are subject to legal supervision by the state, at either the state or federal level. Oversight is mainly limited to compliance with law and statutes without direct interference in internal organization. The state may monitor the fulfillment of assigned tasks, approve statutes, and, if necessary, take supervisory measures.
Dissolution and legal succession
The dissolution of the legal capacity of a personal membership corporation can occur through legislation or administrative act, such as the repeal of the statutory foundation or through mergers. The winding-up (liquidation) and any transfer of assets are governed by statutory provisions.
Conclusion
In German law, the personal membership corporation is a legal form established in the public interest to exercise public tasks through the self-management of a particular group of persons. Owing to the statutory compulsory membership and the exercise of sovereign functions, personal membership corporations occupy a special position within the public self-administration framework. They make an essential contribution to the regulation, oversight, and advocacy of specific social groups and are a fundamental instrument of state organizational activity.
Frequently Asked Questions
What are the legal foundations for personal membership corporations under German law?
Personal membership corporations are, under German law, predominantly public law legal entities whose membership is not based on capital participation, but on the personal affiliation of natural or legal persons. The most important legal foundations for personal membership corporations are found in the Basic Law, especially in the context of chambers and public law corporations, as well as in the respective sectoral laws (e.g., Crafts Code, laws on health professions). In addition, there are regulations in administrative procedure laws and often in the statutes of the respective corporations. General administrative law, especially the Administrative Procedure Act (VwVfG), also applies to personal membership corporations, as do certain provisions of the Civil Code (BGB) and the Administrative Court Code (VwGO), as far as they affect the actions or contestability of administrative acts of these corporations.
What legal form does a personal membership corporation normally take?
In legal terms, personal membership corporations are usually public law corporations with their own legal personality and the ability to act as bearers of rights and obligations. They are formally separate from their members and from the controlling corporation (e.g., the state), and are subject to legal oversight by state authorities. Examples include chambers of commerce and industry, medical chambers or chambers of lawyers. These corporations are usually established by law and are granted their own statutes. They exercise sovereign functions and may have autonomy with respect to their statutes, although they do not enjoy the comprehensive self-administration found in territorial corporations.
Are personal membership corporations subject to state supervision, and what does this involve?
Personal membership corporations are, in principle, subject to state legal supervision, which concerns the lawfulness of their administrative acts. This supervision is exercised by specialized ministries or other supervisory authorities. Oversight may extend to approval of amendments to statutes, monitoring of management, and review of individual acts. However, intervention generally only occurs in cases of violation of applicable law or gross breaches of duty. State supervision serves to ensure the performance of public duties and to protect members’ interests as well as the common good.
How does membership in a personal membership corporation arise and what rights and obligations are involved?
Membership in a personal membership corporation is generally established by law or regulation and is often not voluntary, but compulsory (so-called compulsory membership). For example, all business owners are required to become members of the local chamber of industry and commerce. Members have the right to participate in decision-making (e.g., through board elections), are entitled to the services provided by the corporation, and receive protection of their professional interests. In return, members face significant duties, such as the obligation to pay contributions, to participate in certain tasks (for example, in bodies or committees), and to comply with the statutes and directives of the corporation.
How are personal membership corporations legally liable for their actions and those of their organs?
Personal membership corporations, as legal entities, are independently liable for their actions within the framework of applicable law. Liability generally covers all damages caused by statutory or statutory-based activities, provided these fall under public law duties. The organs of the corporation (e.g., board, presidium) are liable to the corporation itself only in cases of intentional or grossly negligent breaches of duty. In external relations, however, liability primarily rests with the corporation, and personal liability of officeholders arises only in exceptional cases. In the area of official liability, a duty to compensate third parties may arise if organs cause damage culpably and unlawfully (§ 839 BGB in conjunction with Art. 34 GG).
What statutory rights of oversight and participation do the members of a personal membership corporation have?
Members of personal membership corporations are entitled to statutory rights of oversight and participation. These include, in particular, active and passive voting rights with regard to the organs of the corporation (usually the representative assembly or the board), the right to a hearing on significant decisions, and, in many cases, the right to initiate meetings. There is also the right to submit inquiries and to demand accountability for the use of contributions or the performance of tasks. The exact rights and how they are exercised are determined by the statutes of the respective corporation and by relevant federal or state laws.
What legal remedies are available to members of personal membership corporations against measures taken by the corporation?
Members of personal membership corporations who believe that their rights have been infringed by measures taken by the corporation can seek recourse before administrative courts. The legal basis for this is usually the Administrative Court Code (VwGO). Frequently, members must first exhaust internal legal remedies, such as a preliminary or opposition procedure. Only after these remedies have been unsuccessful can administrative litigation be initiated, typically in the form of an action for annulment or performance. Decisions of the organs, especially those with external effect, are regularly subject to judicial review. In particular cases, constitutional complaints are also possible, for example, when compulsory membership or restrictions on professional freedom affect fundamental rights.
