DEMOCRATIC REPUBLIC OF TIMOR-LESTE
DECREE-LAW No. 5/2005
Of 3 August
ON NON-PROFIT-MAKING CORPORATE BODIES
As a tool for social integration and participation, associativism constitutes a sociological
and political phenomenon grounded in the human tendency to live in community, which
cannot be overlooked by the public powers.
The role played by associations in the exercise of democracy and of citizenship is
Associations allow individuals to recognise themselves in their convictions, deepen their
sense of belonging, pursue ideals, carry out useful tasks, make themselves heard, find a
place in society, and assist with change.
In organising themselves, individuals assume their social dimension and capacity to
intervene, particularly in the areas of environmental protection, youth, women’s rights,
public health, education, job creation, human rights, among many other things.
Nowadays, NGO (Non-Governmental Organisation) is the designation that corporate
bodies are given regardless of whether they have personality or property, thus diverging
from the classical dichotomy between association and foundation.
Nonetheless, the ever-increasing importance that non-profit-making corporate bodies are
gaining in legal transition calls for the law to lay down the accountably regime such
corporate bodies are to abide by. The State should ensure transparency in the management
of the funds allocated to such corporate bodies as a state contribution, including funds
allocated to them by development partners for the implementation of activities in the
framework of the National Development Plan.
Thus, pursuant to paragraph 115.1(e) of the Constitution of the Republic, the Government
enacts the following to have the force of law:
Scope of application
1.1. The present law lays down the legal regime for non-profit-making corporate
bodies, also known as NGOs (Non-Governmental Organisations).
1.2 Non-profit-making corporate bodies or NGOs may be constituted under the form of
either an association or foundation.
1.3 An association is a corporate body comprised of persons, which does not pursue any
profits for its associates and therefore cannot distribute any profits, assets or
remainders, or dispose of property owned by the association even in case of winding-
up or liquidation.
1.4 A foundation is a non-profit-making corporate body, of social interest and comprised
1.5 A corporate body is a legal entity to which rights and obligations are assigned.
Principle of legality
There shall be constituted only those associations and foundations that are consistent with
the law, that do not impinge upon third-party interests, or that do not run counter to public
morality and order.
3.1 An Association acquires juridical personality upon filing of its memorandum of
association, provided the association cumulatively meets the following requirements:
(a) be comprised of at least ten members;
(b) its articles of association are in compliance with the present decree-law;
(c) prove to have the necessary means for its operation, in accordance with its
articles of association.
3.2 A foundation acquires juridical personality upon recognition by the competent entity.
The registered office of a corporate is the one stated in its articles of association or, in the
absence of articles of association, the place from where its senior management operates.
5.1 The competence of a corporate body covers all rights and obligations required or
convenient for the pursuit of its purposes.
5.2 Exception is made to any rights and obligations hedged by law or that cannot be
separated from individual personality.
6.1 The articles of association of a legal person shall designate its respective organs,
among which there shall be a board of directors and an auditing board, both of which
comprised of an odd number of officeholders from among whom the chairperson shall
6.2 The auditing board is the body responsible for auditing the management accounts
and shall ensure the good administration of the property.
7.1 The representation of a corporate body, in court and elsewhere, is the responsibility of
the person indicated in the articles of association or, in the absence of articles of
association, the board of directors or a person appointed by the latter.
7.2 The appointment of representatives by the board of directors may only be invoked
before a third party where it can be proved that the latter was aware of such appointment.
Liability of officeholders of organs of a corporate body
8.1 The obligations and the liability of officeholders of organs of a corporate body in regard
to such corporate body shall be defined in its articles of association and, in the absence of
articles of association, the provisions of this law shall apply.
8.2 A director of the corporate body shall not dispose of property of that entity for private
purposes nor shall he or she enter into a contract with the same entity.
8.3 Exception is made to the final part of subarticle 8.2 where the articles of association
provide for the possibility of a director entering into a particular contract with the
association once prior authorization has been obtained from the general meeting to do so.
8.4 A director of the corporate body shall not be a bondsman, surety or guarantor of any
8.5 Members of the managerial organs shall not abstain from voting decisions to be made at
the meetings they are attending, and are liable for the losses arising from such decisions,
except where they have expressed their disagreement.
Officeholders of the organs of the corporate body shall:
(a) perform acts within the limits of the powers deriving from the instructions they
have been given;
(b) provide information as requested in respect of the status of the management;
(c) promptly report to the competent organs the performance of their tasks or the
reason why the tasks could not be performed;
(d) be accountable as required;
(e) return any assets received in execution or for the exercise of their functions if these
have not been normally used in the discharge of such functions.
Civil liability of a corporate body
10.1 A corporate body is civilly liable for acts or omissions by its representatives,
agents or proxies where these do not exceed the limits of the powers granted by law or
by the articles of association and act strictly upon instructions received.
10.2 A corporate body shall have a formal accounting according to the accepted system
and the tax norms.
10.3 An association with a turnover of less than US$ 12,000 (twelve thousand
American Dollars) shall only have a legalised, bound book where to separately record
the expenditure, purchases and sales and shall, at the end of every fiscal year, take stock
of all operations, specifying the amounts comprising its assets and liabilities.
Oversight by the State
Associations and foundations administering funds allocated by the State, benefiting from
any form of assistance from the State or receiving funds from development partners for the
purpose of implementing any activities included in the National Development Plan, are
subject to direct oversight by the Ministry of Planning and Finance.
12.1 The property of an association or foundation does not comprise the personal property
of its members and shall be exclusively assigned to the pursuit of its objectives.
12.2 An association or foundation may, under the terms of the legislation in force, acquire,
administer or transfer such immovable property as is necessary for the direct and immediate
achievement of the objectives laid down in its articles of association, and any other
acquisitions may be cancelled at the request of the Public Prosecution Service or a third
12.3 The immovable property of an association or foundation may only be disposed of with
authorization from the general meeting and in the case of a donation, such a donation shall
be valid only if it benefits any entity pursuing public utility or charitable purposes; public
utility or charitable purposes shall be previously determined by the Ministry of Planning
Disposal of assets in case of winding up
13.1 Where a corporate body has been wound up and there are assets that have either been
donated to it or left with any encumbrance or that have been assigned to a certain purpose,
the recognising entity shall, in the case of a foundation, allocate such assets with the same
encumbrance or purpose, to another corporate body. In the case of an association, the court
shall, at the request of the Publication Prosecution Service, the liquidators, any associates or
interested party, allocate such assets with the same encumbrance or purpose, to another
13.2 Assets not covered by subarticle 13.1 shall be disposed of as determined in the articles
of association or by decision of its associates, subject to the provisions of specific
legislation; in the case of a foundation and in the absence of determination or specific law,
the competent entity shall determine that such assets be allocated to another foundation or
the State, ensuring, to the extent possible, the achievement of the purposes of the wound-up
corporate body; in the case of an association, the court shall, at the request of the Public
Prosecution Service, the liquidators, any associates or interested party, determine that such
assets be allocated to another corporate body or the State, also ensuring the achievement of
the purposes of the wound-up corporate body.
Memorandum of association and articles of association
14.1 The memorandum of association shall specify the goods or services the associates
contribute to the corporate property, and the name, purpose, registered office, and form of
operation of the corporate body, as well as its duration, where the association is not
constituted for an indefinite period of time.
14.2 The articles of association may also specify the rights and obligations of the
associates, the conditions for their admission, separation and exclusion, as well as the terms
of winding-up of the corporate body and consequent devolution of its property.
14.3 In the absence of provisions in the articles of association in respect of the matters
enunciated in the subarticle 14.2, the provisions of this decree-law shall apply.
Form and publicity
15.1 An association is constituted by means of a private document or public deed.
15.2 A public deed is required where the assets of the association are regarded as
immovable or moveable property subject to registration.
15.3 An association acquires juridical personality upon registration with the competent
service of the Ministry of Justice, but it shall take effect in relation to a third party only
after the memorandum of association and the articles of association have been published in
the official gazette; amendments to the articles of association are equally subject to
registration and subsequent publication in the official gazette.
16.1 Persons interested in having an association constituted shall hold a first meeting and
elect its chairperson, who shall convene and chair the necessary meetings until such a time
as the officeholders of the organs of the constituted association take office.
16.2 Each interested person shall have one vote.
16.3 In order for an association to be considered constituted, it is necessary that the number
of interested persons who have voted in favour of the establishment thereof and its articles
of association meet the quorum requirements established by law, regardless of the number
of those who have voted against.
16.4 The memorandum of association and the articles of association shall be signed by the
16.5 Ten of the signatures affixed to the memorandum of association and the articles of
association are required to be notarised.
Liability prior to filing the memorandum of association
16.1 Prior to filing the memorandum of association, all those who have performed acts in
the name of the association or who have authorized such acts are jointly and severally
16.2 The remaining members are liable to the extent of the value of the entry or
membership fee they have paid.
Officeholders of the organs of the association
and cancellation of their powers
18.1 Officeholders of the organs are elected by the general meeting, provided the articles of
association do not provide for a distinct process of choice.
18.2 The functions of the elected or appointed officeholders may be cancelled, but such
cancellation shall not prejudice the rights enshrined in the memorandum of association.
18.3 The articles of association may restrict the right to cancel any functions to the
existence of a just cause.
Convening and operating the board of directors and the auditing board
19.1 The board of directors and the auditing board are convened by their respective
chairpersons and may only make a decision where the majority of their officeholders are
19.2 Except as otherwise provided by law or the articles of association, decisions are made
by a majority vote of the officeholders present, and the chairperson has the right to a
casting vote, in addition his or her vote.
Competencies of the general meeting
20.1 The general meeting shall make all decisions on matters not covered by the scope of
responsibilities assigned by law or the articles of association to other organs of the
20.2 Removal from office of any officeholder of the organs of the association, the approval
of the balance sheet, any amendments to the articles of association, the winding up of the
association or authorization for the association to sue any of its directors for any acts
performed in the exercise of his or her functions are the exclusive competency of the
Convening the general meeting
21.1 The general meeting shall be convened by the board of directors under such
circumstances as provided in the articles of association and, in any case, once a year for the
purpose of approving the balance sheet.
21.2 The general meeting may also be convened when required, for a lawful purpose, by a
number of associates not less than the one-fifth of all the associates, provided a different
number is not determined by the articles of association.
21.3 If the board of directors fails to convene the general meeting where it needs to do so,
the general meeting may be convened by any associate.
Forms of convening the general meeting
22.1 The general meeting is convened by means of a notice affixed at the registered office
of the association and where possible by means of notices broadcast on the radio or any of
the local newspapers, no less than eight (8) days prior to the meeting, indicating the date,
time and venue of the meeting, as well as its agenda.
22.2 Decisions made on matters not on the agenda may be cancelled, except where all
associates in attendance agree that such matter(s) be added on to the agenda.
22.3 The attendance of all associates shall remedy any irregularities, provided none of the
associates opposes the holding of the general meeting.
23.1 The general meeting may not make a decision, after issuing a first convening notice,
without the presence of at least one half of its associates.
23.2 Except as provided in subarticles 23.3 and 23.4, decisions are made by an absolute
majority vote of the associates present.
23.3 A decision to amend the articles of association requires a yes vote of three-fourths of
the number of the associates present.
23.4 A decision to wind up or to extend the duration of the corporate body requires the yes
vote of three-fourths of all its associates.
23.5 The articles of association may require a number of votes exceeding that determined in
subarticles 23.3 and 23.4.
Decisions contrary to the law or the articles of association
24.1 A decision made by the general meeting contrary to the law or the articles of
association, whether in respect of its object or arising from any irregularities in convening
the associates or in conducting the general meeting, may be annulled.
24.2 The nullity of the decision may be challenged within six (6) months, by the board of
directors or by any associate who has not voted on the decision.
Protecting third-party rights
The annulment of a decision made by the general meeting does not prejudice the rights that
have been acquired in good faith by a third party in compliance with the annulled decision.
Personal nature of the associate status
The associate status may be transferred by means of an act between living natural persons
or by succession, except as otherwise provided in the articles of association, and an
associate may not have another associate exercise his or her personal rights.
Effects of separation or exclusion
An associate who, by any means, ceases to belong to the association shall not claim for the
refund of the fees he or she may have paid and shall forfeit the right to corporate property,
without prejudice to his or her liability for all instalments pertaining to the time in which he
or she was a member of the association.
Grounds for winding up an association
28.1 An association may be wound up:
(a) by means of a decision by the general meeting;
(b) upon expiry of its duration, if constituted for a definite period of time;
(c) on any other grounds for winding up the association as provided in the
memorandum of association or in the articles of association;
(d) following the death or disappearance of all of its associates;
(e) following a court decision declaring its insolvency.
28.2 An association may also be wound up by means of a court decision at the request of
the Public Prosecution Service where:
(a) its purpose has either been fully achieved or become unachievable;
(b) its real purpose is not consistent with the purpose expressed in the memorandum
of association or in the articles of association;
(c) its purpose is systematically pursued by unlawful or immoral means and its
existence comes to be contrary to public order, morality or propriety.
28.3 In the cases referred to in subarticle 28.2, the Public Prosecution Service shall act at its
discretion, or at the request of any interested party, to defend state interests and legality.
Establishment and revocation
29.1 A foundation may be established by means of an act between living natural persons or
through a will, and the recognition thereof shall, in either case, be regarded as an
acceptance of the assets allocated thereto.
29.2 Recognition may be applied for by the founder, an heir or testamentary executor, or be
initiated at the discretion of the competent authority.
29.3 Establishment by means of an act between living natural persons shall comprise a
public deed and becomes irrevocable once an application for recognition has been filed or
the respective process is initiated at the discretion of competent authority.
29.4 A founder’s heir is not permitted to revoke the establishment of the foundation,
without prejudice to the provisions relating to legal succession.
29.5 The memorandum of establishment of the foundation, where it consists of a public
deed, and, in either case, the articles of association, including any amendments thereto,
shall not take effect in relation to third parties until published in the Official Gazette.
Recognising a foundation
30.1 Recognition is done on a case by case basis and is the competency of the Government
and the latter may delegate such competency to a district government representative, where
the activity of the foundation is to be confined to the jurisdiction of that representative.
30.2 The recognition of a foundation may only be effected where its purpose is deemed to
be of social interest by the competent entity and the assets allocated to the foundation prove
sufficient to achieve its intended purpose, and under no circumstance shall the amount of
the allocated assets be less than US$ 50,000 (fifty thousand American Dollars).
30.3 Where the foundation fails to be recognised due to under-capitalisation, the
establishment thereof becomes null and void, if the founder is alive; but if the founder is no
longer alive, the assets shall be given to an association or foundation pursuing similar
purposes as indicated by the competent entity, except as otherwise stated by the founder.
Memorandum of establishment and articles of association
31.1 The founder shall state in the memorandum of establishment the purpose of the
foundation and specify the assets allocated thereto.
31.2 The founder may also provide in the memorandum of establishment or the articles of
association for the registered office, organisational structure and operation of the
foundation, regulate the terms of its transformation or winding-up, and determine the
disposal of its assets.
Articles of association drafted by a person other than the founder
32.1 In the absence of articles of association drafted by the founder or in the case of
omissions, where the foundation has been established through a will, the preparation or
completion of the articles of association shall be responsibility of the executors of the will.
32.2 The preparation, in whole or in part, of the articles of association shall be the
responsibility of the recognising authority, where the founder has failed to have them done
and the foundation has not been established through a will, or where the executors of the
will fail to draft the articles of association within one (1) year of the commencement of the
32.3 In preparing the articles of association, the actual or presumed wish of the founder
shall be taken into account to the extent possible.
Amending the articles of association
The articles of association of the foundation may at all times be amended by the
recognising authority, on the proposal of the respective board of directors, inasmuch as
there is no significant change in the purpose of the foundation and the wish of the founder
is not thwarted.
34.1 After consultation with the board of directors, including the founder, if alive, the
recognising authority may accord the foundation a different purpose where:
(a) the purpose for which it was established has been either fully achieved or
(b) the purpose of the foundation ceases to be of social interest;
(c) the foundation becomes under-capitalised to realise its intended purpose.
34.2 The new purpose shall be similar, to the extent possible, to the purpose established by
34.3 There shall be no change in the purpose if the memorandum of establishment
prescribes the winding-up of the foundation.
Obligations negatively impacting the purposes of the foundation
35.1 Where the assets of the foundation are burdened with obligations the fulfilment of
which might seriously hinder or disrupt the pursuit of the institutional purpose, the
recognising authority may, on the proposal of the board of directors, eliminate, curtail or
change such obligations, after consultation with the founder, if alive.
35.2 Yet, where an obligation has been the key motive for establishing the institution, the
competent authority may consider the fulfilment thereof as the purpose of the foundation,
or merge the foundation into another corporate body capable of discharging the obligation
at the expense of the merged assets, without prejudice to that corporate body’s own
Grounds for winding up a foundation
36.1 A foundation may be wound up:
(a) upon expiry of its duration, if constituted on a temporary basis;
(b) on any other grounds for winding up the foundation as provided in the
memorandum of establishment;
(c) by means of a court decision declaring its insolvency.
36.2 A foundation may also be wound up by the recognising authority where:
(a) its purpose has either been fully achieved or become unachievable;
(b) its real purpose is not consistent with the purpose expressed in the memorandum
(c) its purpose is systematically pursued by unlawful or immoral means; and
(d) its existence comes to be contrary to public order.
Declaring the winding-up of a foundation
Where any of the grounds provided in subarticle 36.1 above arise, the board of directors of
the foundation shall report the fact to the recognising authority, in order for the latter to
declare the winding-up thereof and take any action deemed advisable for the liquidation of
Effects of the winding-up
38.1 Once the foundation has been wound up, in the absence of specific action taken by the
competent authority, the powers of its organs are restricted to the performance of acts
strictly necessary for either the maintenance or liquidation of its property or for the
completion of outstanding businesses.
38.2 Directors are jointly and severally liable for acts performed outside the scope of
application of subarticle 38.1
38.3 The foundation shall only be liable to a third party for obligations incurred in its name
by any of its directors if the third party has acted in good faith and the winding-up of the
foundation has not been duly publicised.
Foreign Corporate Bodies
Legality and equality
39.1 A foreign corporate body shall make proof of its legal existence in the country of
origin before it may be registered as a foreign corporate body.
39.2 A foreign association or foundation wishing to carry out activities in Timor-Leste and
establish an agency, branch or any other form of representation in this country shall
conform itself to the present law and all other legislation in force, namely, producing proof
that it has sufficient assets for the activities it proposes to carry out.
40.1 It is incumbent upon the legal representative of the foreign corporate body to lodge the
registration application with the registry accompanied by the documents required.
40.2 The legal representative of the foreign corporate body shall be appointed in
accordance with the articles of association and shall act in its name, provided he or she
makes proof of legal residence in Timor-Leste.
41.1 Registration of a foreign corporate body with the registry is done by filing documents
that prove that:
(a) the corporate body is constituted in accordance with the laws of the country of
(b) it has a permanent representative in Timor-Leste with powers of representation and
the necessary competencies to carry out the activities of the corporate body;
(c) it has the means required for its operation and the activities it proposes to carry out.
41.2 The corporate body shall also file a certified copy of its articles of association with the
translation, into one of the official languages of Timor-Leste, of an extract of its
memorandum of association, stating the name, registered office, purposes, duration, key
requirements for admission, removal from office or expulsion of associates; and such a
translation shall be approved by the National Institute of Linguistics.
Cancelling a registration
42.1 The National Directorate of Registries and Notarial Services, Ministry of Justice, may
order that the registration of a foreign corporate body be cancelled where such a corporate
body carries out activities that are contrary to the law, impinge upon the rights of, or cause
damage to, a third party or the State.
42.2 The National Directorate of Registries and Notarial Services shall to this end consult
with the representative of the corporate body and shall set a 5-day deadline for the latter to
justify its operations after which it shall be given a deadline of another 15 days for
42.3 Upon completion of this process, the National Director of Registries and Notarial
Services shall decide within 30 days.
42.4 A decision by the National Director of Registries and Notarial Services may be
appealed against to the Minister of Justice who shall make a final decision.
Regularising a foreign corporate body
Foreign corporate bodies, their branches, agencies or representative offices operating in
Timor-Leste upon the entry into force of this decree-law shall be accorded a deadline of six
(6) months in which to conform themselves to the law.
Irregular associations and ad hoc committees
Organisation and administration
44.1 To the internal organisation and administration of associations without juridical
personality are applicable rules established by their associates and, in the absence of such
rules, the legal provisions relating to associations, except those that presuppose the
personality of such associations.
44.2 Restrictions imposed on the normal powers of the directors may only be invoked
before a third party where the latter was or should have been aware of such restrictions.
44.3 Article 26 shall apply to the separation of associates.
45.1 Contributions from associates and any assets acquired therewith shall constitute the
common fund of an association.
45.2 No associate shall demand the partition of the common fund and no creditor of any of
its associates shall, for the duration of the association, have the right to have the fund
46.1 Grants to associations without juridical personality are considered to have been made
to their respective associates in that capacity, except where a bequest or donation is
conditioned by the grantor upon the acquisition of juridical personality; in this case, if
juridical personality is not acquired within one (1) year, such a bequest or donation shall be
46.2 Assets bequeathed or donated to an association without juridical personality shall
accrue to the common fund, regardless of any other act of transfer.
Liability for debts incurred
47.1 The common fund is liable for any debts validly incurred in the name of the
association or, in the event of non-existence or under-capitalisation of such a fund, liability
rests with the assets of the person who has incurred such debts; where the act has been
performed by more than one person, the persons concerned are jointly and severally liable.
47.2 In the event of non-existence or under-capitalisation of the common fund or of assets
owned by the associates directly liable, creditors may take action against the remaining
associates who shall be liable in proportion to their respective inputs to the common fund.
47.3 The common fund shall be represented in court by those who have incurred the debt.
Ad hoc committees
Committees established for the purpose of carrying out a rescue or charity plan or
promoting the execution of public works, monuments, festivals, exhibitions,
commemorations or similar acts, shall be subject, except otherwise provided by law, to the
articles below, if they fail to apply for recognition of the personality of the association or if
they fail to obtain recognition.
Liability of organisers and directors
49.1 Committee members and those in charge of the administration of its funds shall be
personally and jointly liable for the maintenance of the funds appropriated and for their
allocation to the announced purpose.
49.2 Committee members shall also be personally and jointly liable for debts incurred in
the name of the committee.
49.3 Contributors may only claim for the refund of the contributed amount where, for
whatever reason, the purpose for which the committee has been established is not achieved.
Use of assets for another purpose
50.1 If the funds raised are insufficient to achieve the announced purpose, or this proves to
be unachievable, the assets shall be used as provided in the memorandum of association of
the committee or in the announced programme.
50.2 Where no use is provided and the committee does not want to use the assets for a
similar purpose, it is the responsibility of the administrative authority to provide for the
disposal of such assets, having regard to the intention of the contributors to the extent
Transitional and final provisions
Validating pre-existing articles of association
Provisions relating to the articles of association governing associations, foundations and
NGOs constituted under previous legislation, which are not in compliance with the law, are
considered automatically repealed and superseded by the provisions of this decree-law,
without prejudice to any amendments as may be decided in the articles of association.
Setting up the registry of corporate bodies
52.1 The Ministry of Justice shall, within ninety (90) days, set up the corporate bodies’
registry with the National Directorate of Registries and Notarial Services, and district
branches shall not be precluded from being subsequently opened as may be deemed
52.2 The record of a corporate body consists of a set of documents, certified copies of the
deed of establishment, articles of associations and amendments thereto, including
credentials issued to or in the name of the corporate body, its managers or directors, in
addition to a list of books and files deemed necessary.
The following entities and acts are recorded in the corporate bodies’ registry:
(a) national associations, foundations and NGOs;
(b) foreign associations, foundations and NGOs authorised to operate in Timor-Leste;
(c) documents relating to the appointment of representatives, managers, directors and
members of the corporate body;
(d) all other acts subject to registration.
Public character of the registry
54.1 The registry is open to the public and any party concerned may access it and apply for
the issuance of a certificate of registration, without the need to undergo any other
54.2 The National Director of Registries and Notarial Services is responsible for overseeing
all administrative and legal aspects of the registry and is therefore prohibited from
processing or authorising any instruments subject to entry in the registry.
Tax and customs benefits
Tax and customs benefits shall be the subject of autonomous legislation.
Repealing previous legislation and entry into force
56.1 All previous legislation concerning non-profit-making corporate bodies whether or not
these have been constituted in the form of associations or foundations is hereby repealed.
56.2 This present law shall come into force fifteen (15) days upon publication in the
Approved by the Council of Ministers on 20 June 2005.
The Prime Minister[Signed] (Mari Bim Amude Alkatiri)
Promulgated on 25 July 2005.
To be published.
The President of the Republic[Signed] (Kay Rala Xanana Gusmão)