© McGrigors LLP

“ARE WE ALL FIT FOR PURPOSE?”

28 FEBRUARY 2009

AIRTH CASTLE HOTEL

Iain Smith

© McGrigors LLP

What is a local sports council?

© McGrigors LLP

What is a local sports council?

Generally an unincorporated association!

© McGrigors LLP

In summary an unincorporated association has:

© McGrigors LLP

In summary an unincorporated association has:

No legal status except for tax!

No private law capacity.

Individual members who retain their own legal capacity and liability.

© McGrigors LLP

In practical terms this means that legally local sports councils cannot:

© McGrigors LLP

In practical terms this means that legally local sports councils cannot:

Enter into contracts.

•with some or all of members.

•of employment - liability is generally with a committee.

•with third party organisations or individuals.

© McGrigors LLP

Sue or be sued by others. •Personal liability rests with office bearers or membership as

a whole depending on level of responsibility assumed.

Sue or be sued by members. •No remedy for members against club, committee or

membership as a whole. (Cannot sue yourself!).

•Remedy is against the individual responsible.

© McGrigors LLP

Own property.

•Property owned jointly between members.

•Cannot be disposed of without unanimous agreement of members.

© McGrigors LLP

So Who Is Liable?

© McGrigors LLP

So Who Is Liable?

Individuals who created the liability.

The management committee.

All of the members of the association?

All of the members who authorised the act.

Answer – Could be all or none

© McGrigors LLP

The current law is:

© McGrigors LLP

The current law is:

Unclear.

Provides uncertain levels of liability for members.

Confusing for creditors.

Cumbersome for property ownership.

© McGrigors LLP

Recommendation

© McGrigors LLP

Recommendation

Individual local sports councils, and those involved with their management, should very seriously consider the implications of not having legal personality.

© McGrigors LLP

With legal personality a local sports council can:

© McGrigors LLP

•Enter a contract on its own behalf.

•Contract with individual members.

•Limit liability to the local sports councils funds.

•Personal liability remains however, should an individual:-–Fail to disclose they are working as an agent–Exceeds the authority given to them–Enters a contract by misinterpretation.

Contract

© McGrigors LLP

Negligence

Sporting organisation liable for authorised costs of its representatives.

No liability for office bearers or members.

Individual wrongdoer remains personally liable.

© McGrigors LLP

Property

Sports organisation could own its property, no need for Trusts.

© McGrigors LLP

Current forms of non-profit organisations

© McGrigors LLP

Current forms of non-profit organisations

•Unincorporated associations.

•Companies:-–Limited by shares or by guarantee–CIC–(SCIO) (future).

•Trusts.

•Industrial and provident society.

(All can potentially be charitable)

© McGrigors LLP

Why a Company Limited by Guarantee

Liability usually limited from £1 to £10.

Flexible structure.

Straightforward to administer and alter.

Cost effective.

© McGrigors LLP

Business Transfer

Migration

•Employees

•Funding

•Third party contracts

•Sponsorships

© McGrigors LLP

How to become a Company Limited by Guarantee Memorandum of association.

Articles of association.

Details of first directors and secretary (if any).

Statutory declaration that the requirements of registration have been complied with.

© McGrigors LLP

On going commitments

Companies House•annual return•annual accounts•changes to directors details.

Directors have statutory duties.

© McGrigors LLP

Summary

Think about the legal status of your local sports council