© 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