Constituting your club as a company14 March 2017
Constituting your club as a company is an alternative to being a members club. This is known as incorporating.
Taking this approach will mean adopting Articles of Association and registering the club with Companies House.
When is incorporating a club suitable?
In general terms, incorporation maybe suitable where a club:
- is large
- has employees
- delivers service under contractual agreements
- regularly enters in to commercial contracts
- owns freehold or leasehold land, buildings or other property.
Some people assume that setting up your club as a company means Executive Officers don’t have any personal liability. This is not the case. Liability still applies.
Most clubs that incorporate do so as companies limited by guarantee. Each member guarantees to pay an amount if the club becomes insolvent, limiting their liability to that amount. This is often combined when applying for charitable status to the Charity Commission.
Clubs may also want to consider setting up as a Community Interest Company (CIC). This combines company limited benefits with protecting the assets for future benefit of the community or club. Go to the Office of the Regulator of Community Interest Companies website for more details here.
The forms required to set up and run a limited company are available from the Companies House website here.
Given the complexity of incorporation, and the regulatory obligations that it carries, clubs are advised to seek professional advice if taking this route.