Club Legal Structure & Tax Status

17th December 2016

At the EGM on 15th December 2016, about 50 members voted unanimously in favour of the proposals to change the club structure to a Company Limited by Guarantee and to register for charity status.  Here is the formal resolution:

The Club shall transfer its undertaking (including its assets and liabilities) to a Company Limited by Guarantee with similar objects to the Club. 

The Company shall register as a Charity and in due course the Club shall be dissolved.

 

30th October 2016

The context –

As currently constituted, EDLTCC is an unincorporated association. As such it is the Executive Committee and particularly its officers who are most likely to be held legally responsible when it comes to the club’s operational and financial commitments.

Consequently, contracts entered into on behalf of the club are in the name of one of the individual officers or committee members and it is they and not the club who could be sued. Moreover the whole membership is ultimately jointly and severally liable for any acts or omissions.

In recent years many sports clubs and associations have protected their members’ potential liabilities by becoming incorporated as companies limited by guarantee.  In addition, some have become Community Sports and Social Clubs (CASC) and many others have opted to become charities.

As part of our on-going review of the governance of the club, and at a time when the club is considering significant development, it makes sense to ensure that we are all protected from financial risk and optimise our income opportunities by adopting the most effective legal structure and tax status possible.

We therefore can’t just leave things the way they are if the club is to continue to operate effectively and the membership is to be protected.

Our actions so far –

Some months ago a small working party was set up to research the various options available to the club and make recommendations.  At the last Executive Committee (EC) meeting, following a short presentation, the EC voted unanimously to proceed with changing the structure to a company limited by guarantee and at the same time apply to become a charity. The club’s existing trustees are also unanimously in agreement with the proposal.

The proposed changes will:

  • protect the membership
  • enable the club to develop
  • help us better serve our local community

The scheme will require external support from local accounting and legal firms to set up the new structure and to apply for charitable status, and we hope to have made these changes by the end of March next year.

There will likely be some implementation costs of around £5,000 as well as some small administration expenses.  However, it is expected that the financial benefit of the new structure and charitable status will more than offset these costs over time.

We hope you will agree that this is both a necessity and a good thing for your club. The EC and the working party will keep you regularly informed of progress towards implementing the changes described above.