Should we incorporate?
Harriet Wright considers the implications of being an unincorporated association, the entity of choice for many sports clubs.
The most common structure used by sports clubs is that of an unincorporated association. Clubs often use this structure as it is relatively informal, easy to operate and, unless it is a charity, not subject to a statutory framework.
Being unincorporated means that the club has no separate legal identity. Therefore it cannot enter into contracts or hold property in its own name and it will generally be the members of the management committee who enter into contracts and hold properties as individuals. The members of the club are responsible for the club’s obligations and debts. This liability is unlimited and it is often one of the factors which can lead clubs to consider an alternative, incorporated structure.
Incorporation provides a club with a distinct legal entity which means the club itself, rather than the individual members, is responsible for the club’s obligations and debts. It can be easier to enter into contractual arrangements and own property. Additionally, the members can only be held responsible for the amount of their nominal guarantee.
Small local sports clubs may prefer the flexibility and informality of being an unincorporated organisation. However, the advantages may outweigh the disadvantages of incorporation in many cases. If the club owns buildings and/or employs coaches then incorporation is generally recommended.
If you would like to discuss the suitability of your club’s structure, the options available for incorporation and the process to incorporate then the Corporate team would be happy to assist.