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Clubs and Societies – to incorporate or not?

Wednesday, 25 February 2015

If you are working together with other people with a common purpose (but not with a view to making a profit) and you have members, you may well be running a club or society. It could be a sports club or social society, that you or your child is involved in. What you may not have considered is what the potential repercussions would be if something went wrong?

Take a hypothetical example:

Piranha Swimming Club are an unincorporated association with 80 swimmers aged 5 to 16 years. The Club is run by a group of parents of the swimmers who are elected annually. The Club has obtained the relevant insurance to cover the swimmers.

Unfortunately, one afternoon during training Oliver, aged 8, trips on a float left at the side by another swimmer and injures himself. Unfortunately, the insurance company say that the accident does not fall within the terms of the insurance as it was caused by the Club’s negligence in failing to maintain a safe space.

Oliver’s parents want to seek compensation and decide to sue the Club. On receiving advice, they name the members of the committee as defendants to the claim.

In the above scenario, having expended time, money and effort running the Club making you the most visible members of the Club, you are susceptible to being sued. If so, subject to the Club in its Constitution or Rules agreeing to indemnify or cover you, you could be personally liable for all or a share of the outcome to the claim.

This is clearly highly undesirable for all members not just committee members who run a club or society.

Unincorporated clubs and societies can reduce or limit the liability of the individuals who run it and the members who belong to it by becoming a company with limited liability. What this does is create a separate legal entity, the company itself, which is liable in the event that a problem occurs. If you have obtained charitable or community amateur sports club (CASC) status, you will need to re-register if the club incorporates.

If you are involved in running and managing a club or society and you wish to discuss ways to limit your liability, or the committee have decided to incorporate, do get in touch.

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