The Buck stops where ? Club or company limited liability explained in brief

Clubs are generally set up as unincorporated associations, ie a group of individuals agreeing to come together for the enjoyment of the sport, administered by a committee and governed by a set of rules.

Leaving aside negligence, for which all clubs and their officers ought to be insured, and which is a topic all on its own, the issue arises of liability for the debts and obligations of the Club. Who is liable?

The members perspective : generally an individual members liability is limited to their subscription fee.

The Committee members perspective : responsibility and liability for the Clubs business lies with you! As a committee member, you may find yourself personally liable for the debts of the Club and any court actions raised against it.

What is the alternative ?

Good practice and sufficiency of reserves aside, incorporating the Club as a limited company under the Companies Acts may be the best way to limit the personal liability of the committee members.

Advantages :

Liability for debts and litigation will normally lie with the Company rather than the individual;

The Clubs property will be owned by the Company rather than its members and officers (which can make its administration easier in the case of land);

If the Club decided to borrow, as a Company, it has the option of granting a Floating Charge over its assets which may be attractive to lenders;

It may be easier to raise finance through grants and the like, which may not be available to unincorporated associations.

Disadvantages :

• The Club as a Company requires to comply with the formalities of the Companies Acts whilst this may mean some additional costs and administration, well-run clubs will find that they are doing much of what is required in any event;
• Certain information regarding the Club will be publicly available its directors and secretary as well as its annual accounts. This is unlikely to be a concern.

Note however that failure to comply with the Companies Acts may lead to the officers being fined.