2020 AGM Incorporation Proposal

PROPOSAL TO INCORPORATE AS A COMPANY LIMITED BY GUARANTEE (CLG)

Proposal

Scaling Dam Sailing Club should become Incorporated as a Company Limited by Guarantee.

Background

Scaling Dam Sailing Club is currently a Not for Profit Unincorporated Association. As such the club the members, the Committee and the Trustees are jointly responsible for the administration of the Club and all accept liability for the actions of the Club. This liability is unlimited. The Club has Trustees who oversee the operation of the club, act as named owners of any assets, are the named parties to any contracts and would manage the dissolution of the club. These Trustees and the Committee are indemnified against any personal liability.

The Committee considers the interests of the members, Committee and Trustees are better served if we should become Incorporated as a Company Limited By Guarantee (CLG).

Impact of becoming a Company Limited by Guarantee

The RYA Vital Signs survey of UK clubs found that 21% of clubs were incorporated. This proportion is increasing and RYA would probably advise new clubs to adopt this structure. A CLG is administered under the Companies Act which would bring a small administrative burden to submit annual reports to Companies House with associated small additional costs (eg inspection of accounts currently about £350).

As a CLG each member agrees to pay an amount if the club were to become insolvent eg £1 thereby limiting members', Committee and Trustees' liability. The club would have Memorandum and Articles of Association (equivalent to our Constitution) filed at Companies House, and would appoint Directors responsible for running the club. The club may hold property and enter into contracts in its own name obviating the need for Trustees (a benefit strongly supported by the Trustees). Directors have a responsibility to promote the success of the club within the terms of the Act and the Articles of Association, and while doing so are protected from personal liability. RYA has detailed templates and guide documents setting out how to go about the process of transition.

To become a CLG several formal documents would need to be prepared and approved by the members of the existing club. The Lease would have to be re-assigned to the new Company (this is probably the most costly element as it would involve NWL and legal support and it would be wise to renew it at the same time to give a longer term which in turn will benefit grant applications).

We have been advised the total cost of the change is likely to be around £1000 assuming members do the donkey work and somewhat dependent on the cost of negotiating the Lease.

Conclusion

The additional administrative burden is not onerous and the benefits of incorporation are clear. In an increasingly litigious society the Committee believes this is the best for the Club and will limit the liability to Trustees, Committee and Members. This proposal is strongly recommended by the Trustees and the Committee.

Footnote

Assuming this proposal is approved, any assistance from members to progress the transition will be very gratefully welcomed.