Many clubs in Scotland are unincorporated. This is a suitable setup for small members’ or amateur clubs with no significant assets, no interest in property and who do not employ staff, enter into contracts or other arrangements involving risk.
However, unincorporated clubs have no “legal personality”. If your club owns property and is unincorporated, it will be owned in the names of certain members. If any of those members leave the club, you need to update the property title and this can have legal and registration costs. Owning property in the name of the club (which is incorporated) means that it doesn’t matter if certain individuals leave the club.
Once incorporated, a club has separate legal personality and members will benefit from limited liability, so any debts, losses, or legal claims associated with the club are the responsibility of the club itself. It also means that if someone wants to raise a legal action against the club, it would be raised against the club rather than individuals. Otherwise, committee members would be personally liable for any decisions made on behalf of the club. Would you risk losing your house or savings on the chance something could happen at your club? If you’re involved in a sports club committee and your club is unincorporated you may be doing just that.
That means that any successful legal claim (perhaps for an injury sustained on your premises) made against the club would be brought against the committee members – who would be personally liable if the injury was not covered by insurance and the club had insufficient assets to meet the claim. Incorporating your club will essentially see it become recognised as a legal entity in its own right, giving members limited liability (usually limited to a nominal £1) if there are debts or other liabilities that cannot be met from the club’s funds and other assets.
If your club employs people, holds property (whether owned, or under a lease), enters into significant contracts (eg equipment leases; or a building contract for an extension to the club facilities) and/or carries on significant income-generating activities, there will be potential liabilities and claims (generally rising with the scale of activity) which cannot all be met by insurance. In those circumstances, it would be advisable for the committee to consider whether incorporation – whether as a company limited by guarantee, a registered society (cooperative or community-benefit society) or Scottish charitable incorporated organisation (SCIO) – would be appropriate for the protection of those involved in the club, particularly committee members.
A further benefit of incorporation is that the club would be seen as having adopted a robust legal structure, and that is generally helpful in the context of dealings with potential funders and other partner bodies.
To date, we’ve supported the incorporation of over 40 sports organisations across Scotland. This includes clubs such as Annan Athletic (as a Community Benefit Society), Dunbar United (as a Community Interest Company) and multiple grassroots charitable clubs as Scottish Charitable Incorporated Organisations). Speak to us to find out how we can help your incorporation.