Proposal to establish Linlithgow RFC as a Company Limited by Guarantee
The Executive is recommending a significant update of the Club’s structure and constitution. This follows a review involving external legal advice, input from Scottish Rugby and also from best practice elsewhere in voluntary sports organisations.
The aim is to preserve the identity and objectives of the Club while protecting the members and office bearers from unnecessary exposure to financial liability.
What is being Proposed?
The Executive will be proposing a move from our current legal status as an unincorporated voluntary association to a Company Limited by Guarantee (CLG). The review of the Club’s Constitution will be part of this process as we will be required to establish “Articles of Association” for the new organisation.
Current legal advice is that unincorporated voluntary organisations that have employees and that own or lease property or land should consider incorporation, as the limited liability will provide a significant degree of protection to members and office bearers.
What is a Company Limited by Guarantee?
- Members instead of shareholders,
- Limited liability to its members (typically £1),
- Limited liability for Directors unless they act negligently or fraudulently,
- Separate legal personality,
- Members do not own shares and cannot therefore profit personally,
- Regulation by Companies House and subject to Company Law – Directors have legal duties,
- Commonly used in the third sector,
- Memorandum and Articles of Association
(include asset lock, non profit distribution clause and social / environmental purposes / objects).
Have we ruled out becoming a Charity?
No, we haven’t! Moving to CLG status would the first step anyway in the process to move to charitable status. A few years ago we looked closely at charitable status and concluded it was not for the Club at the time. However, we believe it’s worth having a look again. It’s a rigorous and lengthy process to become a charity, so we plan to set up a small working group to review this option, while we press ahead with setting up the CLG.
(If any member has a strong interest or has appropriate knowledge / skills they could offer, then we’d be delighted to hear from you, either to seek your input or to be part of this small working group.)
How has this come about and When it is proposed to happen?
We’ve been talking about this for some time as we sought out the best advice and guidance, however we are now keen to move reasonably quickly to bring about the changes, while keeping members updated.
We believe that this is the right thing to do now and welcome discussion or questions on the topic as we develop the detailed proposals for members’ consideration. Our target is to make the new organisation effective from 01 April 2016 and we envisage a number of informal meetings as we shape the detailed proposals before a formal General Meeting to approve the changes. We are not seeking to change the nature of the Club, on the contrary our aim is to preserve the identity and objectives of the Club while protecting the members and office bearers from unnecessary exposure to financial liability.
One of the key stages in the process is the development of “Articles of Association” for the new organisation. The drafting process will involve consultation with the Club members. At the same time we are identifying the practical steps that we need to take to make the transition and the issues that we need to address in the process.
LRFC Executive Committee