Legal Structures at grassroots football clubs

What do we mean by “legal structure”?

A legal structure is a type of legal “entity” or options for existence for an organisation. There are a number of different legal entity options for clubs to choose from and choosing the right one is important to protect liability and lay the correct foundations for your club to grow and develop.

Initially it’s important to recognise there are 2 types of legal structure - Unincorporated or Incorporated.

 

CASC (Community Amateur Sports Club)

This legal structure as the title suggests is only available to amateur sports clubs. A quick overview: 

• Non-charitable activities are permitted
• Some member benefits are allowed
• A CASC only registers with HMRC for tax benefits

 

CHARITIES

Charities are different to CASCs they are not only available to sports clubs. Your charity structure is defined by its ‘governing document’ (the legal document that creates the charity and says how it should be run - see Governing Document section for further guidance).

There are four main types of charity structures:

• Charitable incorporated organisation (CIO) - Incorporated
• Charitable company (limited by guarantee) - Incorporated
• Unincorporated association - Unincorporated
• Trust – Unincorporated

Charities:

• not be Exempt or Excepted
• have income over £5,000 pa (unless set up as a CIO)
• Have exclusively charitable objects and activities
• Meet the public benefit test

Suitable purpose for sports bodies to be established as a charity:

• Advancement of (an) amateur sport
• Advancement of healthy recreation by encouragement of participation in (amateur sport)
• Click here for further guidance

A public benefit assessment by the Charities Commission will assess the following:

• Who can join?
• How much are the fees?
• Can people in poverty access? How?
• Is there private benefit to members, trustees and/or players?

Charity must confirm status by reference to registered number / evidence of Exempt or Excepted status and provide evidence on application form in relation to responsible persons and finances

Other unregistered charities:
Apply for confirmation of status and provide other information / evidence (HMRC will assess whether you are a charity at all)

INCORPORATED ASSOCIATIONS

Company (limited by guarantee)

• Incorporated by Companies House (and may be registered with the Charity Commission or CIC Regulator if appropriate)
• Governing Document is the company's articles of association
• Can contract and own land or buildings in own name
• Must have Directors or trustees
• Association (wide membership) or Foundation (where directors are the only members) styles are possible

Charitable incorporated organisation (CIO)

• Specifically for charities
• Registered with the Charity Commission only
• Governing document is a Constitution
• Can contract and own land or buildings in own name
• Must have trustees and members
• Association (wide membership) or Foundation (where trustees are the only members) styles available
• May act as trustee of land for another body e.g. local authority

 Community Interest Company (CIC)

• Company limited by guarantee or shares
• CIC Regulator
• Community interest test
• Asset lock and dividend cap
• No tax breaks
• Cannot have charitable status

 For more information on Community Interest Companies click here 

 Community Benefit Society

• Registered with FCA (as Mutuals Registrar) not Companies House
• If charitable = “Exempt” charity
• Can contract in own name and own land or buildings
• Directors (trustees) and shareholders / members
• Intended for trading or conduct of a business

 For more information on Community Benefits Societies click here

UNINCORPORATED STRUCTURES

 Trusts

• May be charitable or non-charitable
• For sport, trusts usually relate to holding land/buildings in conjunction with an Unincorporated Association (‘UA’)
• Governing document is a Trust deed, Conveyance, Long Lease, Will, Charity Commission or Department of Education Scheme
• No members
• Trustees make all decisions (sometimes at direction of UA Committee) and have personal liability

 Unincorporated Associations

• May be charitable or non-charitable
• Cannot own land / buildings in own name, so needs land holding trustees
• Governing document is Constitution (and Rules)
• Has members (who usually elect trustees / committee / council / executive)
• Trustees enter into contracts, make day to day management decisions and have personal liability

 Social Enterprise  

• No consistent legal definition - “Social Enterprise” – neither structure nor real legal status
• No formal registration process (but you can apply for Social Enterprise “mark”)
• Generally accepted must:
  • Have social/community benefit purposes
  • trade/conduct a business in furtherance of the purposes
• Could also be a charity or CASC

To see an overview of the benefits and conditions of legal structures click here

GOVERNING DOCUMENT

Once your club's legal status has been agreed and confirmed, you now need to establish a governing document to formalise club decisions and processes to ensure proper and consistent running of your club. This is often called a constitution.

It should include:

• The objectives for your club (e.g. what you want to do or provide for your members)
• The different forms of membership (e.g. adult, junior, social) and perhaps subscription rates
• The rules by which your club will operate -
• How the affairs of the club are to be managed (e.g. by officers and a committee)
• How the members control the club, usually through an annual general meeting.

Constitutions can be lengthy, complex documents, but don’t worry there are plenty of templates to help guide you in the right direction. However, it is important to include the points your club feels are appropriate and relevant and not adopt someone else's document with checking its appropriateness to your club. 

For further guidance on constitutions, click here

Example Club Constitution.pdf