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Unincorporated associations

This article is about unincorporated associations. It tells you how to create and manage your association: what you can and can’t do. 

 

Related Agreements:

 
 

Contents

What is an unincorporated association?

How to form an unincorporated association

Is an unincorporated association recognised by law?

Why write the rules into a formal constitution

What to put into the constitution: Management

What to put into the constitution: memebership

What to put into the constitution: how to change the rules

Registration of your association

Documents that will help you set up your organisation

 

 

What is an unincorporated association?

An unincorporated association is an organisation that arises when two or more people come together for a particular purpose but decide not to use a formal structure like a company.

Most clubs, societies, associations, groups, and some syndicates are unincorporated, as are most voluntary organisations.

The advantage that unincorporated associations have that makes them a popular choice for a club or society is that they enjoy greater freedom of operation than a company or a partnership. For example, there is no requirement to submit annual returns.

How to form an unincorporated association

Although we use the word "form" you do not actually form an unincorporated association. What you do is put together a set of agreed rules for the management and operation of the joint activity. That could be written on the back of an envelope, but using a comprehensive document to do so is better as it covers many things and protects those who make decisions from action by those who do not.

Is an unincorporated association recognised at law?

Unlike an incorporated association (for example, a limited company) an unincorporated association is not a "person" in law. So it has no legal rights and is not separate from its members. It follows that individual members are legally responsible for the acts and omissions of the entire association.

If the association acts through individuals or committees or any other delegated authority, then in most cases, those individuals are responsible to the person they deal with, for what they do in the name of the association. However, within the association, the position may be more complicated and will depend on the application of the law of contract and implied authority.

Unincorporated associations may also have trading or business objectives or carry on commercial activities.

Why you should write the rules of the association into a formal constitution

The most obvious reasons for having a written constitution is that it provides a record of what was agreed. New members joining should understand far better what is expected of them, and disagreements as to how the association should be managed will be minimised.

The second reason stems from the fact that all members are collectively responsible for the actions of the association. Writing the rules down reminds all members what they may or may not do and therefore helps reduce the possibility that an individual acts in a way that jeopardises the interests of another member.

It follows that the downside of an unincorporated association is that the members are never safe from liability incurred by others of them. The safest way to run a simple organisation is to make sure that the rules make clear that no member may commit the association to any contract or expense without consent of the body of members and that all expenses are funded in advance.

By providing clear guidelines as to how the club, society or association will work, a constitution safeguards the interests of members against each other and ensures the on-going success of the organisation.

What to put in the constitution: Management

For most clubs, it is impractical for every member to have a vote on every decision. Therefore, a management committee is usually elected to run the organisation on behalf of the members.

The authority of the voluntary management committee flows from the constitution or rules because every member has agreed to those rules when he signs up as a member. That leaves the office holders as agents for all the members.

It is important when setting up an unincorporated association to consider how office-bearers will be appointed, what duties, powers and responsibilities the management committee will have, and under what circumstances the appointment ends. You should write these into the constitution.

What to put in the constitution: membership

You should also consider at the start the criteria or eligibility for becoming a member, how a person becomes a member and importantly, how membership ends. You may want to give committee members the right to end the membership of individuals who behave in ways inconsistent with the rules or values of your association.

What to put in the constitution: how to change the rules

Over time the members may wish to amend the organisation's purposes or the arrangements for the conducting of its affairs. Unless there are any express rules governing the changing of purposes or rules it is presumed that changes can only be made with the consent of all the members of the association. That often presents a problem if not all members can come together to vote, or if the decision is not unanimous.

Therefore, if it is important that decisions can be made quickly or regularly, it may be sensible to set out alternative arrangements for decision making (such as giving a committee powers to make certain decisions or letting a majority vote decide).

It may also be a good idea to set out when all members should meet regularly, for example, setting out that there will be an Annual General Meeting (AGM) or an Extraordinary General Meeting (EGM) of the members of the association. Decisions that do require the vote of all members can be made at these.

Registration of your association

Unincorporated associations do not need to register with any government organisations because they are not bound by regulations. For example, they do not need to be registered at either Companies House or the Financial Services Authority.

If your unincorporated association has charitable aims, you can apply to the Charity Commission for charitable status. If you are given charitable status, you will have to comply with the Commission's regulations.

Limitations of unincorporated associations

Because it has no legal identity of its own and in legal terms is only a collection of individuals, an unincorporated association cannot itself:

  • start a legal action
  • borrow money
  • enter into contracts in its own name
  • hold property

So if you need your association to hold property (for example, a club minibus) you must set up a trust or allow certain members to hold legal title to (ownership of) the property and assets for the benefit of all of the members.

Personal risk and alternatives

Because unincorporated associations have no separate legal identity, members have to sign loan documents and contracts as individuals and carry the risk personally. This way of working is unlikely to offer a long-term solution if you intend to expand the enterprise.

  • taking on employees
  • raising finance or applying for grants
  • issuing shares
  • entering into large contracts
  • taking on a lease or buy freehold property

However, there is nothing to stop you from starting an unincorporated association first and incorporating later on. Acting this way would usually incur less cost and less administration.

Documents that will help you set up your organisation

Net Lawman sells a number of documents and templates for formalising your association.

The first template that you should look at is our: Club rules and constitution, which is suitable for most clubs and societies.

If your association needs to own property or have an alcohol licence, Members' club constitution and rules licence may be more appropriate.

We also offer tailored versions of these documents for specific types of clubs, such as football clubs or cricket clubs. All our templates can be found under the category Club constitution and rules templates

Lastly, you may be interested in setting up your association as a company limited by guarantee. You can form a company quite easily. One of the documents you will need is a Articles of association: private company limited by guarantee.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.

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