| Unincorporated Associations |
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| Introduction |
| This article is about unincorporated associations: what they can and can’t do, how to form one and how to manage one. |
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| If you are interested in obtaining the documents or templates that you need to form an unincorporated association, then links can be found at the end of this article. |
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| 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. |
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| Most clubs, societies, associations, groups, and some syndicates are unincorporated, as are most voluntary organisations. |
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| 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. |
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| 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. |
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| However, although not separate from its individual members, an association can register a name with the Registrar of Business Names and then hold a bank account in its own name. It can also register to be a charity if it has been formed to benefit the public. |
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| Unincorporated associations may also have trading or business objectives or carry on commercial activities. |
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| 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. |
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| 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 should be minimised. |
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| 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 such a way that jeopardises the interests of another member. |
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| 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. |
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| 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. |
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| 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. |
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| 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. |
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| What to put in the constitution: Membership |
| Likewise, 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. |
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| 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. |
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| 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). |
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| 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. |
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| 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. |
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| 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. |
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| 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: |
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start a legal action |
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borrow money |
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enter into contracts in its own name |
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hold property |
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| If you need your association to hold property (for example, a club minibus) you may be able to set up a trust to legally hold ownership of the property and assets for the members who are to benefit. |
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| 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. |
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taking on employees |
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raising finance or applying for grants |
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issuing shares |
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entering into large contracts |
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taking on a lease or buy freehold property |
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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. |
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| Documents that will help you set up your organisation |
| Net Lawman sells a number of documents and templates for formalising your association. |
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| The first template that you should look at is our: Club rules and constitution, which is suitable for most clubs and societies. |
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| If your association needs to own property or have an alcohol licence, Members' club or association: constitution and rules, with property and alcohol licence may be more appropriate. |
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| 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 Clubs, associations and NGOs. |
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| 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 memorandum and articles of association. |
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