CHANGE OF LEGAL STRUCTURE & CONSTITUTION
Club Name: Kilbarchan Amateur Athletic Club
Special Resolution – Kilbarchan AAC [herein after referred to as the Club] to change its legal structure from an Unincorporated Charity to a Scottish Charitable Incorporated Organisation (SCIO) and to adopt a new constitution appropriate for this structure.
As per the requirements of the constitution of the Club clause 10, ‘Alterations to the Constitution’, the club’s committee at their meeting on 11 September, 2017 agreed to put the above special resolution to the members at the Annual General Meeting at Johnstone Town Hall on 25 October, 2017 at 7.30pm.
The club committee would like you to vote in favour of the above resolution.
This information brief seeks to clarify for the committee and membership of the Club, the need and rational for change.
The Status Quo
The position of the Club in its current form presents a number of risks both for the members and particularly the committee/trustees.
Firstly as an Unincorporated Association the Club has no legal personality as an entity which mean those on the committee/trustees undertake transactions, enter into contracts/agreements and on the Club’s behalf and bear liability if/when things go wrong.
Potential examples of which might be a health and safety incident/accident; and financial mismanagement the suits would be filed against the individual trustees rather than the Club in its own name.
The Club are embarking on an ambitious project to deliver a dedicated indoor facility. This means raising significant funds from a variety of sources and activities. Our research tells us that funders are reluctant to place significant burden of risk on individuals preferring to fund incorporated organisations.
The change options?
Company Limited by Guarantee (CLG) – Gives the Club legal personality. No exemptions from rates, can limit liability of Directors, but there is no benefit in setting up a Company Limited by Guarantee unless there is an intention to trade significantly out with Charitable Purposes. This is not the case. There is a cost implication with CLG as they have to have an accountant sign off the accounts for Companies House purposes.
Charitable Status and Company Limited by Guarantee – As above. There is no intention or desire for significant non-primary purpose trading.
Scottish Charitable Incorporated Organisation (SCIO) – This is the preferred option of the committee/trustees. This gives the Club legal personality out with the traditional Company structure. This means the Club can undertake transactions, enter into contracts/agreements, own land and buildings and to sue or be sued as an entity rather than individuals on behalf of the Club.
The Club would retain its charitable status and access to Gift Aid and the compliance would remain the same with OSCR as the regulating body.
Once the Club becomes a SCIO it is a permanent move and the trustees are bound by the legal and legislative duties bestowed upon them by the Charity Trustee and Investments (Scotland) Act 2005 and subsequent amendments.
A significant change of this nature requires that two-thirds [2/3] (Current constitutional clause – 10) of those present and eligible to vote are in favour of the above resolution. For the avoidance of doubt, the reference to a two-thirds [2/3] majority relates only to the number of votes cast in favour of the resolution as compared with the number of votes cast against the resolution, and accordingly no account shall be taken of abstentions or members absent from the meeting.
We the committee/trustees seek the permission of the Club’s membership to:
- approach OSCR to become a SCIO;
- if agreed adopt the new Constitution to meet the conditions of becoming a SCIO;
- on the instruction of OSCR, formally transfer the assets, business undertakings and liabilities from the Unincorporated Association to the SCIO;
- on completion of the above, call an Extraordinary General Meeting to wind up the Unincorporated Charity.
Opportunities to discuss or clarify the arrangements surrounding the resolution will be given ahead of the formal vote.