SENW to Investigate Incorporation


At the Swim England North West Annual Council Meeting held on Saturday 5th September 2020, the Regional Management Board were given formal approval by the voting members to take all necessary steps to investigate what would be required for incorporation. As a Region we will be engaging professional advice to support and guide us through the process; Mitchell Charlesworth (the Region’s long standing auditors) for financial and business aspects, and Brabners LLP for the legal side.

Incorporation

Currently Swim England North West is an unincorporated association as are the vast majority of clubs in the region. Following the incorporation of Swim England, which is now a company limited by guarantee with charitable status, Swim England North East changed their legal status to a company limited by guarantee last year. Following this all of the other SE regions are investigating whether they too should incorporate.

Key Points

  • The Region provides itself on operating within an effective governance framework and it is pertinent to review the governance structure from time to time. 
  • The law does not recognise an unincorporated association as a separate legal entity distinct from its members or its management committee. An unincorporated association cannot in its own name.
    • Enter into contracts – Problems with any contracts undertaken by the Region would fall upon the person who made the contract.
    • Sue or be sued – This means that any legal claim brought against the Region (e.g. employment tribunals or supplier disputes), would be against the members of the management board, who would be personally liable if there were insufficient assets and/or inadequate insurance to meet the claim. However, if those management board members were directs of a company they would have limited liability (usually £1) and may only be personally liable if they had committed some wrongdoing or if the organisation continued to trade when insolvent.
    • Take on a lease or own property –  Any property of the Region must be held by trustees. Problems can arise where property continues to be vested in individuals, whether formally appointed as trustees or not.
    • Employ Staff – There is a workaround with Swim England to allow the Region to employ its staff
  • There are several alternative structures that could be adopted; one that is under consideration is a ‘company limited by guarantee’. If the region adopted this structure the company would have members, as opposed to companies limited by shares which have shareholders. Members of a company limited by guarantee can simply join the company and resign their membership at a later date.
  • Each member of the company guarantees to pay a small amount of money (usually £1) if the company ever becomes insolvent.
  • Unincorporated associations are not generally subject to any outside scrutiny and their rules and accounts are private documents. Conversely, companies are subject to regulation and must file certain documents at Companies House including annual reports and accounts which therefore become public documents. This will involve time, effort and some expense in preparing returns and accounts.
  • The Region benefits from comprehensive insurance and to date has not been the subject of a claim which was insured. However, there is always a risk of unknown and multiple injuries in a single incident which may leave the Region exposed.

 

Being Incorporated 

  1. Means the Region would become a company subject to the Companies Act; this means that there are various statutory requirements which have to be followed in relation to members’ meetings etc.
  2. Limits the liability of Board members.
  3. Provides the Region with a separate legal entity and reduces the legal risks faced by individuals in unincorporated bodies.
  4. Promotes good governance and transparency.

 

Updating SENW Clubs 

When all the preparatory work has been completed there will be a special ACM to agree the formation of the company and the transfer of all of the Regional assets to the New Company.

Finally, Swim England North West will endeavour to keep all clubs aware of the progress and relevant developments over the next few months.

 

 

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