Types of Organisation: Difference between revisions
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(For more general information about business structures, including other options such as partnerships and limited liability partnerships, see http://www.businesslink.gov.uk.) | (For more general information about business structures, including other options such as partnerships and limited liability partnerships, see http://www.businesslink.gov.uk.) | ||
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|''Legal structure'' | |''Legal structure'' | ||
|''Summary: most typical features'' | |''Summary: most typical features'' | ||
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|''Unincorporated | |''Unincorporated | ||
association Informal'' | association Informal'' | ||
|'' | |''No general regulation of this structure'' | ||
|'' | |''Need to make own rules. Nobody owns - governed according to own rules.'' | ||
|''No, which can create problems for contracts, holding property and liability of members.'' | |''No, which can create problems for contracts, holding property and liability of members.'' | ||
|''Depends on own rules.'' | |''Depends on own rules.'' | ||
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|''Yes, members' liability limited to amount unpaid on shares or by guarantee'' | |''Yes, members' liability limited to amount unpaid on shares or by guarantee'' | ||
|''Yes, but no dividends etc to members if it is a company limited by guarantee.'' | |''Yes, but no dividends etc to members if it is a company limited by guarantee.'' | ||
|'' Would need bespoke drafting in articles, which could be amended by members.'' | |''Would need bespoke drafting in articles, which could be amended by members.'' | ||
|''Yes, if it meets the criteria for being a charity. | |''Yes, if it meets the criteria for being a charity. | ||
|''Scotland: no. Northern Ireland: separate but similar legislation. | |''Scotland: no. Northern Ireland: separate but similar legislation. | ||
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|''Similar to company but with different terminology, eg 'charity trustee' instead of 'director'.'' | |''Similar to company but with different terminology, eg 'charity trustee' instead of 'director'.'' | ||
|''Yes, members either have no liability or limited liability.'' | |''Yes, members either have no liability or limited liability.'' | ||
|'' Members are not permitted to benefit and charity trustees are only able to benefit if constitution, court or Charity Commission give permission.'' | |''Members are not permitted to benefit and charity trustees are only able to benefit if constitution, court or Charity Commission give permission.'' | ||
|''Yes.'' | |''Yes.'' | ||
|'' Cannot be anything but a charity, and must meet the criteria for being a charity. | |''Cannot be anything but a charity, and must meet the criteria for being a charity. | ||
|''Scotland: separate but similar legislation and regulator. Northern Ireland: legislation not yet in place. | |''Scotland: separate but similar legislation and regulator. Northern Ireland: legislation not yet in place. | ||
[[http://www.fsa.gov.uk/pages/doing/small_firms/msr/societies/index.shtml]] | [[http://www.fsa.gov.uk/pages/doing/small_firms/msr/societies/index.shtml]] |
Revision as of 12:00, 22 February 2013
The following is a rough guide of different types of legal structure that Freegle or a trading subsidiary could adopt:
(For more general information about business structures, including other options such as partnerships and limited liability partnerships, see http://www.businesslink.gov.uk.)
Legal structure | Summary: most typical features | Ownership, governance and constitution | Is it a legal person distinct from those who own and/or run it? | Can its activities benefit those who own and/or run it? | Assets 'locked in' for community benefit? | Can it be a charity and get charitable status tax benefits? | Differences in the law as it applies in Scotland or Northern Ireland? |
Unincorporated
association Informal |
No general regulation of this structure | Need to make own rules. Nobody owns - governed according to own rules. | No, which can create problems for contracts, holding property and liability of members. | Depends on own rules. | Would need bespoke drafting to achieve this. | Yes, if it meets the criteria for being a charity. | No specific differences. |
Trust | A way of holding assets so as to separate legal ownership from economic interest. | Assets owned by trustees and managed in interests of beneficiaries on the terms of the trust. | No, which means the trustees are personally liable. | Not usually. Trustees/directors can only benefit if trust, court or Charity Commission give permission. | Yes, if trust established for community benefit. | Yes, if it meets the criteria for being a charity. | No, subject to differences between English and Scots trust law. |
Limited company (other than Community Interest Company) [[1]] | Most frequently adopted corporate legal structure; can be adapted to suit most purposes. | Directors manage business on behalf of members. Considerable flexibility over internal rules. | Yes, members' liability limited to amount unpaid on shares or by guarantee | Yes, but no dividends etc to members if it is a company limited by guarantee. | Would need bespoke drafting in articles, which could be amended by members. | Yes, if it meets the criteria for being a charity. | Scotland: no. Northern Ireland: separate but similar legislation. |
Community interest company (CIC) [[2] | An effective limited company structure for social enterprise with secure 'asset lock' and focus on community benefit. | As for other limited companies, but subject to additional regulation to ensure community benefits. | Yes, members' liability limited to amount unpaid on shares or by guarantee. | Yes, but must benefit the wider community. Can pay limited dividends to private investors and directors can be paid. | Yes, through standard provisions which all CICs must include in their constitutions. | No, but can become a charity if it ceases to be a CIC. | Scotland: no. Northern Ireland: legislation not yet in place. |
Industrial & Provident Society (IPS) (Co-operative) | For bona fide co-operatives that serve members’ interests by trading with them or otherwise supplying them with goods or services. | Committee / officers manage on behalf of members. One member, one vote (regardless of size of respective shareholdings). | Yes, members liability limited to amount unpaid on shares. | Yes, but should do so mostly by members trading with society, using its facilities etc, not as a result of shareholdings. | Would need bespoke drafting in articles, which could be amended by members. | No, would have to be constituted as community benefit type of IPS. | Scotland: no. Northern Ireland: separate but similar legislation. |
Industrial & Provident Society (IPS) (Community Benefit Society (BenComm)) | Benefit community other than just own members and have special reason not to be companies. | Like Co-op type, but new legislation provides option of more secure form of 'asset lock'. | Yes, members liability limited to amount unpaid on shares. | Must primarily benefit non-members - 'asset lock' applies. | Yes, asset lock only survives dissolution if new statutory form of asset lock adopted. | Yes, if it meets the criteria for being a charity. | Scotland: no. Northern Ireland: legislation not yet in place. |
Charitable Incorporated Organisation | First ready-made corporate structure specifically designed for charities. | Similar to company but with different terminology, eg 'charity trustee' instead of 'director'. | Yes, members either have no liability or limited liability. | Members are not permitted to benefit and charity trustees are only able to benefit if constitution, court or Charity Commission give permission. | Yes. | Cannot be anything but a charity, and must meet the criteria for being a charity. | Scotland: separate but similar legislation and regulator. Northern Ireland: legislation not yet in place. |
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