Posted by Jock on December 11, 2000 at 17:04:33 from 212.244.243.30:
In Reply to: Re: Company Status; was TARS Membership List posted by Peter Roche on December 08, 2000 at 19:18:38:
It only seems ' back to front' if you think that 'limiting liability' is the same as 'having a limited company' which it isn't.
There are a number of tools to limit individual liability of committee members, officers and ordinary members. Some of them have already been pointed out by other contributors to this thread:
- (a) offering an indemnity in the club rules;
- (b) insurance;
- (c) incorporation.
The trick is to use the appropriate tool, and this will depend on the activity that the club wishes to undertake.
A literary society that confined itself to literary activities should be relatively risk free. It might carry on for ages without worrying about limited liability, then a member might raise the possibility of a lawsuit by an aggrieved third party. Arguably it would be a remote, but potentially devastating, financial catastrophe. Exactly the sort of risk best dealt with by insurance. So a combination of (a) and (b) would be an effective and inexpensive remedy.
A society that carried out some trading always runs the much greater risk that someone will get their sums wrong resulting in a claim from a supplier or the tax office which cannot easily be met. Here incorporating the trading arm as a limited company makes good sense, as insuring the risk could be expensive (and could entirely eat up the small trading profits).
Finally, comes the case where the society wants to do harebrained things like messing about in small boats. Here the society will have taken expert advice from people like the RYA and will have a good safety policy in place and enforced. But accidents still happen and a combination of insurance and a limited liability company (b) and (c) should cope with the worst case.
Now divide the Society in two and - le voila - you can have the best of both worlds - a simple and democratically constituted club (unincorporated association) whose elected committee holds in trust the shares of the limited company.
I suspect that we are straying outside the topic boundaries of Tarboard, but given the interest generated by this thread, Ian please be patient with us for a little longer.