Community Group Advantages of incorporation

Community group - should it incorporate?
These thoughts are based on the assumption that the group in question is in England and Wales. If the group meets the English law legal criteria for a charity it is, strictly, obliged to register as a charity with the Charity Commission for England and Wales (unless it is in one of the limited exemption categories, which is unlikely). That is true whatever the legal nature of the group (eg unincorporated association or company limited by guarantee).

If the objects are exclusively charitable then registration will be necessary. Also note that the form of the memorandum and articles differs substantially if charitable registration is to be sought (compared to a non-charitable incorporated community group).

There is a noticeable trend towards incorporation of such groups recently (whether their activities are charitable or not). A guarantee company, if its memorandum and articles are well drafted and its directors obtain good professional advice about its establishemnt and subsequent administration, is a very good vehicle for a community group. Liability is more limited than in an unincorporated association (completely for the members, to some extent for the directors) and funding may be easier to obtain (for instance grants from official bodies or sponsorshiop from commercial businesses). There are other positive advantages - for example the company can enter into legal agreements such as contracts in its own name and hold its own property and investments, rather than using human or corporate nominees.

I believe industrial and provident societies are generally less flexible, due to the relevant legislation which governs their establishment and operation. They are certainly less common.

Cecile Gillard
Senior Legal Adviser, Jordans Ltd