Company vs Charity

Sulis · Company vs Charity

Hello,

I am trying to set up a new society and was wondering if anyone had any advice over which is the best way to go? Is it best to be a registered company and if so which type? Are there any advantages/disadvantages in being listed as a charity? Indeed can a Bonfire Soc be a charity? Is it possible to be a society without being a company/charity and if so, what are the ramifications of this?

Sorry, tedious questions I know, but any wisdom is much appreciated.

Kind regards,

Sulis

forrest

You'd be best of going for Ltd company status. On the information is on the Companies house website. You just get each member to pay a £1 share. That way should things go badly wrong you & your members arethen only lible for that £1 share, ie you wont lose your house etc if someone tries to sue you.

Sulis

Thanks for what sounds very important advice!

Sulis

guyfawkesforpm

Firecracker

I know when I joined my bonfire society £1 of my membership was a share and I think it may have been the same for Burgess Hill, not sure of the poinbt of it, but its obviously something alot of societies do.

forrest

rockape65

Hi guys interesting point! Like GFPM i'm not trying to get into an argument but isn't that why we pay through our noses for £10m worth of insurance cover? I would think the only time you would be sued personally was if you were criminally negligent as an individual (i.e threw a rookie directly at a spectator and caused an injury) rather than say an accident at the firesite where no one individual could be deemed liable (As per the Cliffe firesite two years ago) which I assume will be settled by the insurers?

guyfawkesforpm

it alldepends on what you opt for be

Most small businesses that opt for limited company status become private limited companies rather than public limited companies (PLCs). The main differences between them are that:

PLCs can raise money by selling shares on the stock market - private limited companies cannot
PLCs must have share capital of at least £50,000
PLCs must have at least two shareholders, two directors and a qualified company secretary

Limited by shares or by guarantee?
Private limited companies are owned by their shareholders and are limited by shares.

This means that shareholders who paid in full for their shares are not liable for the company's debts. Shareholders who part-paid for their shares are liable for the outstanding amount owing to the company for their shares.

It is also possible to set up a private company limited by guarantee. In this case, the people forming the company - its 'members' - agree on liability limits when they set up the company. This structure is often used by social enterprises to limit the personal liability of their directors and trustees

social enterprise
A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.

Within this definition, social enterprises can take on a variety of legal forms, including:

unincorporated associations
trusts
limited companies
some industrial and provident societies such as community benefit societies
Community Interest Companies
charitable incorporated organisations
Social enterprises also need to consider whether or not to set themselves up as a charity, which has a number of benefits, including significant tax reliefs, but comes with increased regulation and less flexibility.

It is what a business does with its profits that determines whether it is a social enterprise, rather than its specific legal structure.

However, you should carefully consider the various options to ensure that you choose the legal structure that most suits your social enterprise in terms of management style and mission. Although professional advice is not always necessary, it is advisable to seek expert advice before coming to a decision.

so we need to make sure that we go for the right ltd company (eg limited by guarantee or social enterprise)

sorry for long winded reply

BonfireBoy

Cor blimmey all very technical!

As regards to insurance, what happens then if insurance company don't pay out, say if I can hit by something, horribly disfigured, what happens then? Can I sue whoever built said bonfire or the organisers? How does being a ltd company come into play then?

guyfawkesforpm

The company's officers /directors could be sued but it is unlikely

The officers of the company are the people formally appointed to run it - the company directors and company secretary. By law, companies must have officers in place at all times, and their names and addresses must be on the company's registration documents.

guyfawkesforpm

i know littlehampton are ltd by guarantee but do not sell any shares .
this is becouse there is nothing to sell shares in

forrest

I think it's just the society's that have actual assets that sell shares. I know that a while back people sold shares so they did have limited responsibilty should things go wrong as at the time anybody involved in the event was accountable should something go wrong. But rules and laws are always changing.