Old Loughtonians Hockey Club Limited

The management committee has been reviewing the constitution and structure of the club and has decided that it would be prudent and in the best interests of the members as a whole to incorporate a new company limited by guarantee called "Old Loughtonians Hockey Club Limited" (the "Company") and to transfer the activities and assets of the club to the Company.

Old Loughtonians Hockey Club (the "Club") is currently an unincorporated association. As such it has no legal status in itself. Each member of the Club is a member of that unincorporated association and, as a member, owns part of the assets of the Club and is responsible for the debts and other liabilities of the Club.

Many hockey clubs and other sports clubs were traditionally set up as unincorporated associations and have continued to be run on that basis successfully for many years. The Club could continue to be run on that basis with members continuing to take responsibility for assets and liabilities. However, there are of course inherent potential and unquantifiable risks to members of this arrangement and whilst the management committee has no reason to believe that members are actually at risk, feel it would be sensible to remove that hypothetical risk by incorporating the club as the Company.

The Company itself will own all the club assets and be responsible for its debts and other liabilities and the members (as members of the Company) will be able to limit their liabilities to a nominal sum (we suggest £1.00 each).

What do we have to do to achieve this?

The first step is to incorporate the Company. This has been done. The Company was incorporated on 23rd December 2016.  Your president, chairman and treasurer have agreed to act as the initial directors of the Company and members of the management committee have agreed to be the initial guarantee members.

The next step is to transfer the assets of the Club to the Company and for the Company to accept the liabilities of the Club and to take an assignment of any contracts in place between the Club and third parties (all of which are currently in the name of a member acting on behalf of the unincorporated association). Some contracts may need to be novated.

All employees of the Club will automatically become employees of the Company and their contracts will be protected as they will be treated as if they had always been employees of the Company.

The third step is for all members of the Club to become guarantee members of the Company instead. Members' approval To achieve this there will need to be:

(a) a form of transfer agreement between the Club and the Company;

(b) assignments or novations of contract and notices to the third parties involved; and

(c) various other deeds reregistering certain assets in the Company.

We will also of course need to novate insurances and things such as statutory and contractual licences.

You will now have received a notice of an extraordinary general meeting of the Club. Members are asked to attend (in person or by proxy) and to vote in favour of:

(a) transferring the activities and business of the Club as a going concern and the assets of the Club to the Company;

(b) authorising the management committee to prepare and approve and execute the necessary transfer agreement and other documentation needed to facilitate and complete that transfer; and

(c) on completion of the transfer to dissolve the Club as an unincorporated association. The Company through its directors and members will have to pass equivalent resolutions to take a transfer of those activities and assets and to accept the liabilities of the Club.

Three quarters of the members of the Club present at the meeting will need to approve the resolutions for them to be valid.

Documentation

The Club currently has a Constitution which governs the unincorporated association. The Company has articles of association which will effectively be the constitution of the Company.

A draft business and asset transfer agreement has been prepared as have notices to third parties dealing with the assignment of contracts.

If you click the documents in purple you will be able to review a copy of each.

Frequently asked questions

These are some of the questions which the management committee has considered and taken advice on.

What are the risks to members of an unincorporated association and are they real?

The risks the Club runs are the same as any other entity. Some of these can be insured against and the Club has insurance cover for usual business risks. The difference is that legal entities (companies, limited liability partnerships et cetera) are legal bodies in their own right. An unincorporated association is not and every member (whether he or she realises it or not) could become liable for any accident, mistake, fraud or other misadventure by or on the part of any other member when acting on behalf of the club. A ball flying into the new housing estate could cause physical damage to property or persons. A default under a contract to pay or perform would create monetary liabilities. In one case members of a subcommittee of a football club were held personally responsible when a stand collapsed and injured a spectator. Members of a boating club were held personally liable for the nuisance (a tort) caused on a lake. Members of a go-karting club were personally liable for the nuisance caused by noise.

In brief why take the risk when it can be avoided?

What do other clubs do?

We do not know what all other clubs have done but we are advised that the trend is towards incorporation and we have seen numerous examples of hockey and other clubs which have taken this sensible step. The Rugby Football Association has even prepared a guidance pack on the steps involved.

Why do members have to have liability? Can they not just have liability up to their annual membership fee and not actually belong to the unincorporated association?

Yes, that would work but would leave the management committee liable for everything which would clearly not be appropriate for those who volunteer to help the Club and would result in nobody being prepared to take on that commitment.

Will there be tax implications?

We think not. We have taken advice and have been advised that the transfer would constitute a scheme of reconstruction for tax purposes and be tax neutral. Tax clearances have been sought from the Revenue. We will apply for the Company to have the status of a Community Amateur Sports Association and it should therefore be exempt from Corporation Tax.

Accounts

The Company will have to file annual accounts but these statutory accounts are unlikely to contain anything which we would not want our competitors to see.

What assets will need to be transferred?

The Club is run as  a non profit making organisation.  It owns the 2 main pitches which were installed with the help of a grant from the Olympic Delivery Authority.  The pitches will transfer as part of the reorganisation for no consideration.  The Clubhouse and grounds are owned by the OL Trust.  The Club has the benefit of a  lease from the OL Trust for 25 years starting February 2011 at a fixed rent of £16,650 a year.   The OL Trust also very generously supports the Club with regular grants to the OLHC youth section.  The grants in the last period of account ( for the year to April 2016) amounted to £36,500.  The lease is to be assigned to the Company.

The other contracts entered into by the Club will also be assigned or novated.

What does this mean for me?

Hardly anything in practice other than peace of mind through the removal of potential risk.

How do I become a member of the Company and what are the implications?

The same membership form can be used and the same website. By becoming a member of the Company you agree to comply with the articles in the same way that you previously agreed to abide by the constitution. All members have to agree to guarantee the obligations of the Company up to an agreed level. This will be £1.00. At the moment the liability is potentially unlimited.

What happens to the committee and who will run the Company?

The same management committee will act on behalf of the Company as the Club. Representatives of the management committee (currently the president, chairman and treasurer) will form the board of directors and the honorary secretary will become company secretary. These will be the officers of the Company. The officers have statutory duties under the Companies Acts which they will need to comply with but in practice the day to day activities of the club will still be carried out by the employees of the club and the club will still be run by the management committee. All of the captains, managers, coaches and other volunteers and officers will all continue to carry out the same roles as before.

Will this cost a lot of money to implement?

No. Fortunately members of the committee have volunteered to assist with the legal documentation without charge and Taylor Wessing LLP has provided tax advice on a pro bono basis.. The fee payable to Companies House to incorporate the Company was £40 and there will be an annual filing fee of £13 to cover the Company's confirmation statement (what used to be the) annual return.

What if I have more questions or concerns?

Please send any questions or concerns to the Club through the Contact Us facility on the website as usual and we will either send out a further note to cover questions raised or address them at the general meeting itself.

The management committee seems to be very active and communicative at the moment and we seem to have a very positive atmosphere in the club. Is there anything I can do to help?

Yes please. We are always looking for more volunteers to help make this the best club in the country on and off the field. Please do let us know if you would like to help whether with recruitment, sponsorship, coaching, marketing or otherwise.