A club is an association of people who have a common cause or interest-such as running a village hall, a gardening club or a type of sport. They may also be a charity (in which case they are also subject to the requirements of the Charities Act) . The important point to remember is that these bodies are “unincorporated associations” and have no legal identity, unlike a company or partnership. As a result they can only act through individuals, usually their officers or members of its management committee. The responsibilities of these officers and other management committee members, who are usually unpaid, may therefore be extremely onerous, something many are unaware of.
The law of clubs is complex and this note can only be a very brief guide. Should you have any specific queries please ask us for advice.
Because clubs have no independent legal existence, the rules of the club (or constitution) are critical as they determine how the officers and other management committee members of the club are appointed. If the rules aren’t followed then potentially the committee members aren’t appointed lawfully, and so their actions may not be lawful either. This could result in the committee members being personally liable for the actions of the club. The rules need to deal with how members join the club, how they can be expelled, how often general meetings of members are called and how the officers are appointed, amongst other matters.
Sometimes clubs are part of a national network, such as working mens’ clubs, and they can use a common set of rules whcih have been professionally drafted. If this is not possible, it is a very good idea to get professional advice on the rules that should be adopted. The importance of a comprehensive and appropriate set of rules is highlighted when there is a dispute within the club between one or more of the members, particularly if the dispute involves an officer. This is, unfortunately, not uncommon. It is worth thinking about this when considering your rules-if say the treasurer was suspected of financial impropriety, how would he or she be removed and how would the club operate while this process was going on?
Who may become a member is defined by the rules; however, the rules on membership must not breach the legislation relating to race, sex, religious and sexual orientation. The management committee of the club must carry out the expressed wishes of the members, so the rules must also provide for regular meetings where these wishes are discussed (often an annual general meeting), as well as a way for members to call for a meeting should they wish to discuss specific issues (sometimes called an extraordinary general meeting). In order to prevent abuse by wayward members, the rules usually provide that a request for an extraordinary meeting must be seconded by at least one other member. There should also be some means of expelling members who breach the rules of the club, just in case it becomes necessary to do so.
Officers and committee members
If their appointment is lawful and they act lawfully, then the officers and committee members act as agents for the members and hence are entitled to be indemnified by them (if provided for by the rules). Normally a club will appoint at least a chairperson, a treasurer and a secretary; the officers form a management committee together with any other members of the club who are appointed to it. It is this management committee that administers the club’s actions in accordance with the wishes of its members as expressed in meetings. The members of the management committee may also be responsible to the club’s members in the event of their misfeasance in office.
Because a club has no legal identity of its own, it cannot itself form contracts, bring legal claims (or defend them) or own property. It must do so through the officers and management committee. Hence the officers and management committee may be exposed to personal liability, and if the club’s assets are not sufficient, or the officers are unable to get an effective indemnity, it is possible that a creditor of the club for instance could pursue an officer that contracted with them personally. This can lead to difficulties; for instance an officer may contract with a supplier of goods. If the officer then leaves that post (and often the term of office is only a year) or even the club itself, then the supplier must still look to that officer if the club doesn’t pay the supplier.
Legislation and regulatory compliance
The management committee are responsible for the club’s compliance with any appropriate legislation-for instance Health and Safety, liquor licencing and so on, and in particular the Equality Act 2010. They are also responsible for ensuring that appropriate insurance cover is obtained. Again if they do not do so without reasonable excuse they may be personally liable. Bear in mind that if the club maintains records of membership this may well require it to register with the Information Commissioner in order to comply with the Data Protection Act.
Property and finance
Often the club will hold property such as its clubhouse or equipment. These assets are the property of the members as a whole, so that if the club is dissolved the money received will be divided equally between those persons who are members of the club at the time. However, as the club does not have a legal identity it cannot own property itself but must do so through its members. If the property is leasehold or freehold property, this can present a real difficulty especially if officers die or leave the club without first transferring their ownership to a new officer who is replacing them. For this reason it is often better to consider either having the officers act as trustees to hold the property, or incorporation. A company does have legal identity; incorporation is more expensive as it is more formal but it provides much better protection to both club and officers in the event of difficulty. It also allows the club to obtain finance by borrowing on the security of land if desired.
The post of treasurer is often the most important officer in a club. The treasurer is responsible for keeping accurate and up to date accounts of the club’s assets including its cash and investments. The value of these assets can be considerable, particularly if land is held. If so, it might be appropriate to involve professional accountants to ensure that there is no impropriety. There may also be complex tax implications in some cases, if the club is involved in investments or receives an income other than from its members.
There is no obligation to file accounts (as there would be with a company) but an annual report must be presented to the members at each annual general meeting, and it would be good practice to review the accounts at each meeting of the officers. Most if not all clubs require the signature of both treasurer and one other officer on any cheque (usually the chairman) to reduce the chance of fraud.
An employee of a club has the same remedies as any other employee, and the club officers are also required to comply with employment legislation. Hence it is perfectly possible for an employee to bring a grievance against a club, and to make a claim in the Employment Tribunal. The respondent to any claim would be the members of the management committee who were responsible for entering into the employment contract.