Incorporation for Sports Clubs

Many clubs across the UK are unincorporated. This is a suitable setup for small members’ or amateur clubs with no significant assets, no interest in property and who do not employ staff, enter into contracts or other arrangements involving risk.

However, unincorporated clubs have no “legal personality” and their committee members are personally liable for any decisions made on behalf of the club. Would you risk losing your house or savings on the chance something could happen at your club?

If you’re involved in a sports club committee and your club is unincorporated you may be doing just that. That means that any successful legal claim (perhaps for an injury sustained on your premises) made against the club would be brought against the committee members - who would be personally liable if the injury was not covered by insurance and the club had insufficient assets to meet the claim.

What does incorporation mean for your club?

Incorporate your sports club as a company, charity or community benefit society

Incorporating your club will essentially see it become recognised as a legal entity in its own right, giving members limited liability (usually limited to a nominal £1) if there are debts or other liabilities that cannot be met from the club’s funds and other assets.

If your club employs people, holds property (whether owned, or under a lease), enters into significant contracts (eg equipment leases; or a building contract for an extension to the club facilities) and/or carries on significant incomegenerating activities, there will be potential liabilities and claims (generally rising with the scale of activity) which cannot all be met by insurance. In those circumstances, it would be advisable for the committee to consider whether incorporation - whether as a company limited by guarantee, a registered society (cooperative or community-benefit society) or Scottish charitable incorporated organisation (SCIO) - would be appropriate for the protection of those involved in the club, particularly committee members.

A further benefit of incorporation is that the club would be seen as having adopted a robust legal structure, and that is generally helpful in the context of dealings with potential funders and other partner bodies.

Read our guidance on
incorporation and legal
structures.

Read

Why incorporate?

Personal Liability

Committee members of clubs set up as unincorporated associations may be personally liable for the debts and other liabilities of the club if debts cannot be met from the assets of the club and/or claims cannot be met from an insurance policy. If those committee members were instead board members of an incorporated company, registered society or SCIO they would have no personal liability.

Hockey Game - Incorporate your hockey club

Potential Tax & Giving Benefits

Depending on the legal structure you choose to incorporate as, there may be tax advantages available to your club.

For example, as a charity you can get certain tax reliefs and charities do not pay tax on most types of income as long as they use the money for charitable purposes. You can also claim back tax that’s been deducted, for example on bank interest and donations (this is known as Gift Aid).

Young Footballers on Bench - Incorporate your Sports Club

Ability for clubs to hold assets

An unincorporated association cannot hold property in its own name and therefore any property is held by trustees. If the property is to be sold at some point in the future (or if there are other dealings with the property eg the grant of a lease), there will be a need to establish the linkage through the trustees ie tracing each resignation or death of a trustee and each appointment of a new trustee throughout the whole period. This obviously involves time and expense.

Improved Governance

When going through such a change, it’s not uncommon for a club to find that its rules are out of date and don’t quite reflect current practice. The process of incorporating can be a good opportunity to review and update the club’s governance.

This could involve revising the number of committee members, amending officer roles and terms, or clarifying provisions relating to the admission and removal of members. Sometimes these kinds of changes can spark concern from the membership, so some clubs may decide to defer any big changes until after the incorporation has taken place to avoid the risk of derailing the project.

Legal Structures

Charitable Incorporated Organisation (CIO)/Scottish Charitable Incorporated Organisation (SCIO)

Company Limited by Guarantee (CLG)

Community Interest Company (CIC)

Community Benefit Society (CBS)

Once you decided to incorporate your sports club, the next decision will be around which legal structure to adopt. Below are some of the most common for sports clubs. Check out our full guidance on legal structures here.

Our
Services

Our Services

To date, we’ve supported the incorporation of over 60 sports organisations across Scotland. This includes semi-professional football clubs such as Annan Athletic (as a Community Benefit Society), New Elgin Juniors (as a Company Limited by Guarantee) and Dunbar United (as a Community Interest Company) and multiple amateur grassroots clubs of all sports and sizes (as Scottish Charitable Incorporated Organisations).

Our support includes assistance selecting the right legal structure for your club, drafting a suitable constitution for that legal structure, application to the regulator and transferring assets to the new entity. We have club-specific rules/constitutions pre-approved by regulators which can make the process more manageable, not to mention huge experience in the field. We can often clubs with the entire process for as little as £1000 (although a final sum will depend on any complexities/specific requests your club might have – e.g. if you're creating subsidiaries).