We are coming across a number of sports clubs whose committee members tell us that, even though their club is not a limited company, they do not have liability for the debts of the club because they have a clause in their constitution which specifically limits liability of the committee members in the event that the club cannot pay its debts.
Please note that such clauses are worthless in practical terms – whilst they may make the committee feel better, they would have no legal value should the club face financial difficulty.
Clubs that are not some form of limited company should ensure that all committee members are aware of their potential personal liability should the club not be able to pay its debts.
Forming a limited company protects the committee members from personal liability (assuming the committee members act in the best interests of the club and there is no personal misconduct) and is recommended for organisations that:
- employ/pay staff
- Run public events (involving significant numbers of non-members)
- Are about to sign a long term lease
- Own significant assets
Please contact us for further details or advice.