LEGAL STRUCTURES FOR SOCIAL ENTERPRISE AT A GLANCE This is a rough guide to the legal structures most commonly associated with social enterprise. For more information on them, see http://www.acevo.org.uk/legalforms/ or the websites listed below. For more general information about business structures, including other options such as partnerships and limited liability partnerships, see http://www.businesslink.gov.uk. However, there is a lot of law on each of the legal structures described below and you should consider seeking legal advice before your organisation adopts any of them. Legal structure Summary - most Ownership, Is it a legal person Can its activities Assets "locked Can it be a Differences in the typical features governance and distinct from those benefit those who in" for charity and get law as it applies in constitution who own and/or own and/or run it? community charitable status Scotland or run it? benefit? tax benefits? Northern Ireland? Unincorporated Informal. No general Nobody owns. No. Can create Depends on own Would need Yes, if it meets the No specific association regulation of this Governed according problems for rules. bespoke drafting criteria for being a differences. structure and you to own rules. contracts, holding to achieve this. charity. need to make own property and liability rules. of members. Trust A way of holding Assets owned by No. Trustees are No. The trustees/ Yes, if the trust is Yes, if it meets the No, subject to the assets so as to trustees and personally liable. directors cannot established for criteria for being a differences between separate legal managed in interests benefit, unless the community benefit. charity. English and Scots ownership from of beneficiaries on trust, court or trust law. economic interest. the terms of the trust. Charity Commission permit. Limited company Most frequently Directors manage the Yes. Members' Yes (but no Would need Yes, if it meets the No specific adopted corporate business on behalf of liability is limited to dividends etc to bespoke drafting in criteria for being a differences. (other than Community legal structure. Can members. amount unpaid on members if it is a articles (which charity. Interest Company) be adapted to suit Considerable shares or by company limited by could be amended most purposes. flexibility over internal guarantee. guarantee). by members). www.companieshouse.gov.uk rules. Community interest Limited company As for other limited Yes. Members' Yes, but they must Yes, through No, but can Scotland, yes. company (CIC) structure for social companies, but liability is limited to benefit the wider standard become a charity if Northern Ireland, no enterprise with subject to additional amount unpaid on community as well. provisions which it ceases to be a specific differences. secure "asset lock" regulation to ensure shares or by CICs can pay limited all CICs must CIC or can convert www.cicregulator.gov.uk and focus on community benefits. guarantee. dividends to private include in their to the asset-locked community benefit. investors. constitutions. form of a community benefit society. Industrial & Provident For bona fide co- Committee / officers Yes. Members' Yes, but they should Would need No. It would have Scotland, no. Society (IPS) operatives that serve manage an IPS on liability is limited to do so mostly by bespoke drafting in to be constituted Northern Ireland, members' interests behalf of its amount unpaid on members trading articles (which as community separate (but (Co-operative) by trading with them members. One shares. with the society, could be amended benefit type of IPS. similar) legislation. www.fsa.gov.uk/Pages/ or otherwise member, one vote using its facilities by members). Doing/Info/MSR/ supplying them with (regardless of eg etc, not as a result goods or services. sizes of respective of, for example, shareholdings). shareholdings. Industrial & Provident Benefit the Like Co-op type, but Yes. Members' Must primarily Yes (asset lock Yes, if it meets the Scotland, no. Society (IPS) community rather new legislation liability is limited to benefit non- only survives criteria for being a Northern Ireland, than just their own provides option of amount unpaid on members; asset lock dissolution if new charity. separate (but (Community Benefit members and have more secure form of shares. applies. statutory form of similar) legislation. Society (BenComm)) special reason not to asset lock. asset lock be companies. adopted). Charitable Incorporated First ready-made Similar to company Yes. Members' Members: no. Yes. Cannot be Both Scotland and Organisation (CIO) corporate structure but with different either have no Charity trustees: anything but a Northern Ireland, specifically designed terminology (eg for liability or limited only if constitution, charity, and must separate (but www.charity- for charities. "directors" read liability. court or Charity meet the criteria similar) legislation commission.gov.uk/registratio "charity trustees"). Commission permit. for being a charity. and Regulators. n/charcio.asp
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