prev — main — next
SESSION D.6: HANDOUT

LIMITING LIABILITY

THE ADVANTAGES OF LEGAL STRUCTURES.

Some of the main advantages of having a legal status are;

  • The individual members of the group are not generally responsible for the group's activities, including any debts that may arise.
  • The group can own property, enter into contracts; employ people etc in its own name.
  • The group can bring or may defend court proceedings, such as defamation claims, in its own name.
  • The group may be able to apply for charitable status.

In practice, the main reasons for opting for legal status are to protect
the interests of the individual volunteers and members and to gain recognition for the group in legal and financial circles.

Initially, it may be sufficient for the steering or study group to operate with just a written constitution or standing orders, but eventually, it will be necessary to obtain legal status for the reasons outlined above.

In Ireland, the two offices involved with the regulation of voluntary bodies with legal status are, for Co-operatives, the Registrar of Friendly Societies and for Companies Limited by Guarantee, the Companies Office. Both are located in Dublin Castle. In order to register for either type of organisation you will need to draw up a constitution, model rules for these are readily available.

In each case it is necessary to set out the specific objects of the particular group. It may be possible to adopt these from the earlier written constitution in you had one.

Eventually you will need to agree a Memorandum and Articles of Association. The Memorandum provides details of the name of the organisation, the objects and sets out the amount that a person must contribute to become a member and which they must contribute if the company is wound up, hence the concept of limited liability.

In general, the company and the members are separate legal entities
and neither the directors nor the ordinary members are liable for any liabilities incurred by the company, unless they give specific, written guarantees.

Of course, if a person or a group of persons involved in the running of
a limited liability project knowingly set out to defraud or are knowingly involved in running the company in a reckless manner, then they may
be made personally liable for the debts for the company, if the company cannot itself pay these debts.

If the media project were going to trade in any sense, those involved would be well advised to take advice on legal incorporation.

The main issues you should consider are:

  • Do we need a legal structure?
  • Which model best suits our needs?
  • What information is required for incorporation?

prev — main — next