Most small voluntary organisations and community groups are unincorporated associations. “Unincorporated” means not a company. An unincorporated association has been defined as:
“two or more persons bound together for common purposes, not being business purposes, by mutual undertakings, each having mutual duties and obligations, in an organisation which has rules which identify in whom control of it and its funds rests and on what terms and which can be joined or left at will.”
Conservative and Unionist Central Office v Burrell, 1982
- They are relatively straightforward and cost nothing to set up.
- They are run in a fairly informal way.
- There must be at least two people or at least two organisations.
- The members make their own rules for running the organisation.
- The rules, or governing document, are usually known as the “constitution”.
- The organisation is not for business purposes – any profits or surpluses must not be shared amongst the people involved.
- The structure is usually a membership and a governing body of some kind.
- They have no separate legal identity, so any contracts, leases and loans have to be signed by individual member.
- Members of the governing body have unlimited personal liability.
- There are no regulatory laws, so it is essential to get the wording of the constitution right.
- Any legal disputes are decided by reference to the constitution and to case law.
- They can be dissolved at will.