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There’s a lot to think about before formally setting up a sports club. Of course, your club is primarily about sport, however all new clubs require rules and a structure which are key to good management. Here our contractual and disputes specialist Tim Wolley, guides you through the legal framework options open to you.

The first steps 

When setting up a sports club for the first time the main factors to be considered are:


Possible Legal Structures

Unincorporated Association

Legal documents you may need: Club constitution

This term is defined as a group that comes together for a particular purpose. The main advantages of being incorporated are relatively “light touch” regulation. For example, there is no requirement to send and file annual returns or accounts. An Unincorporated Association will typically have:


Incorporated organisations

These include:

If the club is incorporated, the club is a legal entity liable for its own obligations. This limits the personal liability of individual management committee members, shareholders or members.

To be an incorporated organisation offers the following benefits:

Limited Companies

Legal documents you may need: Incorporation documents including Memorandum and Articles of Association.

There are two types of limited company: those companies limited by shares (CLSs) and companies limited by guarantee (CLGs).


This is the standard form of company model used by business. It has a “share capital”, which is a nominal figure used to represent the total net assets of the company. Shares are issued to shareholders, who become the owners of the company. The shareholders’ potential liability is limited to the level of their investment.


CLGs do not have a share capital and the members (equivalent to the shareholders in a CLS) give a nominal guarantee to cover the company’s liability, normally limited to £1. CLGs do not have the in-built “for-profit” framework which CLSs do, allowing investors in a company to receive a return on their investment.

Some of the key characteristics of both CLS and CLG companies are:

Community Interest Companies (CICs)

CICs can be registered at Companies House in the same way as normal companies, with the completion of an additional form setting out the community interest and how it will be pursued. They can be established as CLGs or CLSs. However, CICs have some particular features to safeguard the social mission, namely:

Registered societies

This legal structure tends to be used where it is appropriate to give a wide membership in equal stake in the organisation and an equal say in management and other affairs, for example, by co-operatives and credit unions.

Registered societies can take two forms: community benefit societies (CBSs) and co-operative societies (co-ops). The difference between the two is in the stakeholder groups that the society is set up to benefit: a co-op is set up to benefit its members, whereas a CBS is set up to benefit the community more widely (whether people are members or not).

The regulator of registered societies is the Financial Conduct Authority (FCA), which has a significant regulatory function. For example, registered societies need to file an annual return and audited accounts (if over the statutory threshold).

For their constitution, registered societies adopt a set of model rules registered by one of the recognised sponsoring bodies or a bespoke set within the FCA. In co-ops, it is mandatory for voting to be on a ‘one member, one vote’ basis. In CBCs, for this to be the case (although not necessarily). Any member can own up to £100,000 of the withdrawable share capital in a registered society, though in a charitable CBS the members usually only hold a nominal account. The constitution may allow for the registered society to issue “withdrawable shares”, which can be bought back or “redeemed” from members. This can provide a straightforward and cheap way to raise equity finance from its members, as withdrawable share capital is exempt from certain regulations applicable to conventional share issues (such as the publication of an appropriately drafted prospectus for potential investors).

Unlike companies, registered societies have the ability to merge through resolutions of their members into an existing or new society or company (known as “Transfer of Engagements”). This is a cheap and convenient process for a corporate change.

Currently, all charitable CBCs are exempt charities. This means that they are not recognised as charities by HM Revenue & Customs (HMRC) for tax purposes but are not currently required to register with the Charity Commission, nor are they directly regulated by it.

Limited Liability Partnerships (LLPs)

The LLP legal form retains the organisational flexibility of a traditional “partnership” and is taxed as such, but members have the benefit of limited liability. It has a single-tier structure (the LLP “members” are the equivalent of directors of a company).

The rights and duties of members have to be given by agreement between them (and the LLP). These are usually set out in a master written agreement (the “LLP Agreement”). However, in the absence of an LLP agreement, there are default provisions under the Limited Liability Partnerships Act 2000 (as amended). The LLP Agreement does not have to be filed with Companies House.

Many LLPs are used by two or more individual or corporate bodies to carry on a lawful business with a view to profit; however, clubs can adapt the LLP form to their needs, in particular, by having protections for the social mission set out in the LLP Agreement.

An LLP can be straightforwardly incorporated by filing an application form together with a registration fee to the Registrar of Companies.

Members are liable in the winding up of an LLP up to the amount they have agreed (which can be nothing).

The price of limited liability is disclosure; accounts must be prepared in accordance with the relevant accounting rules and filed at Companies House. They must disclose the highest paid member’s profits and the annual return must be completed.

Charitable Status

Key features of charities

The key feature of a charitable organisation is that it is established with exclusively charitable objects, such as the advancement of education or the relief of poverty. Being a charity is a status; it is possible to establish a charity using a variety of legal forms, including a charitable trust, an unincorporated association, a CLG, an IPS and a CIO. The most common legal form increasingly is the CLG.

A large number of charities are not required, or are not able, to register with the Charity Commission and it is not necessary for an organisation to be registered in order to be a charity.

Other key features of charities are:

Charitable incorporated organisations (CIOs)

The charitable incorporated organisation (CIO), has been designed specifically and exclusively for charities. The CIO combines the benefits of being a corporate body, with a separate legal identity and limited liability for its charity trustees and members, while being regulated solely by the Charity Commission and, unlike CLGs, not by Companies House as well.

Community Amateur Sports Club

Local amateur sports clubs have been able to register with HMRC as CASCs since April 2002. Registering as a CASC enables the club to benefit from a range of tax reliefs that are similar to those available to a charity, but not as extensive.

Legal structure

Registered CASC status is completely separate from a sport club’s legal structure. Provided its constitution meets the registration requirements, a club can adopt a number of different legal structures including an unincorporated association or a company limited by guarantee.

A registered CASC cannot be a charity

A registered CASC cannot be recognised as a charity for tax purposes. It is important that a club is clear from the outset about its motivations for seeking to register as a charity, as opposed to a CASC. While the tax benefits for charities are more generous than for CASCs, more restrictions are imposed on how a charity operates, including being subject to regulation by the Charity Commission. It is likely to be more costly to seek to register as a charity and to comply with the regulatory regime that applies to registered charities.

Also, if HMRC is satisfied that a club is entitled to be registered as a CASC, it must register it on receipt of the application. Should a club that has been registered as a charity make an application to be registered as a CASC and be accepted by HMRC, it will no longer be entitled to be a charity under the Charities Act 2011 (section 6).

Conditions for registration

To be a CASC a sports club must register with HMRC. A sports club is “entitled” to be registered as a CASC if it:


There are various strict conditions that must be met to satisfy the regulations but the tax benefits are considerable. In addition, Business rates reliefs and the Gift Aid Small Donations Scheme (GASDS) apply allowing CASC’s to claim for top-up payments under the Gift Aid Small Donations Scheme (GASDS) on small cash donations they receive of £20 or less without having to obtain a Gift Aid declaration or provide any other audit trail back to the donor’s tax record.

How we can help

If you need further expert legal advice on any aspect of setting up a sports club please contact Tim Wolley on 01782 200007 or 07891 834081. Alternatively you can email him at

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