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What are you trading as? (3/3): Unincorporated Associations and Community Interest Companies

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Simply ‘setting up a business’ is not as straightforward as it might sound.

There are a multitude of ways in which a business can go about its operations and a variety of factors which should be considered in weighing up this decision. The Corporate & Commercial team at BakerLaw have a host of experience advising businesses of all forms and are able to advise you on which trading vehicle might be most appropriate for your business needs.

In this series of articles, we have set out an explanation of some of the options that businesses have when deciding how to operate. In this last instalment, we will consider unincorporated associations and community interest companies.

Unincorporated Associations:

This is a contractual relationship binding a group of members with a common set of rules, obligations and undertakings. The association must have a specified object and/or purpose which is lawful and is not for profit. It is usually recommended that the rules of the association should be codified in order to provide certainty around the contract between members.

There is no separate legal personality. This means that any contract is entered into personally by a member of the association – the association itself cannot contract with other parties. Liabilities are therefore incurred by individual members.

Community Interest Companies (CICs):

This is a form of limited company, specifically designed for social enterprises. CICs therefore benefit from a separate legal personality, have to be registered at Companies House, and must file annual accounts and confirmation statements. Note that a CIC is not, can cannot simultaneously be, a charitable company.

A CIC must have the specific aim of benefiting a community and must use its income towards achieving this purpose. It must satisfy the ‘community interest test’: that a reasonable person might consider that its activities are being carried on for the benefit of the community.

Hopefully this has helped clarify some of the mechanisms available to conduct business under. If you are looking for advice and would like to discuss how we can help you to structure your business, please contact Simon Porter in BakerLaw’s Corporate & Commercial Department or call 01252 730754.

This article is not a definitive statement of the law. It is designed as a free update on the law at the time of publishing. It is not a substitute for legal advice on specific facts and circumstances. BakerLaw LLP and/or the writer accepts no liability or responsibility for reliance on this article and recommends that you seek independent legal advice on your specific circumstances prior to taking any steps.