As I use the term, ‘legal structure’ encompasses several aspects of an organisation’s fundamental character. It certainly embraces its legal identity – whether it is a company, a charitable incorporated organisation, an unincorporated association, etc – but it also takes in aspects of governance: for example, is it a democratic membership organisation? a consortium? a subsidiary? can it issue shares? The choice of legal structure also needs to take account of the effect of regulatory regimes – for example, the extent to which a registered charity is permitted to engage in trading activity.

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​Adopting the correct legal structure is an essential element in creating and sustaining a successful organisation. It influences many operational matters: the personal liabilities of the members, fundraising capacity, the ability to borrow money, and decision-making processes. It will also have a major influence on how the organisation is viewed by the rest of the world.

​An organisation will usually take particular interest in its legal structure when it is first setting up, and then when it finds itself in changing circumstances, perhaps as a result of growth, new funding patterns, merger or otherwise.

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​When seeking to identify the most appropriate legal structure for an organisation, we are essentially trying to answer two questions:

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​(1) What are the key characteristics of this organisation? Factors to consider include:

• ​Core purpose and values

• ​Membership - i.e. exactly who is to own the organisation?

• How will it raise funds? Applying for grants, selling services, membership subscriptions, issuing shares, other?

• ​Decision-making and governance

• ​What it may do with income, assets and profits

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Quite apart from anything else, discussing these fundamental issues is a useful and constructive exercise for any group, whether in a start-up situation or well-established.

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​(2) What is the most appropriate form of legal status for this organisation? Most in our sector will choose between:

• ​Company limited by guarantee

• ​Community Interest Company (limited by shares or by guarantee)

• ​Charitable company

• ​Charitable Incorporated Organisation

• ​Community benefit or co-operative society – what used to be known as ‘Industrial & Provident Societies’

• ​Unincorporated association

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​Each has its advantages and disadvantages, and one option is likely to be the most suitable for a given situation.

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​Once we have identified the answers to the above two questions, my job is to put all these various characteristics and provisions together into a single document that will lay down the basic rules for the organisation - the constitution, or governing document, and then make sure this document is properly adopted and, if necessary, filed with one or more regulatory bodies.

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​CHOOSING A LEGAL STRUCTURE

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The process of selecting the most appropriate legal structure will vary to some extent, depending on the nature and size of the organisation and where it is starting from.

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I have a range of tools and techniques to help with this process, so please do not hesitate to get in touch - whether you know just what you want or are completely new to the subject.

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​Feedback from clients over many years indicates that I can make this process mostly painless and possibly even rather interesting!