Legal structure of business organisations

Voluntary associations What is a voluntary association? You create a VA by entering into an agreement with three or more people to form an organisation so that you can work together to achieve a common non-profit objective. The agreement can be verbal; it does not have to be in writing. But putting it in writing can help to avoid disputes.

Legal structure of business organisations

If the organisation is a member of a multi-employer pension scheme such as Pensions Trustchanging legal structure may crystallise pension exit debt. Before even thinking about changing from unincorporated to incorporated or from one incorporated structure to another, advice from the pension provider and from an independent financial or legal advisor is essential.

Crystallisation may not be an issue, especially when changing from one incorporated structure to another e. And even when crystallisation is an issue, there may be ways around it. But if the debt is going to crystallise if the organisation changes structure, this may be a major factor in your decision.

For more about this, see Pension liability on incorporation, merger or winding up. Deciding whether to incorporate New organisations need to decide whether to be charitable or not charitable, and whether to be unincorporated or incorporated.

Incorporation makes an organisation a legal entity or "legal person". This enables the organisation to enter into contracts and other legal agreements as a body, rather than as individuals acting on behalf of an unincorporated organisation.

Incorporation makes it easier to enter into contracts, leases etc and to own property, and greatly reduces the risk of members of the governing body board, management committee etc being held personally liable if the organisation cannot meet its financial obligations.

There is more about the choice between unincorporated and incorporated charities in the Charity Commission's CC22a Charity types: How to choose a structure, at tinyurl.

More detailed information about the choice between unincorporated and incorporated is in chapters of The Russell-Cooke Voluntary Sector Legal Handbook. Choosing between CIO and charitable company When comparing CIOs with charitable companies, the immediate response is often that CIOs must be better, because there is only one registration with the Charity Commission, rather than with both Companies House and the Commissiononly one regulator, only one body of law, only one set of accounting regulations, only one annual return.

But it may not be quite so simple, and some of the statutory or practical differences between charitable companies and CIOs may, for some charities, make charitable companies a better option. Unless they own property or a long lease, or have identified risks that would make incorporation sensible, it may be appropriate for them to remain unincorporated.

In some cases it will be clear that a CIO is not necessary at the lower income end or advisable at the upper end. But for many organisations it may not be clear cut, and the best decision may emerge only after weighing up a wide range of variables, many of which are set out below.

Legal structure of business organisations

At the moment a CIO, unlike other legal structures, cannot convert to any other structure. Lord Hodgson's review of the Charities Acts in recommended that CIOs should be able to convert to charitable companies, which would allow a CIO that has outgrown the structure to convert to a charitable company.

But this change would require new primary legislation and cannot be relied upon to happen. The information below should help organisations choose wisely between CIO and charitable company, and to understand some of the issues when drawing up a draft governing document CIO constitution or company articles and going through the registration process.

Where a particular issue may be critical to the decision, I have indicated this. For detailed comparisons of CIO with charitable company for each of the items in the list below,with far more detail is archived at www.

Registration and legal compliance 1. A charitable company registers with both Companies House and Charity Commission, and must comply with general charity law as well as company law requirements.The MedTech Europe Code of Ethical Business Practice regulates all aspects of the industry’s relationship with Healthcare Professionals (HCPs) and Healthcare Organisations (HCOs), to ensure that all interactions are ethical and professional at all times and to maintain the trust of regulators, and – most importantly – patients.

The second type of business structure is a partnership structure and the third type of business structure is a corporation structure. Sole Proprietorship In the sole proprietorship structure an individual owns and operates the business.

Your business structure. Choosing a business structure. When you start a business, it's important to choose a structure that suits your needs. This page provides information on the most common business . Choosing your business structure.

TIP: It is a good idea to discuss your proposed structure with your financial, legal or business adviser before starting your business. Your business structure can determine your: tax liabilities; responsibilities as a business owner;. When you start a business, you will have to decide which business structure (also legal structure or business form) to you're simply in business for yourself and don't plan on hiring employees, you may be able to get by as a sole proprietorship.

PwC legal South Africa is a corporate commercial legal practice based in Johannesburg South Africa. We pride ourselves on adding value to our clients’ endeavours, through quality of work, personal attention of partners and excellent service levels.

Choosing your business structure | Small Business