In law, an organisation is either recognised in its own right, or it is made of other people or bodies. This means that some organisations are no more than a group or association of individuals, whilst others have a separate corporate body.
Therefore, different organisations will have different governance structures by default:
Legal identity – formal incorporated organisations have their own legal identity, and can hold assets, enter contracts and be sued in their own name, rather than the name of their members or promoters.
Membership – many of the available structures envisage a body of membership. Some organisations limit who may apply for membership, others are open to all who agree to abide by an agreed constitution and perhaps to act in the best interests of the organisation.
Regulation – some organisations are regulated by Companies House, the Financial Conduct Authority, the Community Interest Company Regulator or the Charity Commission of England and Wales amongst others. An external regulator can provide supporters and funders with reassurance, but these have cost implications.
Liability – some structures protect members from personal liability if the organisation experiences financial problems. Those structures may also protect its directors/trustees if they have complied with the organisation’s constitutional documents and all relevant laws and regulations.
Control – some structures separate the responsibility for the day to day running of the organisation from those with responsibility for strategic decisions and from those with the ultimate control of the decision-making processes.
A step by step guide to the processes of registering your organisation as a Limited Company.
Understanding and choosing a legal structure for your organisation.
What is the role of a board director and how should they go about fulfilling their responsibilities?
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