What are the legal responsibilities of an organisation’s members?
It is crucial to know who will be responsible for which aspects of the organisation, as well as be aware of potential liabilities and conflicts of interest.
This section provides guidance on a number of related issues, including the responsibilities of management and the board, the role of the chair, and how paid members of staff fit into the ecosystem of an organisation.
- The nature of a member’s responsibilities depends on the structure of the relevant organisation, and the terms set out in the organisation’s governing document. The voting membership (it is possible to have some types of members who do not vote at a general meeting) has ultimate control, with the right to appoint and remove board members and amend the organisation’s “rule book” (that is to say, its constitution or articles of association). The rule book is the place to start.
- In general, for societies and other unincorporated organisations, each member enters into a contract with all other members to abide by the organisation’s constitution. This will include a duty to contribute to all debts and liabilities of the organisation.
- In general, for Companies Limited by Guarantee (CLG), each member enters into a contract with the company (since the company is a “legal person” in its own right) on the basis of the company’s articles of association. This includes a duty to contribute to the debts and liabilities of the organisation, but only up to the guarantee set out in the constitution.
- In general, for charitable companies and Charitable Incorporated Organisations (CIOs), members are under a duty to act in the best interests of the charity, but are not financially liable for any debts or liabilities of the organisation over and above the maximum guarantee set out in its constitution.
- Remember that voting members are not always separate from the organisation’s board or committee. Directors and trustees can also be members; the same people wearing two different hats according to what type of business is to be conducted and in what type of meeting. A “general meeting” always refers to a meeting of the voting members.
- Trusts, by definition, do not have members, and so all responsibilities are with the trustees.
- The Charity Commission’s view that members of a charity owe a fiduciary duty to vote in the best interests of the charity has been supported by a recent legal case (The Children’s Investment Fund Foundation (UK) Please see case here .
- The rules of natural justice should be followed in reaching a decision for the expulsion of a member. This means that a decision must be made by an unbiased body and that failure to give the member a meaningful opportunity to give an account of themself and the events leading to the termination of their membership, or to highlight any potentially mitigating features, could lead to a successful challenge.
- Finally, if a voting member of an organisation that usually makes filings at Companies House (e.g. a CLG, a charitable company or a Community Interest Company) is classed as a “Person With Significant Control (PSC)” (e.g. if they hold more than 25% of the overall voting rights), they now have a legal obligation to verify their identity to Companies House. Please see this video for guidance here and please see the link below for more information on what constitutes a PSC.
