Incorporation of EPC: A  Note prepared by the Finance Working Group

At present, EPC functions as an unincorporated organisation.  These are described on the UK Government sponsored web site,

 http://www.governmentfunding.org.uk/Page.aspx?SP=271

as follows:

Unincorporated organisations

An unincorporated association is a organisation set up for non-business purposes which is not a legal entity in its own right. It is treated in law as a collection of individuals. This means that the individual people who manage the organisation can be held liable as individuals for the organisation's debts and other claims against the organisation. Because the group is not considered as a 'body' in law, an unincorporated association cannot hold property or land or investments; individual people (called holding trustees) have to hold things on its behalf.

An unincorporated association is likely to be governed by a constitution (however informal) or be set up under a trust deed.

Voluntary organisations of a certain size (particularly those that employ staff) often become incorporated in order to limit the liability of the Board or Management Committee members.

Incorporated Organisations are described by the same site as:

Incorporated organisations

An organisation becomes a 'body' in its own right and is described as 'incorporated' if it becomes a registered company or an Industrial and Provident Society or is incorporated under statute or royal charter. An incorporated organisation can hold property or land or investments in its own name and the liability of the people who are responsible for the organisation can be limited.

If voluntary organisations decide to become a company, they usually become a 'company limited by guarantee' rather than a company with shares (the appropriate structure for profit-distributing companies).

The accounting requirements for incorporated organisations are different from unincorporated ones. Registered companies account to Companies House.

The Committee has agreed in principle that it is desirable that EPC becomes incorporated.   The implications of that decision appear to be:

• Incorporation as a “company limited by guarantee” limits the liability of Officers to a nominal sum, in the event of the company having to be wound up for any reason.  There would be no liability at all for committeee members.
• Officers would continue to be rotated, according to our existing practice, and the different names registered about once every two years by a process similar to that which currently takes place for the bank account mandates.
• We would need to prepare “Articles of Association” which would essentially be a modest revision of our current constitution.  There is a form to be filled in and this and the Articles must be formally lodged at Companies House.  There will be a small charge. Finding informal legal assistance with this process would not be difficult or expensive.  If formal legal support is required, we would need to pay commercial solicitors’ rates.
• We would need formally to appoint auditors at each AGM and to prepare audited acccounts each year.  These would need to be lodged at Companies House.  Accountancy costs are likely to increase somewhat.
• We would need to keep our bank informed of what we are doing and we should be able to use the opportunity provided by the change to acquire a credit card.   
• We would need at the same time to change employment contracts and leases so that they are held by the new company.
• We would need to continue to keep good quality minutes
• We would need to propose this to and get it agreed by the next AGM for implementation from August(?) 2008

November 2007