Club formation and rules

by Roderick Ramage, solicitor, www.law-office.co.uk

previously published in New Law Journal (newlaw.journal@butterworths.co.uk) on 22 and 29 May 1998 and in Kelly's Draftsman (17th edition) published by Butterworths in December 1998


DISCLAIMER

These precedents and the notes to them are not advice to any person and may not be taken as a definitive statement of the law in general or in any particular case. The author does not accept any responsibility for anything that any person does or does not do as a result of reading or using them.


 

1       Agreement between intending first members for formation of a club or other unincorporated association1

 

THIS AGREEMENT is made on [date] between the persons whose respective names and addresses are set out in the first and second columns of the schedule ("the Subscribers").

1        The Subscribers by signing this memorandum of agreement agree to form a society ("the Club") to be known as The John Smith & Co Limited Sports and Social Club and to become its first members.

2        The rules of the Club shall be in the form of the specimen annexed to this agreement and initialled for identification by the Subscribers.

3        The first officers and members of the committee shall be such of the Subscribers against whose respective names and addresses in the schedule appears in the third column the office or rank to which they are respectively appointed.

THE SCHEDULE

Name

Address

Office/Rank (if any)

Signature

 

 

 

 

 

 

 

 

 

 

2       general rules of a club or other unincorporated association2

 

NAME

1        The name of the club is [The John Smith & Co Limited Sports & Social Club (or) The Much Binding Cricket Club] ("the Club").

 

OBJECTS

2        The objects of the Club are to:

(eg    as a works or local sports club)

-        promote and provide for the benefit of [the employees of John Smith & Co Limited ("the Company") amenities for social, athletic and academic pursuits and generally to foster a spirit of good fellowship amongst the employees (or) the inhabitants of The Marsh and its neighbourhood amenities for the pursuit of the game of cricket and social activities ancillary to it];

(eg    as a bridleway (horse riding) club)

-        procure, enhance and protect potential and existing bridleways, byways and other ways useable by horse riders;

-        procure, enhance and protect the rights of all horse riders and other bridleway users;

-        promote public awareness of the need for and the existence and creation of bridleways, other ways useable by horse riders and others to the exclusion of motorised vehicles;

(and in all cases)

-        foster links with, support and co-operate with other persons and organisation with similar aims; and

-        do all other things which seem to be incidental or conducive to the attainment of the above aims.

 

MEMBERS

3.1     Every person who becomes employed by the Company (and no other person) is eligible to be nominated for membership of the Club and shall be so nominated by the Club Secretary as soon as the Secretary is notified by the Company of his or her employment.

(or)

3.1     Any person who supports the aims of the Club may apply for membership by giving or sending to the Club's Secretary a written application signed by him or her and two Members as proposer and seconder respectively.

3.2     The names and addresses of all persons nominated for membership shall be displayed on the Club notice board for not less than [seven] days before their names are proposed for election to membership.

3.3     Every person nominated for membership shall become a Member if he or she is elected as such by the Committee and pays the subscription for the current year. The Committee may refuse to admit any person as a member without giving reasons for doing so.

3.4     The Secretary shall keep a register of Members and enter in it the names and addresses of all persons who become Members.

3.5     A Member shall cease to be a Member:

-        if he or she gives to the Secretary written notice of resignation of his or her membership;

-        if he or she fails to [pay any subscription within one month after the due date of payment (or) make any [three] consecutive weekly payment[s] of subscription]3; [or]

-        if the Member having committed some act or been guilty of behaviour inconsistent with membership of the Club, the Committee resolves by a majority of three quarters to remove him or her from membership[; or]

-        if for any reason he or she ceases to be an employee of the Company].

[3.6   No person shall cease to be a Member solely as a consequence of leaving the employment of the Company.]

 

SUBSCRIPTIONS

4.1     The Club's membership year is from [1 January to 31 December].

4.2     The annual subscription of the Club shall be not less than £[10.00] and shall be payable in advance on 1 March in each year for the then current calendar year.

(or)

4.2     The subscription shall be [amount] per week payable on every Friday [by deduction from the Members' wages4].

4.3     The annual general meeting of the Club shall have power to vary the subscription by ordinary resolution.

4.4     A person who is elected to be a Member after [30 June] in any year, shall pay half the subscription for that year.

 

OFFICERS

5.1     The honorary officers of the Club shall be a President, a Chairman, a Treasurer and a Secretary. The annual general meeting shall have power to create other honorary officers as it thinks necessary.

5.2     The Auditor and the Trustees are not officers of the Club. The Auditor must not be a Member. The President and the Trustees may but need not be Members. All the officers (except the President) must be Members of the Club.

5.3     Any officer may retire by giving one week's prior notice to the Secretary, and all shall retire at the end of each annual general meeting, but shall be eligible for re-election at that meeting.

 

THE COMMITTEE

6.1     The Committee consists of the officers (except the President) and not fewer than four and not more than eight other Members [amongst whom so far as is possible there shall be a representative of each department of the Company].

6.2     No person shall be appointed a member of the Committee or an officer at any general meeting unless [at or (or) not less than [seven] and] not more than [twenty eight] clear days before the date appointed for the meeting, a notice has been given to the Club of the intention to propose that person for appointment signed by a Member and that person.

6.3     Any casual vacancy on the Committee or of any office arising between annual general meetings may be filled by the Committee.

6.4     Any member of the Committee may retire by giving one week's prior notice to the Secretary, and all shall retire at the end of each annual general meeting, but shall be eligible for re-election at that meeting5[, except that the [one third (or) two] of the members of the Committee, who have served longest, shall be ineligible for re-election and where there is a disagreement as to who is ineligible, the matter shall be determined by lot].

6.5     Any person who fails to attend [three] consecutive meetings of the Committee without giving a reason acceptable to it shall cease automatically to be a member of the Committee.

6.6     The Committee shall manage all the affairs of the Club [(including the purchase for the Club and the supply by the Club of intoxicating liquor and the fixing of the permitted hours for the supply and consumption of it)] and shall have power to do everything necessary for that purpose.

6.7     The quorum of the Committee shall be [five].

6.8     Committee meetings shall be held not less than once in every month.

6.9     Not less than three days' written or oral notice shall be given by the Secretary to members of the Committee of every monthly meeting, but in an emergency at the discretion of the Chairman and Secretary additional meetings may be called on not less than 24 hours' notice.

6.9     Decisions at meetings of the Committee are made by a simple majority and in the event of equality of voting the Chairman (or the acting chairman of that meeting) shall have a casting vote.

 

ANNUAL GENERAL MEETING

7.1     An annual general meeting shall be held in [February] in every year.

7.2     The business of the annual general meeting shall be:

-        to receive the Chairman's report of the activities of the Club during the preceding year;

-        to receive and consider the accounts of the Club for the preceding year and the Auditor's report on the accounts and the Treasurer's report on the financial position of the Club;

-        to elect officers and other members of Committee;

-        to remove and elect the Auditor and the Trustees or to confirm that they remain in office; and

-        to fix the subscription for the current year.

 

EXTRAORDINARY GENERAL MEETINGS

8.1     An extraordinary general meeting may be convened at any time upon either a resolution of the Committee or a requisition setting out the resolution or resolutions to be proposed at it. The requisition must be signed by whichever is the lesser of 30 Members and not less than one-tenth of the Members and served on the Secretary by personal delivery or recorded delivery post. If the Secretary does not give notice of the meeting pursuant to the requisition on or before the expiry of 14 days from service of the requisition the requisitionists or any one or more of them on behalf of the others may give notice of the meeting.

8.2     The Committee may, instead of convening a general meeting arrange for a postal ballot of the Members on any matter, which is not reserved to the annual general meeting. The ballot papers must set out the resolution to be proposed with the names of the proposer and seconder and must include a voting paper and a pre-paid addressed envelope for its return to the officer of the Club charged with responsibility for administering the ballot. There must be not less than twenty-eight days between the posting (by first class post) of the ballot papers to the Members and the date for the return of the voting papers. The vote shall be taken on the day after the day specified for the return of the voting papers.

8.3     The business which may be conducted at an extraordinary general meeting may be any one or more of:

-        removing all or any of the officers, other members of Committee, Trustees and Auditor of the Club and filling the vacancies caused by such removal;

-        appointing persons to fill any other vacancy in any office or the Committee;

-        altering these rules6; or

-        dissolving the Club.

 

PROCEEDINGS AT ANNUAL AND EXTRAORDINARY GENERAL MEETINGS

9.1     Not less than twenty-one days' prior notice in writing setting out the resolutions to be proposed at the meeting shall be sent to every Member at his last known address7.

9.2     Resolutions at annual general meetings shall be passed by a simple majority of the votes entitled to be cast by the Members present at the meeting.

9.3     Resolutions at extraordinary general meetings shall be passed by a majority of three-quarters of the votes entitled to be cast by the Members present at the meeting.

9.4     Resolutions on a ballot shall be passed by a majority of three-quarters of the votes entitled to be cast by all the Members

9.5     Each Member shall have one vote on every resolution.

9.6     In the event of equality in voting at an annual general meeting the Chairman (or acting chairman at that meeting) shall have a second or casting vote, but there shall be no second or casting vote on any resolution proposed at an extraordinary general meeting.

 

TRUSTEES

10.1   The number of Trustees shall be not fewer than two nor more than four.

10.2   The Trustees shall hold office until death, resignation or removal from office by a resolution of the Members.

10.3   There shall be vested in the Trustees all the property of the Club other than cash which will be under the control of the Treasurer.

10.4   The Trustees may deal with the property vested in them by way of sale, mortgage, charge, lease or otherwise as directed by the Club. Such direction shall be given by a resolution of the Members of the Club passed by a majority of the Members present at a duly convened meeting of the Club and when so passed shall in favour of a purchaser mortgagee chargee lessee or grantee be binding upon all Members of the Club. A certificate purporting to be signed by the Secretary for the time being of the Club shall in favour of those persons be conclusive evidence that a direction complying in all respects with the above provisions of this rule was duly given to the Trustees8.

 

ACCOUNTS INCOME AND PROPERTY

11.1   The financial year of the Club shall end on 31 December in every year, to which day the accounts shall be balanced and drawn.

11.2   As soon as is practicable, after the end of the financial year, there shall be prepared a statement of the assets and liabilities of the Club at the end of the financial year, and a statement of income and expenditure during that year, which statements shall be audited by the Auditor not less than 28 days before the annual general meeting.

11.3   Copies of the audited statement of accounts shall be sent to every Member with the notice convening the annual general meeting.

11.4   The Auditor shall be a professional accountant and shall not be a Member of the Club. He shall be appointed by each annual general meeting and shall hold office until the end of the next following annual general meeting.

11.5   All monies received by the Club shall be paid into an account in the name of the Club at bankers appointed by the Committee, and cheques and other instruments drawn on and directions to the bankers shall be signed by not less than two officers.

11.6   No action involving expenditure in the name or on behalf of the Club shall be taken, and no undertakings which would commit the Club to expenditure or other liability shall be made without the prior authority of a resolution of the Committee.

 

INDEMNITY9

12      The Trustees and members of the Committee shall not be liable (otherwise than as Members) for any loss suffered by the Club as a result of the discharge of their respective duties on its behalf, except such loss as arises from their respective wilful default, and they shall be entitled to an indemnity out of the assets of the Club for all expenses and other liabilities incurred by them in the discharge of their respective duties.

 

DISSOLUTION10

13.1   The Club may be dissolved:

-        by a resolution passed under rule 8.2;

[-       by a notice from a liquidator of the Company or a receiver of all or any of its assets;] or

-        by a resolution of the Committee if the number of members is less than [ten] for a period of not less than [six] months.

13.2   The dissolution shall take effect from the day when the resolution is passed and the Committee shall be responsible for the winding up of the assets and liabilities of the Club.

13.3   If any property remains after the discharge of all debts and liabilities of the Club it shall be distributed to [such welfare fund for the benefit of employees of the Company as the Company directs (or) equally amongst the Members of the Club at the date of dissolution (or) to such other organisation with similar aims to the Club as the Members direct in the resolution to dissolve the Club]11.

 

notes:

1        No stamp. There is no necessity for a formal agreement, and a common alternative method of forming a club is for the promoters to convene a meeting, at which a resolution will be passed to form it, to elect the first officers, adopt rules and to transact any other business thought necessary.

2        No stamp. Where the club is to apply for registration under Part II of the Licensing Act 1964 its rules must comply with the provisions of Schedule 7 of that Act. These rules are drawn for a members' (as opposed to a proprietor's) club and comply with the provisions of that schedule. Rule 3.2 and the words in square parentheses in rule 6.6 will not be required if registration is not contemplated although 3.2 may be desirable in any event.

3        A failure to pay subscriptions for three years has been held to be a tacit resignation or repudiation by the member: Re Sick and Funeral Society of St John's Sunday School, Golcar, [1973] Ch 51; [1972] 2 All ER 439.

4        This clause will not permit the employer to deduct the subscription from the employee’s wages. An authority to deduct must be contained in the employment contract or a separate agreement with the employer: Employment Rights Act 1996 s13: for a suitable clause see Kelly's Draftsman (17th edition) [31-112].

5        Normally retirement by rotation will not be necessary, but the words in square brackets may be inserted if the rules are to make room for "new blood".

6        It is necessary to provide for the alteration and amendment of the rules, as otherwise there is no power to vary them: Re Tobacco Trade Benevolent Association, Sinclair (Baron) v. Finlay & Co., Ltd., [1958] 3 All ER 353; [1958] 1 WLR 1113.

7        See Woodford v. Smith, [1970] 1 All ER 1091n; [1970] 1 WLR 806, in which an interlocutory injunction was granted to restrain the holding of an annual general meeting without certain persons claiming in an action to be members being given notice and being permitted to attend at the meeting.

8        A transfer of land based on this rule is included in Kelly’s Draftsman (17th edition) precedent clause [29-317].

9        The general rule is that the person who contracts on behalf of an incorporated association is personally liable, but is entitled by indemnity to a contribution from the members. This clause does not absolve the trustees or committee members from liability, which would in any event be ineffective against a creditor who had not agreed to a limitation of liability, but is intended to ensure that, as between the members, they do not incur greater liability as a result of holding office.

10      Mere inactivity of an unincorporated body does not amount to dissolution or termination. But loss of the substratum of a society has the effect of causing its dissolution. Re William Denby & Sons, Ltd., Sick and Benevolent Fund, Rowling v. Wicks, [1971] 2 All ER 1196; [1971] 1 WLR 973; Re G. K. N. Bolts and Nuts Ltd Sports and Social Club, Leek v. Donkersley, [1982] 2 All ER 855; [1982] 1 WLR 774. Where a club is reconstituted by changes not so fundamental as to constitute a dissolution, property vested in trustees for the club in its original form is subsequently held for the benefit of members of the club in its new form: Re Conveyances dated June 13, 1933, August 17, 1933 and September 2, 1950, Abbatt v. Treasury Solicitor, [1969] 3 All ER 1175; [1969] 1 WLR 1575, C. A. See also Re St. Andrew's Allotment Association Trusts, Sargeant v. Probert, [1969] 1 All ER 147; [1969] 1 WLR 229. But see Re Edis's Trusts, Campbell-Smith v. Davies, [1972] 1 All ER 769; [1972] 1 WLR 1135, in which a drill hall and property held on trust for a Territorial Army unit vested on the disbanding of the Territorial Army, not in the members of the unit but in the Secretary of State.

11      For an example of how property can be divided in differing shares on a dissolution see Re Sick and Funeral Society of St John's Sunday School, Golcar, [1973] Ch 51; [1972] 2 All ER 439. The court directed a distribution in equal shares in Re Bucks Constabulary Widows' and Orphans' Fund Friendly Society, Thompson v. Holdsworth (No 2) [1979] 1 All ER 623; [1979] 1 WLR 936.

 

 

copyright Roderick Ramage

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