What is the difference between an Unincorporated Association and a Company?

Question

Which one should a 'Company Limited by Guarantee' register under?

Answer 1

An unincorporated association has been defined as existing:

"...where two or more persons are bound together for one or more common purposes by mutual undertakings, each having mutual duties and obligations, in an organisation which has rules identifying in whom control of the organisation and its funds is vested, and which can be joined or left at will."[1]
In most countries, an unincorporated association does not have separate legal personality, and nor do members of the association usually enjoy limited liability. However, in some countries they are treated as having separate legal personality for tax purposes.[2] However, because of their lack of legal personality, legacies to unincorporated associations sometimes fall foul of the general common law prohibitions against purpose trusts.

Associations that are organized for profit or financial gain are usually called partnerships.[3] A special kind of partnership is a co-operative which is usually founded on one man—one vote principle and distributes its profits according to the amount of goods produced or bought by the member. Associations may take the form of a non-profit organization or they may be not-for-profit corporations; this does not mean that the association cannot make benefits from its activity, but all the benefits must be reinvested. Most associations have some kind of document or documents that regulate the way in which the body meets and operates. Such an instrument is often called the organization's bylaws, regulations, or agreement of association.


[edit] Civil law
In some civil law systems, an association is considered a special form of contract. In the Civil Code of Quebec this is a type of nominate contract. The association can be a body corporate, and can thus open a bank account, make contracts (rent premises, hire employees, take out an insurance policy), lodge a complaint etc. In France, conventional associations are regulated by the Waldeck-Rousseau law of July 1, 1901 and are thus called Association loi 1901, except in Alsace and Moselle where the law of April 19, 1908 applies (these countries were German in 1901). The Civil Code of Germany contains different regulations for registered non-profit and for-profit associations regarded as juristic persons ("Vereine", articles 21-79) on the one hand and for not necessarily registered associations by contract ("Gesellschaften", articles 705-740) on the other hand. In Texas, state law has statutes concerning unincorporated nonprofit associations that allow unincorporated associations that meet certain criteria to operate as entities independent of their members, with the right to own property, make contracts, sue and be sued, with limited liability for their officers and members.


[edit] Australia
In most Australian states a similar set of laws allows not-for-profit associations to become legal entities with a limit to the liability of its members. An example of such a law is the South Australian 'Associations Incorporation Act 1985'([1]). This allows for the creation of a legal entity able to buy and sell land and in general enter into legally binding contracts. Many clubs and societies begin life as an unincorporated body and seek to attain incorporated status to protect its members from legal liability and in many cases to seek government financial assistance only available to an incorporated body. Clubs and Societies wishing to incorporate must meet the provisions of the relevant state act and lodge their constitution with the corresponding state government authority.

Technically, a company is a juristic person which has a separate legal identity from its shareholding members, and is ordinarily incorporated to undertake commercial business. Although some jurisdictions refer to unincorporated entities as companies, in most jurisdictions the term refers only to incorporated entities. It has been judicially remarked that "the word company has no strictly legal meaning",[1] but is taken to mean a specific form of entity created under the laws of the relevant jurisdiction. Because of the limited liability of the members of the company for the company's debts and the separate personality and tax treatment of the company, it has become the most popular form of business vehicle in most countries in the world.

However, companies have a number of other uses. They are not normally subject to rules against mortmain or perpetuity as are trusts, and may have perpetual existence. Companies are often used in tax structuring. Companies, being commercial entities, are often easier to utilise in financing arrangements than partnerships and individuals.[2] Companies have an inherent flexibility which can let them grow; there is no legal reason why a company initially formed by a sole proprietor cannot eventually grow to be a publicly listed company, but a partnership will generally always be limited as to the maximum number of partners

In British or Irish company law, a company limited by guarantee is an alternative type of corporation used primarily for non-profit organisations that require legal personality. A guarantee company does not have a share capital, but has members who are guarantors instead of shareholders. The guarantors give an undertaking to contribute a nominal amount (typically £1) towards the winding up of the company in the event of a shortfall upon cessation of business. It cannot distribute its profits to its members, and is therefore eligible to apply for charitable status if necessary.

Like a private limited company, a company limited by guarantee must include the suffix "Limited" in its name, unless specifically excluded by law.

Common uses of guarantee companies include clubs, membership organisations (including students' unions, sports associations (such as the PGA European Tour), workers' co-operatives, other social enterprises, non-governmental organizations (NGOs) and charities (such as Oxfam). The railway infrastructure provider Network Rail, domain name registry Nominet UK, the UK Financial Services Authority (FSA) and IXP LINX (London Internet Exchange) are also companies limited by guarantee. Australia also has companies limited by guarantee, Cricket Australia being one example.

When incorporating multi-stakeholder organisations, this form is sometimes preferred over the industrial and provident society because company law allows multiple classes of member with separate voting constituencies.

Answer 2

A company limited by guarantee is a company.

A company is a group of people with some common purpose (usually business) who have registered under the Companies Acts. This limits their liability if the company cannot meet its debts, either to the share capital or to the guarantee capital.

An unincorporated association is a group of people who haven't registered under the Companies Acts. The individuals remain personally liable for all the association's debts.

Answer 3

The first...