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 IVFDF 2006 - Cambridge

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IVFDF 2000 is a limited company registered by guarantee.

Registered Number 189537.

IVFDF2000 is also recognised as a charity in Scotland.

Scottish Charity Number SC 028405.

This paper presents a brief account of the processes of incorporation and recognition in Scotland, and the benefits and barriers that have arisen during and subsequent to these processes.

However, this paper does not represent legal advice; the information in it may be incorrect; it is an abbreviated account of our (my) experiences. I have not studied: law, business, management or associated subjects, and may have interpreted the information I could access incorrectly.

Why think about a company?

Funding and Underwriting the festival has become an issue of increasing concern at recent IVFDFs. It was raised in particular following Sheffield 1998. We agreed to explore running IVFDF as a formal company, with the intention of using law related to limited liability companies to minimise the risk to the individuals running the festival.

Establishing the company

All companies in the UK are regulated by Companies House. They maintain a publi~ register of the company, its memorandum and articles of association (roughly the company constitution), the directors and the annual accounts. These details are available on demand to the public.

The Memorandum and Articles of Association are legal documents, and must be drawn up consistent with certain guidelines. Rather than taking on this task ourselves, we chose to buy what amounted to an off-the-shelf company, and adjust its articles and memorandum to fit our purpose. This cost £120, and took about 2 days work, selecting an appropriate source for the company, considering background information, to help me identify wording which was likely to be appropriate bearing in mind that we hoped to apply for recognition as a charity. The adviser from whom we were making the purchase was very doubtful that we would be successful in our application for charitable status, and did not come up with any suggestions for changes to the company articles. I had done a substantial amount of background research and persisted in the changes I was requesting, and he was happy to implement these, but following my instruction.

IVFDF2000 is a company limited by guarantee and not having a share capital. It was incorporated on 18th September 1998.

Most companies with this status would normally be called xxxxx Ltd. I applied for special permission to drop the 'Ltd' from our company name and this was granted along with the registration of the company. 'Ltd' is normally expected in the name because it advises creditors that the company liability is limited.

The core organising committee were all adopted as company directors. One address had to be given as the registered office of the company, and this must be displayed at the door !

Seeking recognition as a Scottish Charity

We sought recognition as a charity so that we could request preferential rates for halls, and so that we could seek funding and sponsorship from charitable trusts.

It was not necessary to be a company in order to seek charitable status but the process of seeking recognition would have been more complex without the company articles on which to draw.

In Scotland, recognition is granted by the Inland Revenue. Application is made by submitting relevant documentation, detailed in booklets available from the Charities Office. In England charities are registered with the Charities Commission, and governed by specific legislation. Our first application was not successful, but the response was helpful in giving guidance as to why it had not succeeded and what steps should be taken in order to promote success at a subsequent submission.

The Memorandum of Association of the company had to be changed and now reads "The objects for which IVFDF2000 is established are to advance the education of the public in folk traditions and, in particular, the arts of music and dance, through the presentation, promotion, organisation, provision and management of a folk dance festival." To make this change to the company memorandum we had to hold a directors meeting, agree the change in a formal resolution, and submit this resolution to Companies House.

We also had to change one other clause concerning the winding up of the company and the distribution of any remaining assets.

Benefits

Barriers

Able to apply for cheapest rate on University halls, subscriptions, adverts etc.

Any profit can only be passed to other charities with broadly similar aim

Able to apply to charitable trusts

Didn't yield much if anything!

Individual liability restricted to £1

Didn't actually get members for the company

Company accounts have to be submitted to companies house, and available to Inland Revenue on request

Company turn over much too low (ceiling is £350,000 for IR, £25,000 for Charities Office) to demand Audit

Can claim exemption from many company regulations as a small company

Still need consider legal requirements and use recognised wording for such claims

© Nora Mogey, Edinburgh, February 2000

WORD version for downloading/printing

 

 Contact: webmaster@ivfdf.org Last Modified: 15th Mar 2003