Trials Clubs That Are Ltd Liability

[spanner-monkey]

Hi, I have noticed that some Trials & Enduro clubs operate as a Limited liability company, is there a good reason for this & what are the pro`s & con`s for doing this ? . My local ACU motor cycle club runs both trials & enduro`s but are not a limited club, can anyone shed any light on this.

Many thanks

[tucker]

I too would would also like some info as our club have also heard that it would be safer in these days of the claims culture that we were limited for the safety of the members should anything happen? Hope you get some info spannerman.

[mac]

Manchester 17 and Pathfinders clubs are both limited Companies, the ACU run some course and will give advice I believe. It

[atomant]

As a ltd company, there will be one or more directors. A director has legal duties and being a limited company will not protect him/her if a legal claim was made if an accident was due to negligence on their companies part. If anything, I would think you would be more exposed as a limited company as you are expected to follow certain rules which you can not claim to not have knowledge of.

I am a director of a mid sized company and am fully aware of my legal duties as to the safety of my employees and non-employees who I provide a service or goods to. Unless I am mistaken, I do not believe it would be any different for a club who becomes a limited company.

The only real benefit is if the 'business' fails (bearing in mind the directors haven't knowingly put the company in that position to gain financial benefit) then you have nobody chasing you for the 'companies' debt.

So, in summary, I don't see any benefit as a trials club shouldn't really have debt's (if any) worth worrying about.

[scorpa3]

Yes, ultimately being a ltd company does provide extra protection for the club membership.

However, if all of the clubs events are authorised by the governing body (In our case the ACU) and run accordingly, even if a club member is negligent, then the insurance will pay out. That's what insurance is for.

Now, an example of where this would not apply is if the club organises an event or meeting outside of the jurasdiction of the governing body. For example a road bike run for its members. If a social permit is not arranged and no independant insurance is arranged, then IF a club member is found to be negligent and an injury or loss occurs, then the club would be liable and the damages would be spilt between all of the club members.

We have looked very carefully into this and have decided that the best way to protect ourselves is to make sure we are fully insured at all of our events. The ACU's insurance is excellent and this will more than suffice. Why pay for something youreally do not need?

[atomant]

Yes, ultimately being a ltd company does provide extra protection for the club membership.

However, if all of the clubs events are authorised by the governing body (In our case the ACU) and run accordingly, even if a club member is negligent, then the insurance will pay out. That's what insurance is for.

Now, an example of where this would not apply is if the club organises an event or meeting outside of the jurasdiction of the governing body. For example a road bike run for its members. If a social permit is not arranged and no independant insurance is arranged, then IF a club member is found to be negligent and an injury or loss occurs, then the club would be liable and the damages would be spilt between all of the club members.

We have looked very carefully into this and have decided that the best way to protect ourselves is to make sure we are fully insured at all of our events. The ACU's insurance is excellent and this will more than suffice. Why pay for something youreally do not need?

You're talking about insurance pay out which is different to legal duties. for example, if a rider rode in a trial that was organised by the Ltd company, and the rider was killed by riding over a ledge that wasn't properly marked. The HSE would attend and the company could be found negligent. If this was the case then the Directors would be responsible and possibly one or more of its 'employees'.

If that happened to me at my company and I was found negligent, I could end up in prison so I don't see why it would be any different for a club who was Limited.

[scorpa3]

Yes, ultimately being a ltd company does provide extra protection for the club membership.

However, if all of the clubs events are authorised by the governing body (In our case the ACU) and run accordingly, even if a club member is negligent, then the insurance will pay out. That's what insurance is for.

Now, an example of where this would not apply is if the club organises an event or meeting outside of the jurasdiction of the governing body. For example a road bike run for its members. If a social permit is not arranged and no independant insurance is arranged, then IF a club member is found to be negligent and an injury or loss occurs, then the club would be liable and the damages would be spilt between all of the club members.

We have looked very carefully into this and have decided that the best way to protect ourselves is to make sure we are fully insured at all of our events. The ACU's insurance is excellent and this will more than suffice. Why pay for something youreally do not need?

You're talking about insurance pay out which is different to legal duties. for example, if a rider rode in a trial that was organised by the Ltd company, and the rider was killed by riding over a ledge that wasn't properly marked. The HSE would attend and the company could be found negligent. If this was the case then the Directors would be responsible and possibly one or more of its 'employees'.

If that happened to me at my company and I was found negligent, I could end up in prison so I don't see why it would be any different for a club who was Limited.

I agree, being a ltd company, a licenced offical or anything alse won't protect you if you break the law. But the main reason for clubs looking into becoming a ltd company is to protect the membership from the possible risk of being sued for damages due to negligence whilst running an event.

We have consulted the ACU's solicitor on this point and he agrees that it is highly unlikely that a club membership would ever be required to pay for a claim because the ACU's insurance is very good and very comprehensive. Other governing bodies may/may not provide the same level of cover, so I can't comment on clubs/events from outside the ACU.

[atomant]

But the main reason for clubs looking into becoming a ltd company is to protect the membership from the possible risk of being sued for damages due to negligence whilst running an event.

Sorry Pete but I just don't get this. Like you said, you can get this cover already with the ACU's insurance as a club, But if someone gets killed due to negligence whilst the club is a limited company, then its not just a matter of paying out some compensation, it will be a court job with the directors facing a prison sentence. Whether that is still the case as a club I don't know.

[overthehill]

This is either a huge and complicated subject and one which would make anyone with any sense avoid having anything to do with organising events.

or its a simple matter of common sense.

when Atomant states

if a rider rode in a trial that was organised by the Ltd company, and the rider was killed by riding over a ledge that wasn't properly marked. The HSE would attend and the company could be found negligent. If this was the case then the Directors would be responsible and possibly one or more of its 'employees'

this would only apply if the event was organised by paid employees of the club -the fact that the majority of clubs are not 'employers' saves them from the might of a whole raft of safety legislation - the bottom line is that we do have to exercise a common law duty of care. The inherant risks associated with motor sport are accepted by competitors although i accept that this is constantly being challenged by the claim culture. The bigger risks are probably with the issue of spectators at trials. Other motorsport has controlled entry where spectators are advised of the risks associated with the sport but trials takes place over open country with free access.

I prefer not to go down that line- otherwise we would all be sitting at home every weekend.

Apply common sense, have competent people organising your events and lets just get out there and enjoy our sport.

back to the original question, the reason for a club to become Ltd is financial - a club that has a turnover of tens of thousands of pounds needs the comfort of being a limited company.

[scorpa3]

I don't think I can add anything else to this discussion, I'm certainly not a corporate law expert. It's possible that some of what I've said isn't 100% correct, I'm sure my opinion doesn't represent 100% of the facts. But in the case of our club, we have looked very seriously into becoming a ltd company.

We run a number of very good trials at club, centre and National level. We have a monthly social gathering, a road bike run and two or three of Wrighty's guest speaker evenings- every year. The club has almost 100 members and has some money in the current account. I guess we are a typical trials club, so our research (probably) would apply to many clubs.

Following the tragic injury of a compettitor in one of our National trials (who sadly died sometime later after complications in hospital) the ACU sent out one of their top solicitors to find the facts and prepare a case on our (the clubs) behalf, should the need arise.

After collecting all of the facts, I was Clerk of the Course and route planner for the event, the Solicitor informed us that we had done everything correctly as a club and that it was likely that there would be no case to answer... it was a sad accident.

At the end of the meeting with the committee, the Solicitor mentioned that it might be worth considering becoming a ltd company as it adds an extra level of protection for the club. So we started looking into the pros and cons of doing this. After a great deal of research, we couldn't see any real benefit for us, so we went back to the Solicitor and asked him to explain in more detail.

Now that we had completed some research we were in a better position to ask the right questions and understood the answers better and basically in a nut shell it turned out that...... if an event; any event organised by the club, not just a compettition, has a permit issued by the ACU then we are covered by their very good insurance. If something goes wrong and a case is bought against the club, the insurers will fight it and pay up if they loose- there will be no cost to the members; the reason we looked into this in the first place.

Someone else will have to talk aout the implications of corporate law as I don't know how this is effected by becoming a ltd company. As Ian says, it might make thngs worse. I don't know.

Thanks for sticking with me on this. I'm off to ride in the Midland Centre Group trial now, cheerio.

Pete Barnett

Stratford-Upon-Avon MC&LCC

Edited March 11, 2007 by scorpa3

[atomant]

There seems to be some misconceptions as to the personal liabilities of running a limited company in this instance. I will go and do some homework on the subject before I comment further

[john collins]

Cannot ( or should not) add a lot on this one - as I just do not have the knowledge.

I do know that the ACU did some work or ran a seminar for Clubs/Centres on this - last year I think - and I know our Centre discussed it after this.

I would suggest those club members who posed the query just ask their Club/ Centre to write or email Gary Thomson, General Secretrary , ACU and ask him if he can send them details /printed dociuments that I am fairly sure were available. Possibly some other Centre Sec's reading these posts may also have them.

[slapshot 3]

Can I just throw a quick comment in:

from Overthehill's post:

this would only apply if the event was organised by paid employees of the club

If anyone ever gets into this position, god forbid, watch out for the word expenses. At a tribunal I was forced into a couple of years ago (My ice hockey club had, to all intent and purposes, sacked a volunteer coach and as chairman he took me to an Employment tribunal, through the Racial Equality Council (he was Canadian) Equal Ops etc etc etc), his solicitors tried to get the board on his side by suggesting that travel expenses I was given to go meetings all over the country were payment in kind for a wage, despite the fact we were all volunteers.

Their arguement was that if we were paying people "unreasonable expenses" then we were deemed liable for all aspects of employment and company law. The only way out of that for us was provision of club accounts. Pain in the Backside whatever way you look at it

[rabie]

the ACU ran a seminar with some top sports lawyers from Southampton and some accountants from somewhere about 4 years ago now (i met some of the Bradford lads IIRC). basically put they raised the point that most motorcycles clubs as they now stand are "unincorporated associations" and thus lack corporate identity. thus they don't exist in law. to hold land, etc they need trustees, etc. they were really laying it down that this was bad and that some form of incorporation was desired, and some very simple limited company procedures could be followed, and this was necessary for even the smallest trials club. as one of the biggest off road clubs in the ACU we promptly went away and did a lot of digging on the matter and we will hopefully have it all resolved by our AGM in April (we had some complex issues with our land being held by trustees, etc). The most pertinent fear that stuck in my mind was that if they sued us to high heaven (eg especially in the wake of the infamous Matchams saga), the club committee members could be liable and most of the committee didn't like the idea of losing their houses.

so as John Collins says, get in touch with Gary Thompson at the office, and he'll give you all the details