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Briefing Paper 7
Steps to registering your Community Enterprise

The following is a step by step guide to registering a community enterprise or social wealth creating organisation as a Company Limited by Guarantee.

Most organisations decide to register as a company for the following good reasons:

  • Provides Limited liability for members (£1 in the case of a Company Limited by Guarantee)
  • Provides a legal framework to operate within
  • Gives an organisation credibility

The Company Limited by Guarantee is perfect for most Voluntary sector organisations because:

  • It is founded on democratic principles (one member one vote)
  • It has a very flexible structure

STAGE ONE

Once your organisation has decided to register as a company is to make some fundamental decisions:

  • Who will own this company?
  • Who will control this company?
  • Who will manage this company?

Being clear on these issues will help greatly in putting together the articles in the constitution.

Next decide at the earliest stage:

  • The Company name (Make it long so there are no problems of conflict with other registered names)
  • The Company's trading name (short and catchy)
  • Who will be the Company Secretary (The only post that is a legal requirement)
  • Who will be the initial subscribers (only 2 needed)

STAGE TWO

You should now acquire a Company registration pack, free from Companies House. 02920 380 801 Ask for a Starter pack. The New Companies section will give free advice on the technical aspects of the registration including advice on the name you have selected. The starter pack will include copies of all the forms, plus guidelines and explanatory leaflets.

STAGE THREE

Agree a constitution. What Companies House will not supply are the model rules. Attached to these guidelines are Social Enterprise Partnership Ltd model rules for community enterprise and social wealth organisations.

These are suitable for:

  • Organisations that are community based
  • Organisations that are democratic

If using the Social Enterprise model - carefully go through the Memorandum of Association (What the company intends to do) and the Articles of Association (How it intends to do it). Key decisions are highlighted for your attention.

They are:

Under the Memorandum:

  • The Company name
  • The main objects or purpose of the organisation
  • Definition of the community served
  • Equal opportunity statement
  • What happens when the company is dissolved

Under the Articles:

1. Definitions of terms used

2. Categories of membership

3. Quorums and sizes of committees

4. The make up of the Governing Board

5. Re-election rules

6. Audit requirements

7. The Social Audit option

There is no need to get held up at this stage. The memorandum and articles can be easily changed - and should be reviewed regularly anyway. The important thing is to get the company registered and then see how the constitution works in practice.

STAGE FOUR

You now select two subscribers and a Company Secretary to process the registration. Complete the forms according to the guidelines. The Forms will need the signature of a solicitor. Most solicitors will agree to sign for a nominal fee of between £5 - £10.

FINAL STAGE

The final stage is to send the constitution with the completed forms and the fee to Companies House (£20). When the certificate arrives with the Company number - add this to the title page of the Constitution. At the first meeting the two subscribers then agree to the membership of the first Board. These can be simply appointed (usually from the Steering group which is overseeing the setting up of the Company) - it may be best to delay elections till the first AGM. The Company secretary then informs Company House of the new Directors, each of whom must sign a G233 form.

Please note: obtaining Charitable status is a different issue. In most cases it is inappropriate for community enterprise or social wealth organisations to consider such a registration. If Charitable status is required then the objects in the Memorandum have to show clear charitable aims. Good luck!

Further Reading

Definitions of Community Enterprise
A Community Enterprise Company
Why a Social Audit Social Wealth Organisations
The Voluntary Sector Legal Handbook - Directory of Social Change
Voluntary but not Amateur - London Voluntary Service Council
A practical Guide to Company Law - Directory of Social Change

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a network of community enterprises, workers co-op & not-for-profits working in progressive ways to make our city greener, healthier and more equitable

Network Co-ordinator : Andy Wynne MPEN, Bridge 5 Mill, 22a Beswick Street, Manchester, M4 7HR
mpen@bridge-5.org tel - 0161 273 1736

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