UKH

I belong to a club with a hut in N.Wales. Some members are concerned that the hut insurance (£15m third party cover from the BMC) might not cover/cover fully a claim from someone having an accident in the hut, with members being exposed to a claim for thousands or tens of thousands of pounds for damages from or on behalf of the injured person. The hut is owned by Trustees (crusty older members) and run by the club committee, and is let out to both BMC affiliated and non affiliated groups. It ticks along financially and doesn't make a profit. The proposal to protect members from such a claim is to make the club a company limited by guarantee.   The proposal made is all upside - ie if you don't do this you could be exposed to claims for tens of thousands of pounds.  Are there any downsides or other issues we should be considering please?   Thank you.

I used to know a lot about companies limited by guarantee, but I’m a bit rusty. IIRC,  being a CLG protects the directors (NOT the members, although the directors will most likely be members as well).  And a common misconception is that if things go belly up then the company takes the hit rather than the individual directors. However, this is only the case if the directors have acted within the law, shown due diligence etc. 

I don't know much about CLG.  But when I took out the insurance package for my commercial bouldering wall, the debate I had with the insurer was whether to go for £5M or £10M worth of cover.  I can't see that the risks in a hut are that much greater that £15M wouldn't be considered sufficient?

You're probably already aware but the Climbers Club is currently on the way down this road, so it might be worth seeking out the material they've put out about it and the ensuing discussions. Their membership aren't known for biting their tongue when they disagree with something, so if there are reasons to worry, I'd wager they'll have been brought up.

An interesting paper here that they've produced https://www.climbers-club.co.uk/downloads/Incorporation_booklet.pdf

As far as I'm aware the majority of the big clubs did this years ago. The one notable exception is doing it now.

The membership are vocal to say the least, something which is at times an asset to the club!

I would suggest for OP to get in touch with BMC Club's committee possibly. The FRCC is a CLG, I think MAM opted for a different legal structure so it may be worth considering options?

It is essentially all upside. A few more admin steps to be done, but they are tried and tested so relatively easy to sort. The members are liable in an insolvency up to the amount that they guarantee (typically £1). I don't know if there are any tax differences. I've done it before for an organisation and it is relatively painless. It is a good chance to reconsider governance as well.

In 2010 a cyclist was knocked off his bike by a motorist and put in a wheelchair with brain damage and other injuries, requiring 24/7/365 care for the rest of his life. His family won a payout for £9M, increased to £14M on appeal - future loss of earnings & care costs.  https://www.ashtonslegal.co.uk/insights/legal-news/highest-ever-personal-in....

Which is why every small club under the sun is looking to emulate it, AFAIK

Everyone - thank you for your replies - very helpful - particular thanks to Patrick for sight of the CC docs. 

The BMC was encouraging clubs to consider legal status at least 6 years ago via the committee member training days.

Cant think who you mean :-D

Also look at charitable incorporated organisations

Look like a charity, only have to register and report to the charity commission. Pretty painless in the end. 

It's what we did for the surf Life Saving club I help run.