Some Questions and Answers following the 2023 AGM
What is a Company by Limited Guarantee and why has this type of company chosen?
Most limited companies in the UK that are managed to make a profit and are owned by shareholders who benefit from any profits that are earned. They also carry the risks should the company not have sufficient funds to meet its debts. Their risk is limited to the value of their shares. This type of company is not suitable for a company that is a not for profit.
A company by limited guarantee has been designed specifically for not for profit organisations and is the type used by most sports governing bodies and amateur clubs, including UKA, England Athletics, Scotland Athletics, Wales Athletics and Northern Ireland Athletics. Instead of shareholders the company has members who guarantee to pay a maximum amount that has been set in the company’s articles in the event of the company not being able to meet its debts.
The BMAF has chosen this type of company as being the most appropriate.
The BMAF does not own property or have significant assets which makes becoming a Trust company inappropriate. It has no objectives that could be considered charitable, ruling out becoming a charity. It is a national umbrella organisation, without individual members from a specific community which also means a Community Interest Company (CIC) is not possible.
Who will be the Company Members and how much will they have to guarantee?
The majority of the company members will be the Area Clubs and Associations who will each guarantee a maximum of £1. This maintains the Federation concept as the Area Clubs and Associations effectively own the company and will have statutory powers over the company’s Board of Directors.
What are the benefits?
As a company the BMAF will for the first time have a legal identity which will make a significant difference when entering into contracts and arranging banking facilities. It will have to operate under company law which will improve its governance, particularly in the decision making process, transparency and accountability.
It will demonstrate that the BMAF is a serious organisation with a sound structure which will help it gain it more respect from the other athletic governing bodies and also potential sponsors.
Unlike at present where the BMAF’s liabilities, without any limit, fall on each of the individual members of the Executive, they will fall on the Area Clubs and Associations but will be limited to £1 each. Unlimited liability falling on the Executives has been having an increasing impact on being able to attract new Executive Members.
The size of the BMAF’s operation is growing making it more and more difficult to find volunteers to carry out all the tasks that are needed. Paying outside bodies and individuals to do them on the BMAF’s behalf will be happening more often in the future. Being a company will make this much easier.
What are the downsides?
The Federation has had a unique structure. It was set up to provide services to the autonomous Area Clubs and Associations with a Council that provides advice to the Executive. Club members have been able to appoint the Executive at AGM’s.
Care has been taken to structure the new company in as close a way as possible to that structure but within a company wrapper. There will be a split with a main company looking after all the company matters and strategy, with a Board of Directors. The Council will still exist and will advise that Board, while the Company members; the Area Clubs and Associations as a result of being the guarantors; will have ultimate statutory control over the Board of Directors, including appointments and dismissal.
BMAF Services will become a subsidiary which will look after all the athletic and event management responsibilities. It will also be advised by the Council with club members still being able to appoint the discipline officers of the subsidiary company.
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Ian Richards OLY
Vice Chairman BMAF