Legal Feamework
This is an AP created by Sandy, Allan and SamThe question - What should our new legal framework be (how much risk, and who does it fall on if something were to go wrong)?It will run from now to December 6th 2024. What has gone beforeIn 2022 when humans started Celtic Burn, a group of humans set up Northern Regional Ltd (company limited by guarantee) to act as our legal framework. It was called Northern Regional so that other burn events could act within the same umbrella.
The company had directors. Although they were not meant to have any more control or authority than any other CB human. They had legal responsibilities, including to administer accounts.
In summer 2023 the directors held an annual general meeting (AGM) to call for new directors, no one stepped forward.Three of the five directors stepped down after the AGM.
In October 2024 Northern Regional ltd was dissolved under recommendation by Companies House for administrative reasons. NorthernRegional ltd is currently in the final stages of dissolution, and is expected to be tied up within the month with no issues. Celtic Burn will not be affected by this dissolution in the future. It's important to remember that we’re all volunteers. Noone gets paid. We do not make profit. We aim to break even.
2. What might happen nextThere are several forms of organizational structure we could use, we discuss here four options:a) Have no legal structure protection. Many other burns do this, however it’s important to note that other countries in Europe appear to treat unincorporated type organizations at least a little differently to the UK. We might treat it like a group of friends going camping in a field or with one of the looser legal entity models. It's the simplest legally but most risky to individual burners. If there was an incident, for example, then it’s hard to say who would be liable. In a decentralized Burn, who are the organizers? The liability would usually fall to the person who collected the money, made the booking, whose name is on the bank account. No-one involved in drafting this AP would be in favor of CB going ahead under this optionb) Create a new Company Limited by Guarantee (CLG). This would be similar to the setup we had with Northern Regional, with the only difference being new directors. It could use a similar basic constitution to Northern Regional ltd.
With a CLG in the event of an accident liability would be on the new company rather than on individuals, Though ultimately directors will be responsible under UK law claims or debts would be made against the CLG rather than individuals.It would have to file annual accounts with Companies House and HMRC. Essentially it would need to do all the same things Northern Regional had to do.
Legal responsibilities of a CLG director: https://www.gov.uk/guidance/being-a-company-director
c) Community Interest Company - It’s the most complicated, requiring a written constitution and to have some level of legal and administrative accountability for its social function.These entities are regulated by a governing body. It is the most administratively demanding and restrictive of the models discussed here.
d) A PLC. This puts the responsibilities most on directors and would require shareholders.
3. What we are proposing.
Regardless of the specific legal model chosen, we suggest that the members of Celtic Burn are officially considered to a greater extent than with Northern Regional. Of the models discussed we favor the Company Limited by Guarantee.
In order to fulfill the legal requirements, directors will need authority to make and act upon certain decisions. It is still important that Directors do not hold more decision making power than required for this above other community members because of their status.
To make it work we would need:
The stepping forward of new directors. Minimum of 3, preferably 5 (odd number for split voting).
A written definition of director responsibilities:- File financial accounts with HMRC and Companies House
An easily accessible constitution. This could be amended from our previous one.
New directors then register our new company with Companies House. New company names welcome.
The community to throw a directors party once a year so that the directors can come and do their accounting work and then be fed, fluffed and appreciated
To make this work well directors need to be organized and on the same page about collective responsibilities. They need to schedule dates to work together on responsibilities. It can be a thankless job so the whole community needs to be aware of and support the work that they do.
Proposed next steps:We propose that voluntary directors (and any other interested parties) form a Working Group and take forward the concluded decision of this AP, write a constitution and open a legal entity and bank account for CB25. This AP does not represent a competence to go to Companies House tomorrow and register a new organization. To get to that stage we need transparent community understanding of what our specific organization looks like. New directors to step forward and complete the above steps. CB is scheduled to happen in 6 months. We believe that we have this long to form a new appropriate legal entity. It may be that expediency calls for parts of this be temporary for the 2025 burn (e.g. new bank account) and revisited regarding the longer term.
Carl Fri 29 Nov 2024 9:41AM
I could potentially be a director.
Rachel Fri 29 Nov 2024 12:17PM
Brilliant, so, so far Jakub, Carl and Gareth, and Guy have expressed some openness to potentially being directors. Sam and Tom were previously directors, do we know if they are planning to continue on?
Sandy and Allan were you interested in being directors?
At this point it’s clear we have enough folk willing to help, so perhaps all of those above could get together a small working group as Sandy had suggested above might be helpful?
Allan Tue 3 Dec 2024 11:19AM
@Rachel Acting as a Director/Trustee for Nest is as much as I can handle at present. Happy to share information, discuss on anything relevant where my experience may be helpful, but can't take on another serious role.
Sandy Ryalls Thu 12 Dec 2024 2:42PM
@Rachel I'm not opposed, in principle to being a director. I'd need to think and research to be sure I want to commit.
Tom Allen Sat 30 Nov 2024 12:33PM
I concur that a CLG is the most sensible option at this stage. I am happy to rest and as a director but this time we really need to set up all the accounts to online not on paper and get them sent to a central secretary@ email account all the directors can access and get notified about so we don't accidentally miss any deadlines this time! I'm happy to run a call or something sharing my experiences and knowledge of being a director for many different orgs over the last 20 years so people know more about it before signing up if they have not done it before etc.
It would be really nice to form as an actual members organisation and maybe even better vat registered (because there is no VAT on members donations but we could save it on all purchases) but both of these things are too complex for an organisation of our size as there is not good templates to follow for either system for this type of org out of the box. As part of another group I'm part of (Hackspace) we are still looking into the best way to do both of these things and I we get good answers I will propose that further down the line.
For now we have a system of accounting where as long as the optional contributions to dreams is larger than the remaineder at the end of each tax year we pay no tax which works for now.
Gareth Mon 9 Dec 2024 10:29PM
I haven't had much of a chance to research different types of organisations that exist in the UK, but the one shade of concern I have is that it does feel very misleading to be potentially setting up as a company when we're clearly not that. I appreciate it is somehow easier, and might make sense in the short term, but my gut says that in the longer term this might want looking at again.
As mentioned above, I'm far from an expert yet. But I did want to address the elephant in the room before the AP closes (which I can't see the date on but it must be soon).
And yes, still more than happy to help out with directorship etc.
Sam Lee Tue 10 Dec 2024 11:01AM
I'm not planning on being a director, I did a shitty job of it last time because I was going through some big family stuff so dropped the ball on the secretary responsibilities. I need a little break to give those processes some attention and space but I will be around doing other different things and caring.
I think in an ideal world with max time and energy we would create a bespoke membership organisational structure, but for now and the medium future I think our energies are best spent on a simple CLG, with no more responsibilities than the bare bones.
If the secretary part is set up well it should be pretty straightforward and annual. And yes, we keep aiming to break even and spend the money we receive for a given event.
Agree with RachelR that we have enough here to move forward to a working group + invite other folk that might be interested. Highly recommend to lean on Toms knowledge and experience. I'm happy to join a call too to assist with facilitation/ process thinking.
Isabelle Tue 10 Dec 2024 4:11PM
Thanks, @Allan, for giving some more explanation in response to my question.
From what's shared here and what we touched on in our last CB Zoom call, the main reason to be a company can be summed up as the concern that financial responsibility/liability would fall on bank account holders.
I would be totally comfortable to be a signatory on a bank account in a situation where
a) we have site/event insurance, and
b) participants sign a Release of Liability / Waiver of Claims type document (which seems sensible to me in any case and I understand is common practice at other events including other Burns).
For me, this approach would mean putting our values into practice, and being in that position would not feel like too much of a risk for me, personally.
As I said before, I'm in acceptance that the decision may be made on other, more pragmatic considerations here, but I want to at least make sure this perspective is also seen here alongside others (I'm aware only a very small number of voices are currently contributing here, even fewer than on the other APs... )
I'm in favour of choosing a structure that reflects what we actually are in reality.
That would be, in the short term, a club/ unincorporated association (or, as was mentioned by someone else on our call "a group of friends having a party" - similar things are happening up and down the country all the time without a company structure), and medium term this would be working towards a bespoke membership organisation or a cooperative.
One more thing I'd like to offer:
A lot of the examples and stories that have been shared over time (about things that can go wrong, liability, etc...) and that have formed the basis of the argument for why we should be a company, seem to be from events that are much larger than CB (is or would become anytime soon), or from non-Burn events. At the moment, the discussion seems to be centred around imagining extreme scenarios of what could happen in theory, but for a balanced decision, we'd also need to factor in the extremely low probability of those things happening in our actual situation.
fox of light Sat 21 Dec 2024 2:40PM
Would the runners of this AP kindly update the decision at its closing in the top of the OP description?
Thanks 🙏🏻
Rachel · Fri 29 Nov 2024 8:30AM
Thank you Sandy, Allen and Sam for creating this AP. Seems pretty clear that making a new CLG is the best option. Very grateful to anyone willing to step up as a director. Personally will be too busy with consent team things to be a director, but thank you to those who have expressed interest.