PROPOSED CHANGE IN LEGAL STATUS FOR THE RTAI
RTAI (the Association) has operated as an unincorporated body of persons since its inception more than 60 years ago. The National Executive Committee (NEC) has been considering developing the legal structure of the RTAI given its current position, as an unincorporated body and the drawbacks which that structure entails. The current structure of the Association as an unincorporated group of persons with no formal legal standing creates legal uncertainty and risk for the Association. The Association in its current form has no formal legal status. It is not a corporate entity, trade union and it does not come within the Register of Friendly Societies. Accordingly, for legal purposes it is treated as a group, class or association of persons who are each individually responsible and liable for the actions of the group. The NEC proposes to adopt a more formal approach to the running of the RTAI while protecting the values of the Association and the interests of the RTAI members.
RTAI has therefore sought legal advice from Hayes Solicitors regarding the Association’s legal status. Hayes have recommended that, given the size of the RTAI and the nature of its work, incorporating the Association as a Company Limited By Guarantee without share capital.
Incorporating as a Company Limited by Guarantee (“CLG”)
A company limited by guarantee without share capital is a type of company used primarily for ‘not for profit’ organisations that require separate legal personality distinct from its members. Many charitable and professional bodies find this form of company to be a suitable vehicle for their purposes as they wish to secure the benefits of separate legal personality and of limited liability but do not require to raise funds from the members.
The current lack of legal status leaves the Association in a vulnerable position especially given the value of assets owned by the Association. The incorporation of the Association would help the RTAI in its work providing information, advice and services to members and organising a broad range of activities in Ireland and abroad for members. The incorporation of the Association as a company, being a separate legal personality, would mean that the Association could hold property in its own right and distinct from its members.
At present any member or third party with whom the Association engages who may suffer a loss as a result of any actions or omissions on the part of the Association can pursue any or all of its members in respect of such losses. This would no longer be the case if the RTAI conducted business through an incorporated entity. The incorporation of the Association as a CLG would mean that the members of the company would no longer be personally liable for the Association’s debts and liabilities.
Additionally, the Association as an incorporated entity will find it far easier to enter into contracts in its own right as a separate legal entity rather than the pre-existing position whereby certain authorised members are required to enter into contracts on behalf of the Association as a whole. It will be able to hold property and sue and be sued in its own right. Further, the changing of membership through new admissions and retirements will not affect the operation or affairs of the Association, when incorporated.
From a governance perspective, the management of the Association as a company will be subject to the Companies Act 2014 and that will bring greater transparency in terms of the Association’s compliance with expected standards of governance.
The incorporation procedure would be seamless to members. It would involve amending the current Rules and Constitution in order to ensure that the newly prepared Memorandum and Articles of Association are fully compliant with Irish Company law and in particular, the Companies Act 2014. In doing so, we can preserve the core elements of the RTAI rules which will remain unchanged.
There will be an ongoing duty to comply with company law, including delivery of annual returns to the Companies Registration Office and preparation of financial statements. However these requirements, whilst involving an on-going cost, are not onerous.
It is timely for the RTAI to now move forward by securing its legal status through incorporation in order to protect the assets of the Association and its members and so that it may continue with its vital work for all of its members through a modern structure.