Why Should A Students' Union Incorporate?

• Published date: 08 March 2021
• Subject Matter: Corporate/Commercial Law, Charities & Non-Profits , Corporate and Company Law, Contracts and Commercial Law
• Law Firm: Wrigleys Solicitors
• Author: Ms Hayley Marsden, Charlotte Nutt and Laura Moss

Students' unions that want to incorporate this summer need to start the process now.

Many students' unions choose to incorporate as a separate legal entity, because it offers more protection from personal liability for trustees, as well as being administratively easier. If you have SUSS pension liabilities, the 2021 'window' in which you could incorporate without these being crystallised has now been announced, but the sooner you get started, the easier it will be to meet their deadlines.

There are many benefits to becoming an incorporated body. The key advantage is the establishment of a separate legal personality.

Having a separate legal personality means that the incorporated body can enter into contracts in its own name and hold its own assets and liabilities. This means that any liability taken on under such agreements is the liability of the organisation and not of the individuals. It is also administratively easier, because individual trustees are not signing contracts or holding assets in their own name, on behalf of the students' union.

It also means that, if the organisation runs into trouble, it is generally the charity itself which is on the hook, rather than individual trustees. The assets of individual trustees are therefore usually protected (see below for some limited exceptions to this).

The opposing position for an unincorporated body is that liabilities will be in the name of the individuals involved. This means that there is a personal risk taken on by an individual when becoming a trustee of an unincorporated body.

There are some exceptions to the limited liability offered by an incorporated structure, where the individual trustees could still be held personally liable, including if they give personal guarantees, if they breach their duties as trustees, or where the law requires personal responsibility (e.g. in relation to certain criminal, insolvency and environmental matters). However, incorporation gives the trustees much better protection than they have with the unincorporated charity.

A students' union often employs staff (sometimes significant numbers of staff) and may carry out activities which involve a certain amount of risk. In our experience, lay trustees are often particularly concerned about the risk to their own personal assets where a students' union is unincorporated. It can therefore be a barrier to recruiting new lay trustees.

What legal structure should your students' union take?

The most common...