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Can Our Club Be Limited By Shares?

March 22nd, 2017

questioniconA sports club can indeed choose to incorporate as a limited company by shares but it is not advisable for a club that is not for profit.

A club that is not for profit will need to demonstrate to potential funding organisations and to the tax authorities that any profit/surplus it makes is NOT distributed to the members of the club but is instead reinvested back into the club.    This would be contrary to the structure of a company limited by shares, where the shareholders would normally be paid a dividend based on the financial performance of the company.

A company limited by shares is therefore a good choice for a commercial sports club and we would recommend that a not for profit sports club consider a company limited by guarantee, where there are no shareholders but instead there are members, a perfect fit for a club.

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