Written by FMC Executive member David Barnes, this article was originally published in the June 2017 issue of Backcountry Magazine. We’ve reproduced it here as part of the Outdoor Community resource. If you’ve got extra tips or advice to give, then please get in touch.
There are many advantages and few disadvantages to incorporating. The advantages include the fact that the club exists in perpetuity, easier access to banking services and the ability to contract in its own name (e.g. renting clubrooms).
A key advantage of incorporation is to separate the members from liability for the clubs actions. If the club is incorporated then it is a separate entity from its members, so (other than to the extent that a member was alleged to be responsible for an event) there is no liability on individual members.
If the club is not incorporated, liability for the club’s action lies with the members (not just the committee). Liability is ‘joint and several’, which means that legal action against the club would actually be taken against individual members – so those who could be located and had the ability to pay would be targeted. (Any such members could then seek to recover from the remaining members). An example of this was a student flat that burnt down. One flatmate had insurance so, despite him not being home (and because the lease explicitly made them all jointly & severally liable) his insurer paid and that insurer would probably have pursued the rest .
Put another way, incorporation separates members from any personal responsibility for the actions of other members.
Unincorporated clubs are usually the very small ones. If it was a toss-up between spending the $100 one-off cost to incorporate and getting public liability insurance, incorporation would probably be a better use of your funds.