In the UK, there is no single recognised legal structure required for national governing bodies (NGBs) of sport. Some countries, like France and Germany, have a specific legal structure which set out the governance requirement for all NGBs.
National governing bodies of sport in the UK can choose their own bespoke legal form which will be one of the following:
- Unincorporated associations;
- Limited companies;
- Community interest companies;
- Charitable incorporated organisations.
Each legal form imposes different requirements and statutes on the organisation. Therefore, the board structures and requirements will vary in accordance to which legal structure an NGB has chosen. For example, if the NGB is a registered charity then it will be regulated by the Charity Commission and certain requirements in relation to trustees will be mandatory. But if the NGB is registered as a company, then it will need to comply with the 2006 Companies Act and it will be regulated by Companies House.
National governing bodies will, in most of the cases, operate as not-for-profit organisations. Consequently, any surpluses will be reinvested into the NGB for the purposes of the NGB rather than being driven by the need to maximise profit for shareholders and/or owners. Regardless of being not-for-profit the NGB will still have to conform to the same legal requirements as private for-profit companies organised within the same legal structure. To comply with HM Revenue & Customs (HMRC), your organisation must ensure that it has the correct legal structure. It's worth examining which structure best suits the way your organisation operates as this will affect:
- The tax and National Insurance that you pay;
- The records and accounts that you must keep;
- Your financial liability in the event of insolvency;
- The ways your business can raise money;
- The way management decisions are made about the business.