Grey Lynn 2030
Possible Legal Structures
1. Currently Grey Lynn 2030 is operating as an unincorporated society with no rules/constitution.
2. As an unincorporated society, the members of the steering group are personally liable (jointly and severally) in the event that something happens at an event organised by Grey Lynn 2030. This is because in law the Grey Lynn 2030 group has no separate legal existence. For example, if last Friday night with the screening of the short movies, the projector caught fire and burnt the community centre down, the community centre’s insurers would go after members of the steering group to recover the costs of the fire.
3. Creating Grey Lynn 2030 as a separate legal entity is therefore desirable, not only for members of the steering group to avoid personal liability, but also because it is easier to secure funding from organisations, that is, organisations such as trust boards etc are more likely to give legal entities rather than groups of people.
4. There are two possible legal structures which Grey Lynn 2030 can use:
(a) Charitable trust; or
(b) Incorporated society
In addition, to allowing members of the steering group to avoid personal liability, both can allow Grey Lynn 2030 to claim tax exempt status. But note, tax exempt status must be applied for and is not granted automatically.
5. The differences between the two structures are set out on the following page.
6. I believe that the better structure of the two for Grey Lynn 2030 is that of an incorporated society, for the following reasons:
(a) Grey Lynn 2030 is not sitting on a large amount of money or other assets and deciding how they should be used, maintained etc. Rather as the vision statement currently says, the aim of Grey Lynn 2030 is:
“[t]o be a participatory organization that aims to serve all sectors of the Grey Lynn community by facilitating, supporting and generating sustainability in all dimensions of urban development.”
Thus having a committee to which people go to and communicate with, plus the committee organising and co-ordinating events, makes it sensible for Grey Lynn 2030 to be an incorporated society rather than a trust.
(b) Difficulty in finding two people willing to be trustees. Reasonably onerous duties are imposed on trustees and changing trustees is time consuming. Incorporated societies are much more fluid in that sense, can have people come and go as they please.