Choosing a Legal Structure Quiz?

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IMPORTANT:  Before adopting a particular legal it is vital that you obtain professional advice.

The following questions may assist in select the most suitable legal structure for an organisation.

Incorporated or Unincorporated?

  1. Is the organisation planning on taking out a lease?
  2. Is the organisation planning on buying a property?
  3. Is the organisation planning on taking on employees?
  4. Raising finance?
  5. Entering into large contracts?
  6. Involved in risk?
  7. Does the organisation require limited liability?
  8. Does the organisation require its own legal identity?

If you answer NO to all of the questions then the recommendations for a legal structure are one of the following unincorporated structures

  • Unincorporated association (can be a charity)
  • Sole Trader (unlikely to be a social enterprise)
  • Partnership

If you answer YES to any of the questions then the recommendation for a legal structure is one of the following incorporated structures

  • Company Limited by shares
  • Company Limited by Guarantee
  • Community Interest Company limited by shares
  • Community Interest Company limited by guarantee
  • Scottish Charitable Incorporated Organisation

Incorporated structures?

  • Does the organisation require charitable status?
    • Yes - Company Limited by Shares and Company Limited by Guarantee, Scottish Charitable Incorporated Organisation
    • No - All other incorporated structures are available
  • Does the organisation plan to raise funds by issuing shares, applying for loans?
    • Yes - Company limited by shares, Community Interest Company Limited by shares
    • No - Company limited by guarantee or Community Interest Company limited by guarantee, Scottish Charitable Incorporated Organisation

Company Limited by Shares or Community Interest Company Limited by Shares

  • Is the aims of the organisation  only benefiting the community
    • Yes - Community Interest Company Limited by shares
    • No -  Company Limited by Shares

Company Limited by Guarantee or Community Interest Company Limited by Shares

  • Is the aims of the organisation only benefiting the community?
    • Yes - Community  Interest Company Limited by Guarantee
    • No - Company Limited by Guarantee