Model Articles -version Oct09



Company Limited by GuaranteeModel Articles of AssociationDeveloped for use in forming a company eligible to make an asset transfer request for ownership under the Community Empowerment (Scotland) Act 2015.CONTENTSWhat is this model for?To be aware.Extract of Section 19 of the Community Empowerment (Scotland) Act 2015Key points for your organisation to decide1.What is this model for?The model Articles of Association (AofA) associated with this guidance have been produced to help you set up a company limited by guarantee (CLBG) eligible to make an asset transfer request for ownership under the Community Empowerment (Scotland) Act 2015 (“the Act”). It meets the requirements to be a “community-controlled body” under section 19 of the Act, and the additional requirements for requesting transfer of ownership under section 80(1)(a). It also meets the requirements of the Companies Act 2006 (“the 2006 Act”)A CLBG using this model will also be eligible to make Participation Requests under Part 3 of the Act.This model is not suitable if you plan to use the Community Right to Buy under the Land Reform (Scotland) Act 2003. Please see The model AofA includes clauses suitable for meeting the requirements for charities. Having charitable status or not makes no difference to your rights under the Act, but you may find it helpful in other ways. Guidance on becoming a charity is available from the Office of the Scottish Charity Regulator (OSCR) and the Scottish Council of Voluntary Organisations (SCVO) . As an alternative to a CLBG with charitable status, you may wish to consider making your organisation a Scottish Charitable Incorporated Organisation (SCIO). Information on this option is also available from OSCR and SCVO. 2.To Be AwareWhilst great care has been taken in preparing the model Articles of Association which accompany this guidance, the model is not intended as a substitute for legal advice. It is intended to make the legal process simpler for all concerned and therefore cheaper for you. You may still wish to obtain independent legal advice.The Scottish Government cannot accept any responsibility from any consequences of any kind arising from use of this model.There is no central register or authorisation for community-controlled bodies. When an organisation makes an asset transfer request, it is for the relevant authority receiving the request to decide whether the community organisation is eligible.Please read the Asset Transfer Guidance for Community Transfer Bodies, this guidance, and the model and its accompanying notes before rmation contained within the model and this guidance is correct as of January 2017.Adapting the model to your needsThe model is a template and you can adjust the articles where necessary to suit your own needs. Within the model, text highlighted yellow needs to be completed for your organisation. Provisions in red are optional, depending on the choices you make for your organisation.Provisions in blue need only be included if the Company is to be a charity. If you plan to become a charity you must make sure that any changes you make or options you choose meet OSCR’s requirements.Please remember that changing or deleting any clauses may require consequential changes throughout the model, including renumbering the remaining clauses and changing cross-references to those numbered clauses.The right-hand column of guidance notes should be deleted before the AofA is finalised. 3.Extract of Section 19 of the Community Empowerment (Scotland) Act 2015The following is the extract from the Act setting out the requirements for a community-controlled body. The model AofA accompanying this guidance has been designed to comply with these requirements.19Meaning of “community-controlled body”In this Part, a “community-controlled body” means a body (whether corporate or unincorporated) having a written constitution* that includes the following— (a)a definition of the community to which the body relates,(b)provision that the majority of the members of the body is to consist of members of that community,(c)provision that the members of the body who consist of members of that community have control of the body,(d)provision that membership of the body is open to any member of that community,(e)a statement of the body's aims and purposes, including the promotion of a benefit for that community, and(f)provision that any surplus funds or assets of the body are to be applied for the benefit of that community.* in this context, “constitution” includes Articles of Association.4.Key points for your organisation to decideBefore using the model AofA there are a number of issues you need to decide about what your organisation wants to do and how it will work. It is important to think carefully about these things to make sure you have a governing document that meets your needs.The main points to consider are:Company’s name (front cover, article 1)You should think carefully about the name of your organisation; what it says about you and your activities, who is included (or excluded), any potential abbreviations, etc. You should also take care that it does not contain sensitive words or expressions.You should also check that your proposed name is not already in use or too similar to another. Further advice is available from Companies House, , and OSCR Your Community (article 4)The Company must relate to a specific community, and at least one of its purposes must be to benefit that community.Your community may be defined by geographical boundaries or by any common interests or shared characteristics. You will need to consider how broad or narrow the definition should be, so that you can meet the requirement to be open to any member of the community. You may want to combine interests and geography, for example “people affected by mental illness in Perthshire”, or “allotment gardeners in Renfrew”. Your definition must be clear enough that you can tell whether someone is a member of the community or not.Purposes of the Company (clause 4)Under section 19 of the Act, one of your purposes must be to benefit the defined Community. The others are optional. The purposes set out in article 4.1 to 4.4 cover a wide range of purposes your Company may want to carry out. They can be deleted or amended to suit your organisation better, but it can be helpful to keep some flexibility to develop new activities in the future.If you want to become a charity you must make sure that your purposes are acceptable to OSCR and will meet the charity test. Membership (articles 6, 8, 14) Section 19 of the Act requires the organisation’s constitution to have provision that:(b)the majority of the members of the body is to consist of members of the community(c)the members of the body who consist of members of the community have control of the body, and(d)membership of the body is open to any member of the community.In the model, only members of the community are eligible to become Members of the Company, as either Ordinary Members or Junior Members. This avoids any need for rules about majorities in membership or voting. People who support the aims of the organisation but are not members of the community may be included as Associates. Associates do not have the right to vote at general meetings or to stand for election to the Board. Ordinary Members are members of the community aged 16 or over. They have the right to vote at general meetings and to stand for election to the Board.Depending on the definition of your community, you may also have Junior Members, aged between 12 and 15. If there is no age limit in the definition of your community, there should be no limit on the age of members of the Company. However, young people under 16 cannot legally carry out all the duties required of the Board. Junior Members can therefore vote at general meetings, but cannot stand for election.Numbers of members and quorum (articles 7 & 18)In order to make an asset transfer request for ownership, section 80 of the Act requires that the organisation must set a minimum of 20 members. You may set a higher minimum, if your community is particularly large. If your community is very small and having a minimum of 20 members is not practical, you can apply to the Scottish Ministers for designation – see chapter 5 of the Guidance for Community Transfer Bodies. You also need to decide the quorum, the number of members who have to be present for a general meeting to take decisions. This should be set at a level to make sure a reasonable number are required to attend, but not so many that it is difficult to achieve.Proxy Voting (Article 20)Allowing proxy voting for ordinary members is a legal requirement for all companies. A Proxy template form can be found at Schedule 2 at the end of the model.Board of Directors (article 23)All CLBG are run by a Board of Directors. If the company is a charity, the Directors may be known as Trustees.The number of Directors needed will depend on the size of the community and number of members of the organisation, and the range of your activities. A minimum of 5 is recommended; 3 is the absolute minimum if the organisation is to be a charity. Most organisations want a larger number to share the workload of the Board. You may want to include specific posts to be responsible for particular tasks or to represent certain parts of the community (eg Communications Officer, or Young People’s representative).Elected, Appointed and Co-Opted Directors (Articles 32 to 35)The model allows for three types of Directors:Elected Directors - Those who are elected from the Ordinary Members of the company.Appointed Directors - It is sometimes the case that the local Councillor, or a representative of the Community Council or other appropriate outside body, should have a close tie with the Company by having Board representation. These Directors are chosen by the nominating organisation, not the Company, and can be replaced by them.Co-opted Directors - Individuals can be co-opted onto the Board in order to ensure the required skills are available. Co-opted Directors need not be Ordinary Members. They must retire each year at the AGM but may be re-appointed as many times as wanted.You will need to consider how many of each type of Director to allow. You must ensure that Elected Directors are in the majority (i.e. the total number of Appointed and/or Co-opted Directors combined must be lower than the total number of Elected Directors). The quorum for Board meetings must also require Elected Directors to be in the majority.5.What to do once the AofA is draftedOnce you have drafted your Articles of Association, you will need to register the company with Companies House. Guidance is available from . Registration online is usually completed within 24 hours.If you want to become a charity, you will also need to register with OSCR - see . Please note that OSCR aim to assess applications within 90 days. Once you are registered, you will need to inform Companies House (and OSCR if applicable) if you make any changes to your AofA. Some changes to charities, including changing the name or purposes or winding up the company, require consent from OSCR before you make the change. ................
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