There have been calls for the UK government to address the legal status of unincorporated associations for some time. In 2009, the Scottish Law Commission (“SLC”) published a report on unincorporated associations and there was general optimism that its proposals would lead to legislative reform. Whilst this never materialised, the issue is once again back on the government’s radar following the Scotland Office’s recent consultation on the SLC’s proposals.
So what has been proposed by the SLC?
In its 2009 report, the SLC highlighted that by not having separate legal personality, an unincorporated association cannot, amongst other things, enter into contracts with third parties or hold property in its own name.
To address these problems, the SLC proposed that unincorporated associations who meet certain criteria (including having at least 2 members and an approved constitution) should be given separate legal personality. Such associations would be referred to as “Scottish Associations with Legal Personality” or SALPs for short.
Under the current proposals, there would be no requirement for registration and an unincorporated association would automatically become a SALP if it met the necessary criteria. If an unincorporated association did not wish to have legal personality, it would be entitled to opt-out of being a SALP.
The effect of becoming a SALP
If implemented, the SLC’s proposals would substantially change the way which unincorporated associations operated in Scotland.
SALPs would be able to in their own name:-
- enter into contracts;
- own property (this would remove the need for assets to be held by trustees for the association although an SALP could continue to do this if so desired); and
- raise or defend legal proceedings (at present the law concerning whether an unincorporated association can defend legal proceedings is unclear).
So what happens next?
The consultation closed earlier this month and the Scottish Office will now review the responses with a view to producing a final report on the matter.