Country Idealist Profiles

Ireland – Legal Forms of The Non-Profit Sector

Posted in Ireland, Ireland - The Third Sector by hynesbrid on August 14, 2008

Unlike other countries there is no one legal form in Ireland that is specific to the nonprofit status of an organisation.  The legal and regulatory basis of the Non-Profit Sector is defined by three main strutures:

  • Companies limited by guarantee with no share capital:
    A group can form a company in accordance with the rules laid down by the Companies Acts and thus acquire a legal status seperate from that of its members. The provisions of the Companies Acts provide for a company limited by shares or a company limited by guarantee.  Community and Voluntary groups adopt the latter. There are no shares and the personal liability of members is limited to a nominal account.  This is the most common form of incorporation used by the Community and Voluntary Sector organisations.
  • Industrial and provident societies
    In order to be registered as an industrial and Provident Society (IPS) a society must be formed ´for carrying on any industrial, businesses or trades´.  While this covers non profit making groups or service providers it would appear to excludes campaigning bodies.  The standard rules of an IPS allow profits to be distributed among its membership, although this is not always so.
  • Incorporation under the Charities Act 1973 (although not many nonprofit organisations have taken this option).  A body which is a charity can apply to the Commissioners of Charitable Donations and bequests to be incorporated i.e. granted seperate legal status.
    Non profit organisations can also be trusts or friendly societies but these do not grant a seperate legal status to the organisation.

The advantages of having a legal status are:

  • The individual members of the group are not generally responsible for the groups activities, including any debts that may arise.
  • The group can own property, enter into contracts and employ people in its own name.
  • The group can bring and defend court proceedings in its own name.
  • The group can apply for charitable recognition.

The Government in its White Paper strongly recommends that Community and Voluntary organisations should adopt an appropriate legal framework; in most cases this will involve registering as companies limited by guarantee.  The Government accepts the need for a more modern legal framework of law governing the sector.  The White Paper and its recommendations are a first step towards addressing this matter.,2200,en.doc



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