A number of churches are thinking about the possibility of adopting the structure of a limited company, and some have already done so.
It’s still relatively unusual, however – so why do it, and what should churches bear in mind?
Why?
The main reason for becoming a company (‘incorporation’) is concern about the personal liability of trustees. The bottom line is that a trustee of a church that is not a company faces the risk of having to use his own assets to meet any shortfall in the church’s funds. In particular, as the volume and complexity of the laws affecting churches increase, there is a sense that the risk of litigation against churches may also be increasing. If the church were found liable for breaching these laws and could not pay (or was not insured for) the sums claimed, the trustees personally would be on the hook, even if they have acted properly. A court or the Charity Commission can relieve trustees of liability if they have acted honestly and reasonably, and ought to be excused — but they may have to get to court to find out.
