Network consortium agreements
One of the biggest issues facing collaborative business networks is what legal form they should take. Too loose and they lack accountability and robustness but too tight and they become hamstrung and inflexible. Enter the Unincorporated Association and the Consortium Agreement.
According to David McIlwaine of the international law firm Pinsent Masons there is now a new legal form known as an “Unincorporated Association” (UA) which may be ideal for many networks.
A UA is very flexible and easy to setup: all that needs to happen is that the members commit to a ‘Consortium Agreement’ which typically covers the following:
- How to become a member
- Membership Fees
- Meetings and Voting Rights
- Role of Management Committee
- Responsibilities for Business Development
- Responsibilities for managing finance
- Confidentiality and IPR
- Liability of Members (and brokers)
- Exit of Members
A UA does however have unlimited liability: if this is a problem for the network they should consider a “Company Limited by Guarantee”(CLG).
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