Companies limited by guarantee (“CLGs”) are most often formed by charities or non-profit organisations requiring a corporate status, which will allow them to enjoy a limited liability status.

Once a CLG obtains its charity or Institutions of Public Character (“IPC”) status, it would be regulated by both the Accounting and Corporate Regulatory Authority (“ACRA”) and the Commissioner of Charities (“COC”).

To date, there are more than 2,000 registered charities registered with the COC.

Charities are increasingly venturing into revenue-generating business activities to generate additional income to support their charitable works or to provide goods or services to their members or clients.

Such business ventures are not new in the non-profit sector. What has changed in the past decade is the breadth of interest and increase in such initiatives.  Revenue-generating initiatives can be found in almost every non-profit domain, from social services to the environment, regardless of the size of an organisation.

This has given rise to growing concerns on the extent to which charities are getting involved in revenue-generating business activities. Such business activities should not undermine the charity’s focus and distract the charity from its exclusively charitable purpose. A charity should not engage or spend a significant amount of its resources on non-primary business activities.

The Board of Directors of a charity should be prudent and not expose their charitable assets to significant risk. When assessing the significance of risks, the board should consider the following factors:

Charitable

What we offer

As advisors to the Board and its members, CorpServe helps charities build a strong governance framework and ensure they remain compliant. 

Having in place a strong governance framework and  best practices are essential for the effective performance and operation of a charity. This also allows the Board to focus on the furtherance of the charity’s objects. 

We provide advisory and compliance support to the CLG in the following areas:

Registration as a charity or IPC    Planning and Setting up

For registration as a charity or IPC, we can provide insights into various legislative conditions, as well as other requirements which need to be fulfilled. These include naming the organisation, the purpose or objectives of the organisation, drafting the governing document, governing board requirements like the board composition, the board size, and the criteria and process for board renewal.


Management of a charity or IPC     Governance

In the management of a charity or IPC, we guide the Board in areas like committee structure, constitutional documents, as well as corporate governance review and board evaluation.

A charity that engages in revenue generating business activities should institute certain controls to segregate its business and charitable activities or it can consider setting up a separate entity to undertake the business activities. We can provide guidance to the Board in this aspect, from the sharing of best practices in various critical core functions from accounting, finance to compliance, or to the assessment on whether to set up a separate entity.


Work closely with the management     Compliance

We work closely with the management to develop a framework on the content, manner, and timeline for reporting to authorities like ACRA and COC, and the organisation’s key stakeholders.


 

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