A friendly society is usually an association formed for some beneficial aim, such as to provide life, endowment or sickness insurance to a specified limit, or to establish a working man’s club for social or recreational purposes, or to promote other benevolent activities, e.g. old people’s homes.
Friendly Societies can be split into 2 categories:
- Those registered under the Friendly Societies Act 1974, which are unincorporated; and
- Those registered under the Friendly Societies Act 1992, which are incorporated
Both should however be registered with the FCA.
Those registered under the 1974 act are unincorporated and therefore like other unincorporated charities the position of the trustees when financial difficulties arise can be precarious, however the relationship between the members and the society is governed by its rules.
Similar to an unincorporated charity the assets of the society are held by individual trustees on trust for the society and its members.
Establishing who is responsible for the debts of a Friendly Society will be by reviewing its rules, however it may include a trustee, treasurer, secretary, chief executive, member of the management committee, or a person appointed by the society to sue or be sued on its behalf.
Those registered under the 1992 act are incorporated and in times of financial difficulty have the option of winding up the society voluntarily by passing a special resolution.
A report must be done under CDDA.