One thing that actors have in common with commercial lawyers is a recognition of the IMPORTANCE OF STRUCTURE.

Transcription

1 ESTABLISHING PERFORMERS' COLLECTIVES One thing that actors have in common with commercial lawyers is a recognition of the IMPORTANCE OF STRUCTURE. The following are some of the issues that should be determined when setting up a performers' collective. Unless these matters are settled at an early stage the group will be unlikely to survive the difficulties it will later encounter. Moreover, it is the answer to these questions that will influence the group's choice of structure. 1. Purpose Why is the group forming? What is it that the members wish to do? What is the objective? i) To present issue based theatre to particular community groups. To introduce school children to the theatre? This must be unanimously agreed at the outset, for it is essential to have a common purpose. 2. What will be performed? This will probably be the easiest thing to agree on Shakespeare? A piece written by the group? A piece written with members of the community? Stand up comedy? Living n playwrights? 3. How will the piece be performed? This also must be agreed upon. 4. Where will the performance take place?

2 2. 5. How many performances will there be? (d) 1 performance? 1 season? 1 financial year? Indefinite? All of these are preliminary but vital issues. They all inter-connect. They all must be settled before proceeding.

3 3. 6. Budgeting Preparing detailed budgets is essential. Where possible check out hard figures get quotes. Where estimates must be made be pessimistic. Productions nearly always cost more and return less than expected. Don't allow the dream to distort the financial projections. 7. Raising the money The most important piece of advice in the theatre is use other people's money, but if you can't, never mortgage the house. To the lawyers present never forget to make a file note of your financial advice to clients. When the show loses money it is easy to say that you were poorly advised... Particularly if it's the only way of saving the house. If the group intends relying on money from funding authorities communicate with them. Talk to the project officers. Involve them. Enthuse them (where possible). Find out what the funding body will require. Find out early so that you can either take the requirements into account or choose not to rely on them at all. Remember that generally speaking the funding bodies insist that the group have a structure, a constitution and that it be non-profit distributing. There are some exceptions but it is dangerous to assume that you will be an exception. ASK. Raising money may also involve seeking sponsors and donations (both in kind and in cash). Consider this coldly. Everybody is hunting the corporate dollar these days. Given the inadequacy of the amounts allocated to the Arts by both State and Federal Governments corporate sponsorship is essential for the continued existence of most performing companies. Sponsorship is not easy to get and it can't be relied on.

4 4. 8. Decision making How will the creative decisions be made? i) by a producer (if so how will the producer be chosen)? i by the group in discussion? how? Who will make the financial decisions? Who will make the administrative decisions? Oden von Horvath to Brecht: Definition of a theatre collective- When a group of actors and technicians, after frank and exhaustive discussion decide to do exactly what Brecht suggests. 9. Allocation of income How are members going to be paid? i) During preproduction? during the season? (d) Is it based on salary? Is it based on a percentage of nett profits (and if so what does nett mean?). Is it a combination of both? Actors Equity have taken a forward thinking approach to collectives and do not insist that the members pay themselves award rates - and will assist. 10. Liability for losses Unless the group incorporates in one way or another - each member of the collective will probably be personally liable for any financial losses or for any damages that may flow from the collective's work.

5 5. At the outset of a project we all feel lucky. If the project is small scale, small outlay, small potential loss, the group may decide to take the risk: to take on personal liabilities. But as the project increases in scale or the risk exposure increases serious thought must be given to adopting legal structures which will minimise the personal risk. 11. Insurances What insurances should be taken on? These will protect the members from many of the potential liabilities. * Public liability is essential. * Personal injury & sickness of cast? Maybe. * No show insurance? Maybe. * Weather? Maybe. Think it through - because it'll have to be budgeted. 12. What records will have to be kept and by whom? (d) If the funding bodies put a cent into the show, they will want a dollar of reports. Most commercial sponsors too are pleased to receive financial statements as well as artistic reports at the end of the show. Certainly if the profits are to be shared between the members it is essential to maintain good records so that everyone is content with their lot. Finally there is the Tax Office If the records are not comprehensive the Tax Office will not be pleased. An unhappy Tax Office always results in unhappy tax payers. 13. Rights in group material

6 6. If the group intends performing material written by the members, either alone or in collaboration with other members of the group or community, it is important to decide who will own the rights. For example, if an incorporated structure is established which employs those who create the material, the copyright will be owned by the employer unless the employer and the employees enter a contract to the contrary. This problem has been faced by many Theatre In Education groups. They have usually adopted the approach of dividing up any royalties between the talent (the employees) and the administrative structure (the employer). 14. Choice of structures Now that all of that has been decided - you are in a position to determine what legal structure best suits your needs. The structure must complement the objectives of the group and provide for needs of the members. As might be expected, some forms are better than others. The first question that must be asked is: "What will happen to any profits made by the group?" That is, will they be distributed to the members or will they be ploughed back into the objectives of the group? If it is intended that any profits be distributed to the members the organisation will have to consider forming a "company limited by shares" (in which the profits are distributed according to the shareholding) or a "partnership". Persons forming such groups should seek expert professional help. Delay can be very expensive. Structure should be considered with care; some suit certain purpose better than others and those responsible for establishing the group must seriously consider whether they are making the best use of the available types of legal structure. Remember that this area of the law is fairly flexible and it is usually possible to fit the legal structure around the group's needs rather than moulding the group around the structure. The structure should be supportive, not dominant.

7 Partnerships Most collectives are short-term projects most are partnerships because the risks are small in comparison to the time and hassles of forming a long-term, incorporated structure. Remember however, that each partner is liable for the actions of the other partners. Thus, it is always a sensible idea to get legal advice so that this the most exposed of relationships can be put down in a simple agreement a partnership agreement. 16. Non-profit groups "Non-profit" does not mean that the group doesn't make a profit. It means that it does not divide the profits among its members. All profits are spent on the objects of the organisation. "Non-profit" means non-profit distributing, not non-profit making. It should be noted that most funding bodies insist that the organisations that they fund be non-profit distributing. If government support is going to be sought, members of the steering committee should approach such funding bodies at an early stage so that their requirements can be taken into account. 17. Types of non-profit structures Non-profit performing groups may be of four types: (d) an unincorporated association; an incorporated association; a co-operative society; or a company limited by guarantee; or The first of these is by far the most common, yet it offers few advantages offered by the other more formal structures. of the Unincorporated Non-Profit Associations

8 8. Any group of people who band together for specific purpose, but who do not incorporate under the Companies Code, the Incorporated Associations Acts or the Co-operative Acts, may be described as an unincorporated association. Formation is free and without formality and thereafter the association runs itself according to its own rules and settles internal disputes in its own way. It sounds ideally simple and effective, but unincorporated bodies would usually be better served by a more considered, more certain, formal structure. * Advantages i) Unincorporated associations are easy to set up. No formalities are required. i iv) The costs of formation are minimal. The ongoing administration is not regulated by government agencies and this permits a flexibility much cherished by some groups. Because of the absence of governmental supervision the organisation can keep its dealings private. Its objects, minutes and accounts are not available for public scrutiny. * Disadvantages i) Unlike incorporated bodies, an unincorporated association has no legal identity distinct from its members. It is merely a collection of individuals. This has important consequences: i. It cannot sue or be sued in its own name. Its members (usually the committee) must accept such responsibilities. For example, they will be personally liable for the debts of the group; ii. The group cannot enter into contracts in its own name. As a consequence, if it is decided to lease or buy premises or goods, representatives of the group will have the accept this onerous financial responsibility.

9 9. iii, iv. Similarly the unincorporated group can't actually own property or goods in its own name. Ownership must be vested in trustees and this imposes extremely high personal liabilities and duties on those persons. Problems may arise if the representative signatory of a long-term contract leaves the organisation before the expiration of the term of that contract. This makes it very difficult for the association to enforce the agreement. v. The members of an unincorporated organisation may be personally liable for the breach of any contract entered on behalf of the group and similarly will be personally liable if the organisation commits a tort (such as an act of negligence) that causes someone loss. Because of the difficulty caused by fluctuating memberships it is often difficult to sue all members of a group, so, plaintiffs tend to sue the committee members. This is an enormous personal liability for those committee members and is one that is all too rarely considered. i The unincorporated association does not have limited liability. Thus, even if the association agrees to indemnify its members, if the amount owed is greater than the assets of the organisation, recourse may still be had against the members. The financial sky is the limit. Funding bodies generally do not give grants to unincorporated groups. * Forming an unincorporated association A structure of this type is easy to set up. If, after considering its disadvantages, it is decided to form one, the most important consideration is to draw up a constitution which reflects the aims of the organisation and provides an administrative structure by which these aims can be achieved. However, if the association

10 10. intends employing people, hiring or buying premises, trading, or doing other things that might expose the members to financial liabilities, careful thought should be given to incorporation. The Incorporated Association In all jurisdictions special legislation has been enacted to make the incorporation of non-profit organisations with community, cultural or sporting purposes, a fairly simple matter * Advantages i) This structure is designed to provide protection for community groups. It provides all the benefits of a company limited by guarantee, without involving the association in the same initial and ongoing expenses and formalities. i It is easy to form. No lawyers are necessary. Brochures are available which explain how to go about it and the government even provides free standard constitutions. These constitutions may be altered to fit most requirements. When the association is incorporated, the law treats it as a "legal person", distinct from its members. Thus, an incorporated association can own property in its own name, it can hire and fire, sue and be sued. This relieves the members from personal liability should anything go wrong with the association. Their liability is limited. * Disadvantages An association cannot be incorporated if its object is to provide "pecuniary gains" for its members. The term "pecuniary gain" is not clearly defined in the legislation but it certainly amounts to a demand that the organisation be non-profit distributing. There are also restrictions on "trading" in most jurisdictions. The strictness of this limitation varies from State to State so careful attention must be paid to ensure that the group's objectives are compatible with the restrictions.

11 11. Often these difficulties may be quite simply overcome. For example, if a group wishes to set up simply to present theatrical performances, most States would not permit it to form an incorporated association because its primary purpose would be to "trade". However, it would not be at all difficult to incorporate the group if its object was "to introduce to the performing arts, those sections of the community who do not have access to theatre because of their economic, educational or geographic circumstances". Thus, the organisation may provide educational or other resources rather than be principally concerned with "trading". The Co-Operative Although all States have legislation which permits the forming of cooperatives, every jurisdiction provides more attractive alternatives. The co-operative was developed in the 19th century for the specific purpose of regulating "friendly societies" (workers' mutual insurance funds), and later, to permit the incorporation of both consumers' and producers' co-operative societies. Although the structure has since been further stretched to permit their usage by groups of more general community benefit, "the aims and activities of co-operative societies do not coincide with those community organisations: they merely overlap. It follows that a legal structure established with the former type of organisation in mind and only incidentally made available to the latter is far from perfect as far as the latter is concerned" * Advantages The formation of a co-operative society confers the benefits of incorporation without the expense or formalities of forming a company. No stamp duty is payable, no fees are payable upon registration, and no solicitor need be retained. The Registrar of Co-operative Societies will assist interested persons in completing the formalities and drafting the co-operatives' rules. Best of all, the name has that nostalgic ring that we associate with flowers and the '60s. * Disadvantages Because of the historical roots of the co-operative, the role accorded to the Registrar is one of irritating over-supervision. Before approving the

12 12. registration the Registrar must be of the opinion that the co-operative would be of benefit to the community; that its rules are in accordance with the Act; that the proposed function of the group could not be fulfilled by an already existing society; that the co-operative can achieve its aims; that it is a bona fide co-operative; that it will provide fairly for the members' needs. Further, the society must have an open membership, have democratic voting procedures, and no member may contribute more that 20 per cent of the share capital. After registration, the Registrar plays an active supervisory role in the co-operative and will even make inspections of the co-operative from time to time. * Conclusions There are very few successful long-term co-operatives working in the cultural arena. Those that are successful are so because of the personal strengths and skills of key members. Their structures provide little inherent support. Non-profit organisations seeking the benefits of incorporation would do well to ignore this mode and either form an incorporated association or a company limited by guarantee. Its cheapness is attractive and it may be ideologically alluring, but in general the co-operative is a cumbersome way of providing services to members. (d) The Company Limited by Guarantee Although there are several different types of company, the one most suited to nonprofit organisations is that which is limited by guarantee. Unlike the most common form of company, (one which is limited by shares), the liability of its members is limited to the amount that each promises to contribute to the assets of the Comboyne when it is wound up. The amount of this guarantee is stated in the memorandum of incorporation (usually $4 to $100). * Advantages i) The company is a separate legal entity from its members. Therefore it can sue and be sued, enter contracts in its own name, own property in its own name, and is responsible for its own debts. The potential liability of its members is limited to the amount stated in the memorandum.

13 13. i iv) Although the above advantages can also be gained by incorporation under the Co-operation Act, the company limited by guarantee suffers less interference from the registrar in its affairs. It is less restricted in when, how and what it may do. Its advantage over the incorporated association is that it can "trade" without difficulty. It is quite easy for the members of the company to change its articles and memorandum of association. v) The members may apply to have the "Limited" removed from the name. Note however, doing this imposes many restrictions on the company (in particular, no member of the board may receive any payment from the organisation and thus, no performers can be board members). Thus, many groups choose not to apply for this licence. After all, its advantage is mainly aesthetic. vi) Registration is virtually automatic, once the proper papers are filed and the fees paid. * Disadvantages i) The company is quite expensive to set up. If the organisation has to pay for the preparation of the documents it will cost between $1,000 - $1400. The company must keep separate books for directors' minutes and members' minutes. i iv) It must also maintain a register of directors, secretaries, and (if relevant) managers. Proper books of account and records must be kept. v) An annual return must be lodged. As this must be signed by an auditor, this also involves an annual expense of at least $300 for auditor's fees. vi) v Registration is not fast. It takes up to six months. Forming a company should not be attempted without legal advice.