CTM40120 - Particular bodies: clubs: incorporated as companies: dividends not paid

A social or recreational club may be conducted by a company. Provided that all of the following conditions are met, such companies can be treated as members' clubs rather than as proprietary clubs in agreeing trading profits:

• the company does not pay dividends to shareholders,
• any share capital is all of one class, and every member (other than a person with restricted membership - CTM40130) is a shareholder,
• the intention is that the members and shareholders shall be an identical body, and
• substantial identity actually exists between members and shareholders.

The death, resignation or removal of former members may be ignored in considering whether substantial identity exists. Any inequality of shareholdings should be considered in doubtful cases but, in general, may be ignored as long as dividends are not paid.