SANDY ADIRONDACK
Legal and governance training and consultancy
for the voluntary sector
OTHER CHAPTERS
I. THE ORGANISATION

Ch.2: Unincorporated organisations
Ch.3: Incorporated organisations
Ch.4: Charitable status, charity law & regulation
Ch.5: The organisation's objects
Ch.6: The organisation's name
Ch.7: The governing document
Ch.8: Registering as a charity
Ch.9: Branches, subsidiaries & group structures
Ch.10: Changing legal form
Ch.11: Collaborative working, partnerships and mergers
II. GOVERNANCE
Ch.12: Members of the organisation
Ch.13: Members of the governing body
Ch.14: Officers, committees & sub-committees
Ch.15: Duties & powers of the governing body
Ch.16: Restrictions on payments & benefits
Ch.17: The registered office & other premises
Ch.18: Communication & paperwork
Ch.19: Meetings, resolutions & decision making
Ch.20: Assets & agency
Ch.21: Contracts & contract law
Ch.22: Risk & liability
Ch.23: Insurance
Ch.24: Financial difficulties & winding up
III. EMPLOYEES, WORKERS, VOLUNTEERS & OTHER STAFF
Ch.25: Employees & other workers
Ch.26: Rights, duties & the contract of employment
Ch.27: Model contract of employment
Ch.28: Equal opportunities in employment
Ch.29: Taking on new employees
Ch.30: Pay & pensions
Ch.31: Working time, time off & leave
Ch.32: Rights of parents & carers
Ch.33: Disciplinary matters, grievances & whistleblowing
Ch.34: Termination of employment
Ch.35: Redundancy
Ch.36: Employer-employee relations
Ch.37: Employment claims & settlement
Ch.38: Self employed & other contractors
Ch.39: Volunteers
IV. SERVICES & ACTIVITIES
Ch.40: Health & safety
Ch.41: Safeguarding children & vulnerable adults
Ch.42: Equal opportunities: goods, services & facilities
Ch.43: Data protection & use of information
Ch.44: Intellectual property
Ch.45: Publications, publicity & the internet
Ch.46: Campaigning & political activities
Ch.47: Public events, entertainment & licensing
V. FUNDING & FUNDRAISING
Ch.48: Funding & fundraising: General rules
Ch.49: Fundraising activities
Ch.50: Tax-effective giving
Ch.51: Trading & social enterprise
Ch.52: Contracts & service agreements
VI. FINANCE
Ch.53: Financial procedures & security
Ch.54: Annual accounts, reports & returns
Ch.55: Auditors & independent examiners
Ch.56: Corporation tax, income tax & capital gains tax
Ch.57: Value added tax
Ch.58: Investment & reserves
Ch.59: Borrowing
VII. PROPERTY
Ch.60: Land ownership & tenure
Ch.61: Acquiring & disposing of property
Ch.62: Business leases
Ch.63: Property management & the environment
VIII. BACKGROUND TO THE LAW
Ch.64: How the law works
Ch.65: Dispute resolution & litigation
UPDATED INFORMATION FOR CHAPTER 1:
THE RUSSELL-COOKE
VOLUNTARY SECTOR LEGAL HANDBOOK

This page contains information that has appeared on Sandy Adirondack's legal update website for voluntary organisations at www.sandy-a.co.uk/legal.htm. For current updates, including potential changes that are in the pipeline, see the legal update website.

These websites for each chapter update the 3rd edition of The Russell-Cooke Voluntary Sector Legal Handbook by James Sinclair Taylor and the Charity Team at Russell-Cooke Solicitors, edited by Sandy Adirondack (Directory of Social Change, 2009). The websites are not intended as a comprehensive update and should not be treated as such.

To order a copy of The Russell-Cooke Voluntary Sector Legal Handbook, print out the order form at www.sandy-a.co.uk/bookserv.htm or send an email order by clicking . It costs £60 for voluntary organisations or £90 for others, plus 10% p&p.

To avoid spamming, an email address is not given on screen. If you can't see the word 'here' or have trouble sending an email by clicking on it, the address is bookservice at sandy-a.co.uk, with the spaces and 'at' replaced by the @ symbol.

The information here covers the law applicable to England and Wales. It may not apply in Northern Ireland and/or Scotland. These news items are not a full or definitive statement of the law and are not intended as a substitute for professional legal advice. No responsibility for loss occasioned as a result of any person acting or refraining from acting can be taken by the author.


Chapter 1
SETTING UP AN ORGANISATION


The items below formerly appeared on the legal update website for voluntary organisations and are archived here. The content may be out of date and links may not work. For current updates to the chapter, see the legal update website for voluntary organisations at www.sandy-a.co.uk/legalstatus.htm.


MODEL CONSTITUTION FOR VERY SMALL CHARITIES

Updated 4/4/10. This information updates s.1.2.2 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
The Charity Commission published in October 2009 a model constitution for very small charities which do not own a building or employ people, and whose income is (and is likely to remain, at least for a while) below the registration threshold of £5,000. The constitution was developed in association with nine umbrella or support organisations, and is available via tinyurl.com/ylhjcmb.

A charity which reaches £5,000 and must register with the Commission, or which wants to register below that level when voluntary registration of excepted charities becomes available, will have to adopt a more detailed governing document.


MODEL ARTICLES OF ASSOCIATION

Updated 26/3/2011. This information updates s.1.5.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
For companies formed on or after 1 October 2009, the articles of association are significantly different than they would have been before this date. New companies, whether charitable or non-charitable, should take specialist advice about whether to use one of the new model articles, and if so whether they need to be adapted to ensure they are appropriate for the company. If model articles are not used, legal advice is essential — it is not wise to try to draw up articles without such advice, as they may not comply with the Companies Act 2006 and, for charitable companies, the Charities Act 2006.

The Companies (Registration) Regulations 2008, containing the memorandum and statements that are needed for registration, are at www.opsi.gov.uk/si/si2008/uksi_20083014_en_1.

The Companies (Model Articles) Regulations 2008 are at www.opsi.gov.uk/si/si2008/uksi_20083229_en_1. These include model articles for a public company, private company limited by shares (intended for an owner-managed business), and private company limited by guarantee (intended for not-for-profit companies, including voluntary sector companies). These are available in Word format on the Companies House website, via tinyurl.com/ych9vby.

However, these company law model articles do not include anything that is in the Companies Act — so the rules on the notice period for general meetings, for example, or for written resolutions are not in the model articles. This means that company directors, the company secretary if there is one, and anyone who deals with company administration all have to know the Companies Act provisions or need to know where to find them in the Act or in a reference book. For most voluntary organisations it is likely to be better to use a model that includes the relevant statutory provisions.

In addition, the Companies Act model articles for a company limited by guarantee do not include provisions required under charity law or recommended by the Charity Commission. The Charity Commission issued in August 2010 a revised version of the new model articles for charitable companies (GD1), which it had originally issued in September 2009. These include provisions which the Commission says ensure compliance with both charity law and company law, in particular in relation to the provision of payments and benefits for directors/trustees and persons connected with them, and in relation to directors'/trustees' conflict of interest and conflict of loyalties. The model articles are on the Charity Commission website via tinyurl.com/6525t3a.

An alternative to the Charity Commission's model articles is the Charity Law Association's model, which was published on 5 March 2010 and is approved by the Charity Commission. It is available free of charge to CLA members, or for £15 in hard copy or £40 for hard copy plus a Microsoft Word version on disk, from the CLA. The CLA can be contacted via its website at www.charitylawassociation.org.uk.

As well as the Charity Commission's general guidance for registering new charities, including charitable companies, at tinyurl.com/yc2kvkh, there is also guidance on incorporating an existing unincorporated charity at tinyurl.com/y9gdu2w.

For charitable companies in Scotland, SCVO (the Scottish Council for Voluntary Organisations) has updated its model articles, accessible via tinyurl.com/yask8js.


COMPANY CONSTITUTION

Updated 4/4/10. This information is included in s.1.5.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
For new companies formed on or after 1 October 2009, the memorandum of association includes only the company name and a statement that the subscribers (the persons who sign the memorandum, and become the first company members) want to form a company. All operational provisions, including the objects, are now in the articles of association.

For existing companies, all of the provisions in the memorandum except the subscribers' signatures are now treated as if they were in the articles (Companies Act 2006 ss.8, 17-20, 28), so any reference in the Companies Act or related legislation to a company's articles includes, for companies formed before 1 October 2009, the memorandum as well.

Companies set up before 1 October 2009 do not need to re-format their memorandum and articles until they are amended or something else happens that requires a new version to be produced. Until then, anyone who asks for the company's constitution or articles must be given the articles with the memorandum (apart from the list of subscribers) attached to the end of the articles. When the articles are amended, or if the company decides to produce a combined version of the memorandum and articles, it may either produce a completely renumbered version, or may simply add the memorandum to the end of the articles.

Objects
All new companies are assumed to have unrestricted objects, unless the articles specifically restrict them. Charitable companies must have restricted objects, and some community interest companies may choose to do so (Companies Act 2006 s.31).

Amendment
Anything now in the articles can be amended by special resolution. But certain amendments by charitable companies — changes to the objects clause, use of property when the company is dissolved, or provision of benefits to directors or members of the company or persons connected with them — still require prior written consent from the Charity Commission (Companies Act 2006 s.21).

It may be sensible to undertake a constitutional review, partly to ensure the constitutional provisions still meet the needs of the organisation, but also to ensure they comply with the law and best practice, in particular in relation to the provision of payments and benefits to directors/trustees and connected persons, and in relation to conflict of interest and conflict of loyalties.

The Charity Commission's new model articles (GD1) can be a starting point for such a review. In addition, s.7.7 in The Russell-Cooke Voluntary Sector Legal Handbook includes a list of provisions that may need to be revised to comply with, or take advantage of, changes in company and charity law.

Since 1 October 2009 it has become an offence not to notify Companies House within 15 days of a special resolution amending the articles. The notification must include a copy of any Charity Commission consent required for the amendment.

Also since 1 October 2009 an amendment to the objects takes effect only when the notification has been accompanied by form CC04 and the change has been registered at Companies House, so it is essential to confirm it has been entered in the register before undertaking any activities within the new objects.

Entrenched provisions
For companies set up on or after 1 October 2009, the articles can include provision designating parts of the articles as entrenched provisions, which can only be amended if certain conditions are met or certain procedures are complied with. These conditions or procedures have to make it harder to change the articles than with a special resolution, but they cannot completely prohibit amendment. The entrenchment provisions could be used, for example, by a non-charitable not-for-profit company which wants to entrench its not-for-profit provisions so they cannot easily be changed (Companies Act 2006 ss.22-24). For companies formed before 1 October 2009, entrenched positions can be changed only by court order.

The constitution
The company constitution includes not only the articles (including the memorandum, for companies formed before 1 October 2009), but also certain resolutions and agreements that are specified in the Act as resolutions and agreements affecting a company's constitution. Such resolutions and agreements have to be sent to the registrar of companies in the same way that special resolutions have to be (Companies Act 2006 ss.29-30).

An example of a resolution affecting a company constitution would be a resolution allowing information required under the articles or company law to be provided to company members via a website or a resolution allowing the members of a company to authorise a situation in which a company director has a conflict of interest.

Every copy of the articles (including the memorandum, for companies formed before 1 October 2009) must now be accompanied by these resolutions and agreements affecting a company's constitution, and also by copies of enactments (legislation) affecting the articles, and any alterations made to the articles by a court or by another authority such as the Charity Commission. The accompanying materials do not have to be provided if those provisions have already been incorporated into the articles (Companies Act 2006 ss.32-36).


CHANGES TO COMPANY REGISTRATION

Updated 16/10/12. This information updates s.1.5.5 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
From 24 April 2012 a company can register with HMRC for corporation tax at the same time as incorporating as a company. This service is available only for a company which is not a charity or a member of a group. To use the service the company must know the date it will start operating, and must incorporate using the Business Link web registration service or approved third party software.

The option to register for corporation tax comes at the end of the web or software incorporation process, and involves six questions. After Companies House has accepted the incorporation it sends the tax information to HMRC, which will contact the new company to confirm its taxpayer reference and ask for any further information if required.

From 1 October 2012, the fee for registering a company using approved third party software goes down from £14 to £13. Registering on paper is generally £40, but £20 for community interest companies (CICs), companies delivering documentation in Welsh, or certain other registrations for which Companies House receives relatively few applications and for which there is currently no electronic service.

Same day company registration, which can only be done on paper, is £100.

A private company limited by shares which uses model articles can be registered online for £15 (reduced on 1 October 2012 from £18), using a Business Link/Companies House web registration service. This service is not available for CICs limited by shares, or for any company limited by guarantee.

Information about all aspects of company registration is available from Companies House via tinyurl.com/zbd9n.

GP1 Incorporation and names, updated in May 2012, can be accessed via tinyurl.com/26559of.


ADVENTURE ACTIVITIES LICENSING

Updated 7/10/13. This information updates s.1.9.3 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
Following consultation from June to September 2011, legislation was going to be developed to abolish the Adventure Activities Licensing Authority, as recommended by Lord Young in his review of health and safety law in 2010, with licensing to be replaced with a code of practice. This was originally expected to be in place by 31 March 2012, but following concerns raised in the consultation, the process was "paused" (HSE's word). Further information was expected in late 2012, but as of October 2013 nothing had happened.

Until the licensing regime is reviewed, providers of adventure activities must continue to comply with the current requirements. HSE has also consulted with the devolved administrations in Scotland and Wales, and both Scotland and Wales have said they wish to continue operating within the AALA statutory framework.

Up to date information about the HSE consultation is available at www.hse.gov.uk/aala/index.htm.


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Governance and legal training and consultancy
for the voluntary sector

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