UPDATED INFORMATION FOR CHAPTER 5:
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 2nd edition of The Voluntary Sector Legal Handbook by Sandy Adirondack and James Sinclair Taylor (Directory of Social Change, 2001). The websites are not intended as a comprehensive update and should not be treated as such.
To order a copy of The 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 £50 for voluntary organisations or £80 for others, plus 10% p&p. We expect the third edition to be published in 2007.
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 5
THE GOVERNING DOCUMENT
THE CHARITIES ACT 2006
Updated 8/12/06.
The Office of the Third Sector announced on 5 December 2006 the proposed timetable for implementation of the Charities Act 2006. The Act, which received royal assent on 8 November 2006, will come into effect in stages over the next two years, with the first commencement order expected in early 2007, the second in the second half of 2007, and the third in early 2008.
The Act (in pdf format) is at www.opsi.gov.uk/acts/acts2006/ukpga_20060050_en.pdf, and in html format at www.opsi.gov.uk/acts/acts2006/20060050.htm.
Explanatory notes to the Act are at www.opsi.gov.uk/acts/en2006/2006en50.htm.
The Charity Commission's guide to the main provisions is at www.charitycommission.gov.uk/spr/ca2006prov.asp.
For the Office of the Third Sector's implementation timetable click here (the address is too long to show on screen).
The summary below lists some of the changes that may affect small and medium charities, with the expected implementation dates. It is not full summary of the Act and does not cover all provisions.
Charities Act 2006
AMENDING A CHARITABLE COMPANY'S MEMORANDUM AND ARTICES
Updated 22/3/08. This information updates s.5.5.2 in The Voluntary Sector Legal Handbook 2nd edition.
From 18 March 2008 the Charities Act 1993 requirement to obtain prior Charity Commission consent for any change in the memorandum or articles of association "directing or restricting the manner in which the property of the company may be used or applied" no longer applies. Consent is required only for changes to the objects clause, changes relating to use of property when the company is dissolved, or changes relating to the provision of benefit to directors, members of the company or persons connected with them.
This provision is in s.31 of the Charities Act 2006, which amends s.64 of the Charities Act 1993. For links to the Acts and guidance, see The Charities Act 2006.
Explanatory notes to the Act are at www.opsi.gov.uk/acts/en2006/2006en50.htm.
Charities Act 2006
AMENDING AN UNINCORPORATED CHARITY'S GOVERNING DOCUMENT
Updated 22/3/08. This information updates s.5.5.5 in The Voluntary Sector Legal Handbook 2nd edition.
In an unincorporated charity of any size the constitutional provisions relating to the powers exercisable by the trustees in administering the charity, and provisions regulating the charity's administrative procedures, can from 27 February 2007 be amended, even if there is no amendment power in the governing document. If the charity is a membership body (with members distinct from the charity trustees) the amendment must be approved by a general meeting of the members. If the charity is not a membership body, the trustees can make the amendment.
Where the governing document contains amendment provisions, they must be followed.
From 18 March 2008, the trustees of an unincorporated charity with annual income no more than £10,000 and which does not hold land designated for specific purposes, may amend by a two-thirds majority the charity's purposes (objects). The new purposes must be charitable and must consist of or include purposes similar to the ones that are being replaced, and the trustees must be satisfied it is in the interests of the charity for the purposes to be changed. The trustees must send a copy of the resolution and their reasons for passing it to the Charity Commission.
These provisions are in ss.41-42 of the Charities Act 2006, which add new s.74C & s.74D to the Charities Act 1993. For links to the Acts and guidance, see The Charities Act 2006.
COMPANIES ACT 2006 CHANGES
For changes relating to company constitutions in the Companies Act 2006, see www.sandy-a.co.uk/vslh/02incorp.htm.
CHANGES IN INDUSTRIAL AND PROVIDENT SOCIETY LAW
Updated 26/10/05. This information updates ss.2.4, 4.7.2, 5.4.18 and 16.1.2 in The Voluntary Sector Legal Handbook 2nd edition.
The Co-operatives and Community Benefit Societies Act 2003 has changed industrial and provident society law to bring it more into line with company law. From 1 April 2004 the very strict I&PS rules voiding (invalidating) all acts outside the I&PS's or committee's powers were eased. From the same date, where the name of a charitable I&PS does not include the word "charity", "charitable" or the Welsh equivalents, the fact that it is charitable must be stated on business letters, notices, advertisements, cheques, orders, invoices, receipts etc. From 20 October 2003 I&PSs no longer need to have a seal.
When the appropriate regulations are agreed--expected to take effect from 1 December 2005--it will be possible for non-charitable community benefit societies to "lock in" assets so they cannot be distributed to members, but must always be used for the benefit of the community. (Charitable community benefit societies are already subject to an asset lock under charity law, as are community interest companies.)
The Act is at www.opsi.gov.uk/acts/acts2003/20030015.htm, and explanatory notes are at www.opsi.gov.uk/acts/en2003/2003en15.htm.
AMENDING THE GOVERNING DOCUMENT OF SMALL CHARITIES
Updated 29/12/03. This paragraph adds to s.5.5 in The Voluntary Sector Legal Handbook 2nd edition.
The Charity Commission's small charity pages now include guidance for unincorporated charities with annual income under £5,000 which wish to amend their constitution or trust deed, transfer property or spend capital, and declarations for unincorporated charities under £10,000 which have amended their governing document or wound up. The links are at www.charitycommission.gov.uk/supportingcharities/sculist.asp..
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