OTHER CHAPTERS
I. SETTING UP AN ORGANISATION
Ch.1: Trusts & unincorporated associations
Ch.2: Companies & other incorporated structures
Ch.3: Charitable status, charity law & regulation
Ch.4: The objects clause
Ch.5: The governing document
Ch.6: Setting up an organisation
Ch.7: Registering as a charity
Ch.8: The organisation's name
Ch.9: Branches, subsidiaries, partnerships & mergers
II. GOVERNANCE & MEMBERSHIP
Ch.10: Members of the organisation
Ch.11: Members of the governing body
Ch.12: Officers, committees & sub-committees
Ch.14: Restrictions on expenses, remuneration & benefits
III. RUNNING AN ORGANISATION
Ch.15: The registered office and other premises
Ch.16: Paperwork requirements
Ch.17: Meetings & decision making
Ch.18: Legal agreements
Ch.19: Organisational & personal liability
Ch.20: Insurance
Ch.21: Financial difficulties & winding up
IV. EMPLOYEES, WORKERS, VOLUNTEERS & OTHER STAFF
Ch.22: Employees and other workers
Ch.23: Rights, duties & the contract of employment
Ch.24: Model contract of employment
Ch.25: Equal opportunities in employment
Ch.26: Taking on new employees
Ch.27: Pay & pensions
Ch.28: Working time & leave
Ch.29: Disciplinary matters, grievances & whistleblowing
Ch.30: Termination of employment
Ch.31: Redundancy
Ch.32: Employer-employee relations
Ch.33: Employment claims & settlement
Ch.34: Self-employed workers & other contractors
Ch.35: Volunteers
V. SERVICES & ACTIVITIES
Ch.36: Health & safety
Ch.37: Equal opportunities in provision of goods & services
Ch.38: Confidentiality, privacy, data protection & freedom of information
Ch.39: Intellectual property
Ch.40: Publications & publicity
Ch.41: Campaigning & political activities
Ch.42: Public gatherings & entertainment
Ch.43: Food & drink
VI. FUNDING & FUNDRAISING
Ch.44: Funding & fundraising: General rules
Ch.45: Fundraising activities
Ch.46: Tax-effective giving
Ch.47: Trading companies
Ch.48: Contracts & service agreements
VII. FINANCE
Ch.49: Financial procedures & records
Ch.50: Annual accounts, reports & returns
Ch.51: Auditors
Ch.52: Corporation tax, income tax & capital gains tax
Ch.53: Value added tax
Ch.54: Investment & reserves
Ch.55: Borrowing
VIII. PROPERTY
Ch.56: Land ownership & tenure
Ch.57: Acquiring & disposing of property
Ch.58: Business leases
Ch.59: Property management & the environment
IX. BACKGROUND TO THE LAW
Ch.60: How the law works
Ch.61: Dispute resolution & litigation
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UPDATED INFORMATION FOR CHAPTER 13:
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 13
DUTIES AND POWERS OF THE GOVERNING BODY
GOVERNANCE GUIDANCE
GOVERNANCE GUIDANCE
Updated 26/7/06. This information updates s.13.3 and various other sections in The Voluntary Sector Legal Handbook 2nd edition.
When I started doing management committee/board training 20+ years ago, there was virtually no information available for MC members/trustees about their duties. Now there is no shortage of good information (amidst a lot of dross, I am sorry to say). For one of the best introductions, Duties of Charity Trustees from solicitors Bates, Wells & Braithwaite, click here (the address is too long to give on screen) or ring them on 020 7551 7777.
The Essential Trustee is the new version of CC3, formerly Responsibilities of charity trustees. It is available free from the Commission on 0845 300 0218, or can be downloaded at www.charitycommission.gov.uk/publications/cc3.asp.
For the Charity Commission's How to be an effective charity trustee click here. This provides links to their guidance on various aspects of charity law that trustees need to know about. Perhaps more useful is their Questions to consider at key stages in the life of a charity (click here). This sets out the questions trustees and staff need to be asking as charities grow and develop, and provides links to relevant Commission guidance. The briefing covers starting up, keeping pace with change, funding, trading, employment, property, and winding up. Although some of the questions are specific to charities, most are relevant to non-charities as well.
The National Hub of Expertise in Governance's Good Governance: A code for the voluntary and community sector, published in July 2005, provides a comprehensive overview of the key principles of good governance and examples of what the principles mean in practice. A four-page summary includes only the principles. Both can be downloaded at www.governancehub.org.uk, or are available from the Governance Hub, NCVO, 8 All Saints St, London N1 9RL, 020 7713 6161. In June 2006 an updated summary was issued in a plastic-covered pocket version, very cute although some of the print is too light. This is not on the website but can be obtained from the Hub on 020 7520 2514.
The Institute of Chartered Secretaries and Administrators (ICSA) has free guidance notes intended primarily for charitable companies limited by guarantee but also in many cases applicable to unincorporated charities. The notes include model role descriptions for trustees, chair, secretary and treasurer; model letters to be sent to new trustees; and a model trustee code of conduct, conflict of interest policy, declaration of interest form and register of interests. The notes are at www.icsa.org.uk/index.php?option=com_content&task=view&id=61.
TRUSTEE CONFLICT OF INTEREST AND CONFLICT OF LOYALTIES
Added 26/10/04. This information updates ss.13.3.4 and 13.3.6 in The Voluntary Sector Legal Handbook 2nd edition.
The Charity Commission's Guide to conflict of interest for charity trustees, published in March 2004, looks at how charities and trustees should deal with situations where there is direct financial gain or benefit to a trustee, indirect financial gain or benefit to a trustee (for example, through payment to a trustee's spouse or business partner), non-financial gain (such as provision of the charity's service to a trustee or their partner), or conflict of loyalties (where a trustee is "wearing two hats"--this is sometimes also called duality of interest). The guide contains a four-point checklist:
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If you have identified that a conflict of interest exists, are you, or is the trustee concerned, receiving a material benefit as a result of that conflict of interest? If no, have you, or has the trustee, declared the interest in the register of interests and not taken part in any discussions/voting on that issue? If yes, has the benefit been authorised?
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Does the governing document contain authority for the benefit arising from the conflict of interest? If yes, have the charity’s trustees complied strictly with the terms of the authority contained in the governing document? If no, have the charity’s trustees applied to the Commission for authority?
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Once the charity’s trustees have the necessary authority, are there procedures in place to manage the conflict of interest effectively? If no, have the charity’s trustees ensured that procedures are put in place for managing conflicts of interest?
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Have the charity’s trustees ensured that any benefit received by the trustees is disclosed in the annual report and accounts?
These points are explained in the guide, which is at www.charitycommission.gov.uk/supportingcharities/conflicts.asp.
SENIOR STAFF ACTING AS IF THEY WERE TRUSTEES
Added 21/9/03; links updated 22/12/05. This information updates ss.13.3 and 14.3.7.1 in The Voluntary Sector Legal Handbook 2nd edition.
A couple of Charity Commission inquiries illustrate the importance of the trustees taking responsibility for overall control of their charity, and not delegating too much decision-making power to staff. At the King's Church (Ramsgate) Trust the Commission found that an employee exercised so much control over the Trust's administration that trustees were under the impression they were supposed to report to him. At the Alzheimer's Foundation for Research into Alzheimer's Disease, the Commission found that a senior employee had so much control over the day-to-day operation of the charity that he appeared to have taken on the responsibilities of a trustee. The trustees were minimally involved, with at least one who had never been invited to any meetings, never spoke to any other trustees and never received any financial information about the charity. The Commission's report says, "Having concluded that the senior employee was acting as if he were a trustee while receiving a salary from the charity, the Commission considered that the charity did not have express legal authority to do this and would not sanction the payment of his salary."
The Alzheimer's Foundation investigation is no longer on the Charity Commission website.
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WHAT TRUSTEES SHOULDN'T DELEGATE
Added 24/3/08. This information updates s.13.5 in The Voluntary Sector Legal Handbook 2nd edition.
The Institute of Chartered Secretaries and Administrators published on 14 March 2008 a guidance note on matters reserved for the board of trustees, which can be accessed via tinyurl.com/32m2ku. This lists issues which must or should be dealt with by the board, rather than being delegated to senior management or other staff. It is based on charity and company law, the Good Governance code for the voluntary and community sector and good practice.
COMPANIES ACT 2006 CHANGES
For the statutory duties of company directors in the Companies Act 2006, see www.sandy-a.co.uk/managing.htm#directorduties.
Companies Act 2006
COMPANY DIRECTORS: CONNECTED PERSONS
Updated 18/11/07. This information is included in s.15.2.5 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
From 1 October 2007 the definition of "connected person" is extended to include the director's parents, children or step-children of the director who are over 18 years old (those under 18 are already included under section 346 of the 1985 Act), persons with whom the director lives as partner in an enduring family relationship, and children or step-children of the director's unmarried partner if they live with the director and are under 18 years of age (Companies Act 2006 ss.252-253).
Companies Act 2006
DERIVATIVE CLAIMS
Updated 18/11/07. This information is included in s.15.3.11 in The Russell-Cooke Voluntary Sector Legal Handbook (VSLH3).
From 1 October 2007 a new provision for derivative claims allows a company member to bring a claim, on behalf of the company, against one or more directors for failure to comply with their statutory duties as directors. Before such a claim can proceed, the member must obtain consent from the court (Companies Act ss.260-264).
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