Charities Bill (HC Bill 257)

286 Effect of provisions relating to vesting or transfer of property

No vesting or transfer of any property in pursuance of any provision of this
Part operates as a breach of a covenant or condition against alienation or gives
rise to a forfeiture.

5Part 14 Special trusts

287 Meaning of “special trust”

(1) In this Act, “special trust” means property which—

(a) is held and administered by or on behalf of a charity for any special
10purposes of the charity, and

(b) is so held and administered on separate trusts relating only to that
property.

(2) But a special trust does not, by itself, constitute a charity for the purposes of
Part 8 (charity accounts, reports and returns).

288 15Power to spend capital subject to special trusts: general

(1) This section applies to any available endowment fund of a special trust which,
as the result of a direction under section 12(1), is to be treated as a separate
charity (“the relevant charity”) for the purposes of this section and sections 289
to 292.

(2) 20But this section does not apply to such a fund if sections 289 to 291 (power to
spend capital subject to special trusts: larger fund) apply in relation to it.

(3) If the condition in subsection (4) is met in relation to the relevant charity, the
charity trustees may resolve for the purposes of this section that the fund, or a
portion of it, ought to be freed from the restrictions with respect to expenditure
25of capital that apply to it.

(4) The condition is that the charity trustees are satisfied that the purposes set out
in the trusts to which the fund is subject could be carried out more effectively
if the capital of the fund, or the relevant portion of the capital, could be
expended as well as income accruing to it, rather than just such income.

(5) 30Once the charity trustees have passed a resolution under subsection (3), the
fund or portion may, by virtue of this section, be expended in carrying out the
purposes set out in the trusts to which the fund is subject without regard to the
restrictions mentioned in that subsection.

(6) The fund or portion may be so expended as from such date as is specified for
35this purpose in the resolution.

(7) In this section, “available endowment fund” has the same meaning as in section
281 (power of unincorporated charities to spend capital: general).

289 Resolution to spend capital subject to special trusts: larger fund

(1) This section applies to a fund within section 288(1) if—

(a) 40the capital of the fund consists entirely of property given—

(i) by a particular individual,

(ii) by a particular institution (by way of grant or otherwise), or

(iii) by two or more individuals or institutions in pursuit of a
common purpose, and

(b) the market value of the fund exceeds £10,000.

(2) 5If the condition in subsection (3) is met in relation to the relevant charity, the
charity trustees may resolve for the purposes of this section that the fund, or a
portion of it, ought to be freed from the restrictions with respect to expenditure
of capital that apply to it.

(3) The condition is that the charity trustees are satisfied that the purposes set out
10in the trusts to which the fund is subject could be carried out more effectively
if the capital of the fund, or the relevant portion of the capital, could be
expended as well as income accruing to it, rather than just such income.

(4) The charity trustees—

(a) must send a copy of any resolution under subsection (2) to the
15Commission, together with a statement of their reasons for passing it,
and

(b) may not implement the resolution except in accordance with sections
290 and 291.

(5) In this section, “market value” has the same meaning as in section 282
20(resolution to spend larger fund for given for particular purpose).

(6) In subsection (1), the reference to the giving of property by an individual
includes the individual’s giving it by will.

290 Notice of, and information about, s.289 resolution

(1) Having received the copy of the resolution under section 289(4), the
25Commission may—

(a) direct the charity trustees to give public notice of the resolution in such
manner as is specified in the direction, and

(b) if it gives such a direction, must take into account any representations
made to it—

(i) 30by persons appearing to it to be interested in the relevant
charity, and

(ii) within the period of 28 days beginning with the date when
public notice of the resolution is given by the charity trustees.

(2) The Commission may also direct the charity trustees to provide the
35Commission with additional information or explanations relating to—

(a) the circumstances in and by reference to which they have decided to act
under section 289, or

(b) their compliance with any obligation imposed on them by or under
section 289 or this section in connection with the resolution.

291 40When and how s.289 resolution takes effect

(1) When considering whether to concur with the resolution under section 289(2),
the Commission must take into account—

(a) any evidence available to it as to the wishes of the donor or donors
mentioned in section 289(1)(a), and

(b) any changes in the circumstances relating to the relevant charity since
the making of the gift or gifts (including, in particular, its financial
position, the needs of its beneficiaries, and the social, economic and
legal environment in which it operates).

(2) 5The Commission must not concur with the resolution unless it is satisfied—

(a) that its implementation would accord with the spirit of the gift or gifts
mentioned in section 289(1)(a) (even though it would be inconsistent
with the restrictions mentioned in section 289(2)), and

(b) that the charity trustees have complied with the obligations imposed on
10them by or under section 289 or 290 in connection with the resolution.

(3) Before the end of the period of 3 months beginning with the relevant date, the
Commission must notify the charity trustees in writing—

(a) that the Commission concurs with the resolution, or

(b) that it does not concur with it.

(4) 15In subsection (3) “the relevant date” means—

(a) if the Commission directs the charity trustees under section 290(1) to
give public notice of the resolution, the date when that notice is given,
and

(b) otherwise, the date on which the Commission receives the copy of the
20resolution in accordance with section 289(4).

(5) Where—

(a) the charity trustees are notified by the Commission that it concurs with
the resolution, or

(b) the period of 3 months mentioned in subsection (3) has elapsed without
25the Commission notifying them that it does not concur with the
resolution,

the fund or portion may, by virtue of this section, be expended in carrying out
the purposes set out in the trusts to which the fund is subject without regard to
the restrictions mentioned in section 289(2).

(6) 30The fund or portion may be so expended as from such date as is specified for
this purpose in the resolution.

292 Power to alter sum specified in s.289

The Minister may by order amend section 289(1) (market value of fund for
purposes of resolution to spend capital subject to special trusts: larger fund) by
35substituting a different sum for the sum for the time being specified there.

Part 15 Local charities

Indexes and reviews etc.

293 Meaning of “local charity”

40In this Act, except in so far as the context otherwise requires, “local charity”
means, in relation to any area, a charity established for purposes which are—

(a) by their nature, or

(b) by the trusts of the charity,

directed wholly or mainly to the benefit of that area or of part of it.

294 Local authority’s index of local charities

(1) A council may maintain an index of local charities or of any class of local
5charities in the council’s area, and may publish information contained in the
index, or summaries or extracts taken from it.

(2) A council proposing to establish or maintaining under this section an index of
local charities or of any class of local charities must, on request, be supplied by
the Commission free of charge—

(a) 10with copies of such entries in the register of charities as are relevant to
the index, or

(b) with particulars of any changes in the entries of which copies have been
supplied before;

and the Commission may arrange that it will without further request supply a
15council with particulars of any such changes.

(3) An index maintained under this section must be open to public inspection at
all reasonable times.

295 Reviews of local charities by local authority

(1) A council may—

(a) 20subject to the following provisions of this section, initiate, and carry out
in co-operation with the charity trustees, a review of the working of any
group of local charities with the same or similar purposes in the
council’s area, and

(b) make to the Commission such report on the review and such
25recommendations arising from it as the council, after consultation with
the trustees, think fit.

(2) A council having power to initiate reviews under this section may—

(a) co-operate with other persons in any review by them of the working of
local charities in the council’s area (with or without other charities), or

(b) 30join with other persons in initiating and carrying out such a review.

(3) No review initiated by a council under this section is to extend—

(a) to any charity without the consent of the charity trustees, or

(b) to any ecclesiastical charity.

(4) No review initiated under this section by a district council is to extend to the
35working in any county of a local charity established for purposes similar or
complementary to any services provided by county councils unless the review
so extends with the consent of the council of that county.

(5) Subsection (4) does not apply in relation to Wales.

296 S.294 and s.295: supplementary

(1) 40In sections 294 and 295 and this section “council” means—

(a) a district council,

(b) a county council,

(c) a county borough council,

(d) a London borough council, or

(e) the Common Council of the City of London.

(2) A council may employ any voluntary organisation as their agent for the
5purposes of sections 294 and 295, on such terms and within such limits (if any)
or in such cases as they may agree.

(3) In subsection (2), “voluntary organisation” means any body—

(a) whose activities are carried on otherwise than for profit, and

(b) which is not a public or local authority.

(4) 10A joint board discharging any of a council’s functions has the same powers
under sections 294 and 295 and this section as the council as respects local
charities in the council’s area which are established for purposes similar or
complementary to any services provided by the board.

297 Co-operation between charities, and between charities and local authorities

(1) 15Any local council and any joint board discharging any functions of a local
council—

(a) may make, with any charity established for purposes similar or
complementary to services provided by the council or board,
arrangements for co-ordinating—

(i) 20the activities of the council or board, and

(ii) those of the charity,

in the interests of persons who may benefit from those services or from
the charity, and

(b) is at liberty to disclose to any such charity in the interests of those
25persons any information obtained in connection with the services
provided by the council or board, whether or not arrangements have
been made with the charity under this subsection.

(2) In subsection (1), “local council” means—

(a) in relation to England—

(i) 30a district council,

(ii) a county council,

(iii) a London borough council,

(iv) a parish council,

(v) the Common Council of the City of London, or

(vi) 35the Council of the Isles of Scilly, and

(b) in relation to Wales—

(i) a county council,

(ii) a county borough council, or

(iii) a community council.

(3) 40Charity trustees may, regardless of anything in the trusts of the charity, by
virtue of this subsection do all or any of the following things, if it appears to
them likely to promote or make more effective the work of the charity—

(a) they may co-operate in any review undertaken under section 295 or
otherwise of the working of charities or any class of charities;

(b) they may make arrangements with an authority acting under
subsection (1) or with another charity for co-ordinating their activities
and those of the authority or of the other charity;

(c) they may publish information of other charities with a view to bringing
5them to the notice of those for whose benefit they are intended.

(4) Charity trustees may defray the expense of acting under subsection (3) out of
any income or money applicable as income of the charity.

Parochial charities

298 Transfer of property to parish or community council or its appointees

(1) 10This section applies where trustees hold any property—

(a) for the purposes of a public recreation ground, or of allotments
(whether under inclosure Acts or otherwise), for the benefit of
inhabitants of a parish having a parish council or (in Wales) community
having a community council, or

(b) 15for other charitable purposes connected with such a parish or
community;

and it applies to property held for any public purposes as it applies to property
held for charitable purposes.

But it does not apply where trustees hold property for an ecclesiastical charity.

(2) 20The trustees may, with the approval of the Commission and with the consent
of the parish or community council, transfer the property to—

(a) the parish or community council, or

(b) persons appointed by the parish or community council;

and the council or their appointees must hold the property on the same trusts
25and subject to the same conditions as the trustees did.

299 Local authorities’ power to appoint representative trustees

(1) This section applies where a parochial charity in a parish or (in Wales) a
community is not—

(a) an ecclesiastical charity, or

(b) 30a charity founded within the preceding 40 years.

(2) If the charity trustees do not include persons—

(a) elected by the local government electors or inhabitants of the parish or
community, or

(b) appointed by the parish council or parish meeting or (in Wales) by the
35community council or the county council or (as the case may be) county
borough council,

the parish council or parish meeting or the community council or the county
council or county borough council may appoint additional charity trustees, to
such number as the Commission may allow.

(3) 40If there is a sole charity trustee not elected or appointed as mentioned in
subsection (2), the number of the charity trustees may, with the approval of the
Commission, be increased to 3, of whom—

(a) one may be nominated by the person holding the office of the sole
trustee, and

(b) one may be nominated by the parish council or parish meeting or by the
community council or the county council or county borough council.

300 Powers of appointment deriving from pre-1894 powers

(1) Subsection (2) applies where, under the trusts of a charity other than an
5ecclesiastical charity—

(a) the inhabitants of a rural parish (whether in vestry or not), or

(b) a select vestry,

were formerly (in 1894) entitled to appoint charity trustees for, or trustees or
beneficiaries of, the charity.

(2) 10The appointment is to be made—

(a) in a parish having a parish council or (in Wales) a community having a
community council, by the parish or community council, or in the case
of beneficiaries, by persons appointed by the parish or community
council;

(b) 15in a parish not having a parish council or (in Wales) a community not
having a community council, by the parish meeting or by the county
council or (as the case may be) county borough council.

(3) Subsection (4) applies where—

(a) overseers as such, or

(b) 20except in the case of an ecclesiastical charity, churchwardens as such,

were formerly (in 1894) charity trustees of or trustees for a parochial charity in
a rural parish, either alone or jointly with other persons.

(4) Instead of the former overseer or church warden trustees there are to be
trustees (to a number not greater than that of the former overseer or
25churchwarden trustees) appointed—

(a) by the parish council or, if there is no parish council, by the parish
meeting, or

(b) by the community council or, if there is no community council, by the
county council or (as the case may be) county borough council.

(5) 30In this section “formerly (in 1894)” relates to the period immediately before the
passing of the Local Government Act 1894 and “former” is to be read
accordingly.

301 Powers of appointment deriving from pre-1927 powers

(1) Subsection (2) applies where, outside Greater London (other than the outer
35London boroughs), overseers of a parish as such were formerly (in 1927)
charity trustees of or trustees for any charity, either alone or jointly with other
persons.

(2) Instead of the former overseer trustees there are to be trustees (to a number not
greater than that of the former overseer trustees) appointed—

(a) 40by the parish council or, if there is no parish council, by the parish
meeting, or

(b) (in Wales) by the community council or, if there is no community
council, by the county council or (as the case may be) county borough
council.

(3) In the case of an urban parish existing immediately before the passing of the
Local Government Act 1972 which after 1st April 1974 is not comprised in a
parish, the power of appointment under subsection (2) is exercisable by the
district council.

(4) 5In this section “formerly (in 1927)” relates to the period immediately before 1
April 1927 and “former” is to be read accordingly.

302 Term of office of trustees appointed under s.299 to s.301

(1) Any appointment of a charity trustee or trustee for a charity which is made by
virtue of sections 299 to 301 must be for a term of 4 years, and a retiring trustee
10is eligible for re-appointment.

But this is subject to subsections (2) and (3).

(2) On an appointment under section 299, where—

(a) no previous appointments have been made by virtue of—

(i) section 299, or

(ii) 15the corresponding provision of the Local Government Act 1894,
the Charities Act 1960 or the Charities Act 1993, and

(b) more than one trustee is appointed,

half of those appointed (or as nearly as may be) must be appointed for a term
of 2 years.

(3) 20An appointment made to fill a casual vacancy must be for the remainder of the
term of the previous appointment.

303 S.298 to s.302: supplementary

(1) In sections 299 and 300, “parochial charity” means, in relation to any parish or
(in Wales) community, a charity the benefits of which are, or the separate
25distribution of the benefits of which is, confined to inhabitants of—

(a) the parish or community,

(b) a single ancient ecclesiastical parish which included that parish or
community or part of it, or

(c) an area consisting of that parish or community with not more than 4
30neighbouring parishes or communities.

(2) Sections 298 to 302 do not affect the trusteeship, control or management of any
foundation or voluntary school within the meaning of the School Standards
and Framework Act 1998.

(3) Sections 298 to 302—

(a) 35do not apply to the Isles of Scilly, and

(b) have effect subject to any order (including any future order) made
under any enactment relating to local government with respect to local
government areas or the powers of local authorities.

Supplementary

304 Effect of provisions relating to vesting or transfer of property

No vesting or transfer of any property in pursuance of any provision of this
Part operates as a breach of a covenant or condition against alienation or gives
5rise to a forfeiture.

Part 16 Charity mergers

Registration

305 Register of charity mergers

(1) 10There continues to be a register of charity mergers, to be kept by the
Commission in such manner as it thinks fit and maintained by it.

(2) The register must contain an entry in respect of every relevant charity merger
which is notified to the Commission in accordance with section 307 and such
procedures as it may determine.

306 15Meaning of “relevant charity merger” etc.

(1) In this Part “relevant charity merger” means—

(a) a merger of two or more charities in connection with which one of them
(“the transferee”) has transferred to it all the property of the other or
others, each of which (a “transferor”) ceases to exist, or is to cease to
20exist, on or after the transfer of its property to the transferee, or

(b) a merger of two or more charities (“transferors”) in connection with
which both or all of them cease to exist, or are to cease to exist, on or
after the transfer of all of their property to a new charity (“the
transferee”).

(2) 25In the case of a merger involving the transfer of property of any charity—

(a) which has both a permanent endowment and other property
(“unrestricted property”), and

(b) whose trusts do not contain provision for the termination of the charity,

subsection (1)(a) or (b) applies subject to the modifications in subsection (3).

(3) 30The modifications in relation to any such charity are—

(a) the reference to all of its property is to be treated as a reference to all of
its unrestricted property, and

(b) any reference to its ceasing to exist is to be treated as omitted.

(4) In this section and sections 307 and 308—

(a) 35any reference to a transfer of property includes a transfer effected by a
vesting declaration, and

(b) “vesting declaration” means a declaration to which section 310(2)
applies.

307 Notification of charity mergers

(1) A notification under section 305(2) may be given in respect of a relevant charity
merger at any time after—

(a) the transfer of property involved in the merger has taken place, or

(b) 5(if more than one transfer of property is so involved) the last of those
transfers has taken place.

(2) If a vesting declaration is made in connection with a relevant charity merger, a
notification under section 305(2) must be given in respect of the merger once
the transfer, or the last of the transfers, mentioned in subsection (1) has taken
10place.

(3) A notification under section 305(2) is to be given by the charity trustees of the
transferee and must—

(a) specify the transfer or transfers of property involved in the merger and
the date or dates on which it or they took place,

(b) 15include a statement that appropriate arrangements have been made
with respect to the discharge of any liabilities of the transferor charity
or charities, and

(c) in the case of a notification required by subsection (2), set out the
matters mentioned in subsection (4).

(4) 20The matters are—

(a) the fact that the vesting declaration in question has been made,

(b) the date when the declaration was made, and

(c) the date on which the vesting of title under the declaration took place
by virtue of section 310(2).

308 25Details to be entered in register of charity mergers

(1) Subsection (2) applies to the entry to be made in the register of charity mergers
in respect of a relevant charity merger, as required by section 305(2).

(2) The entry must—

(a) specify the date when the transfer or transfers of property involved in
30the merger took place,

(b) if a vesting declaration was made in connection with the merger, set out
the matters mentioned in section 307(4), and

(c) contain such other particulars of the merger as the Commission thinks
fit.

309 35Right to inspect register of charity mergers

(1) The register of charity mergers must be open to public inspection at all
reasonable times.

(2) Where any information contained in the register is not in documentary form,
subsection (1) is to be read as requiring the information to be available for
40public inspection in legible form at all reasonable times.