Charities Bill [HL]

Session 2010 - 12
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Other Bills before Parliament

Charities Bill [HL]

Charities Bill [HL]
Part 11 — Charitable incorporated organisations (CIOs)
Chapter 1 — General
108

Name and status
211
Name
(1)
The name of a CIO must appear in legible characters—
(a)
in every location, and in every description of document or
communication, in which a charitable company would be required by
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regulations under section 82 of the Companies Act 2006 to state its
registered name, and
(b)
in all conveyances purporting to be executed by the CIO.
(2)
In subsection (1)(b), “conveyance” means any instrument creating,
transferring, varying or extinguishing an interest in land.
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212
Status
(1)
Subsection (3) applies if the name of a CIO does not include—
(a)
“charitable incorporated organisation”,
(b)
“CIO”, with or without full stops after each letter, or
(c)
a Welsh equivalent mentioned in subsection (2) (but this option applies
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only if the CIO’s constitution is in Welsh),

and it is irrelevant, in any such case, whether or not capital letters are used.
(2)
The Welsh equivalents referred to in subsection (1)(c) are—
(a)
“sefydliad elusennol corfforedig”, or
(b)
“SEC”, with or without full stops after each letter.
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(3)
If this subsection applies, the fact that a CIO is a CIO must be stated in legible
characters in all the locations, documents, communications and conveyances
mentioned in section 211(1).
(4)
The statement required by subsection (3) must be in English, except that in the
case of a document which is otherwise wholly in Welsh, the statement may be
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in Welsh.
213
Civil consequences of failure to disclose name or status
(1)
This section applies to any legal proceedings brought by a CIO to enforce a
right arising out of a contract or conveyance in connection with which there
was a failure to comply with section 211 or 212.
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(2)
The proceedings must be dismissed if it is shown that the defendant to the
proceedings—
(a)
has a claim against the CIO arising out of the contract or conveyance
that the defendant has been unable to pursue because of the failure to
comply with section 211 or 212, or
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(b)
has suffered some financial loss in connection with the contract or
conveyance because of the failure to comply with section 211 or 212,

unless the court before which the proceedings are brought is satisfied that it is
just and equitable to permit the proceedings to continue.
(3)
This section does not affect the right of any person to enforce such rights as that
40
person may have against another in any proceedings brought by the other.

Charities Bill [HL]
Part 11 — Charitable incorporated organisations (CIOs)
Chapter 2 — Powers, capacity and procedure etc.
109

214
Offence of failing to disclose name or status
(1)
In the case of failure, without reasonable excuse, to comply with section 211 or
212 an offence is committed by—
(a)
every charity trustee of the CIO who is in default, and
(b)
any other person who on the CIO’s behalf—
5
(i)
signs or authorises the signing of the offending document,
communication or conveyance, or
(ii)
otherwise commits or authorises the offending act or omission.
(2)
A person guilty of an offence under subsection (1) is liable on summary
conviction to a fine not exceeding level 3 on the standard scale and, for
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continued contravention, a daily default fine not exceeding 10% of level 3 on
the standard scale.
(3)
The reference in subsection (1) to a charity trustee being in default, and the
reference in subsection (2) to a daily default fine, have the same meaning as in
the Companies Acts (see sections 1121 to 1123 and 1125 of the Companies Act
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2006).
215
Offence of holding out that a body is a CIO
(1)
It is an offence for a person (in whatever way) to hold any body out as being a
CIO when it is not.
(2)
It is a defence where a person is charged with an offence under subsection (1)
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to prove that the person believed on reasonable grounds that the body was a
CIO.
(3)
A person guilty of an offence under subsection (1) is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.
Chapter 2
25
Powers, capacity and procedure etc.
216
Powers of CIO
(1)
Subject to anything in its constitution, a CIO may do anything which is
calculated to further its purposes or is conducive or incidental to doing so.
(2)
The CIO’s charity trustees are to manage the affairs of the CIO and may for that
30
purpose exercise all the powers of the CIO.
217
Constitutional requirements
(1)
A CIO must use and apply its property in furtherance of its purposes and in
accordance with its constitution.
(2)
If the CIO is one whose members are liable to contribute to its assets if it is
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wound up, its constitution binds the CIO and its members for the time being to
the same extent as if its provisions were contained in a contract—
(a)
to which the CIO and each of its members was a party, and
(b)
which contained obligations on the part of the CIO and each member to
observe all the provisions of the constitution.
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Charities Bill [HL]
Part 11 — Charitable incorporated organisations (CIOs)
Chapter 2 — Powers, capacity and procedure etc.
110

(3)
Money payable by a member to the CIO under the constitution is a debt due
from that member to the CIO, and is of the nature of an ordinary contract debt.
218
Third parties
(1)
Subject to subsection (3), the validity of an act done (or purportedly done) by a
CIO is not to be called into question on the ground that the CIO lacked
5
constitutional capacity.
(2)
Subject to subsection (3), the power of the charity trustees of a CIO to act so as
to bind the CIO (or authorise others to do so) is not to be called into question
on the ground of any constitutional limitations on their powers.
(3)
Subsections (1) and (2) apply only in favour of a person who gives full
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consideration in money or money’s worth in relation to the act in question, and
does not know—
(a)
in a subsection (1) case, that the act is beyond the CIO’s constitutional
capacity, or
(b)
in a subsection (2) case, that the act is beyond the constitutional powers
15
of its charity trustees,

and (in addition) subsection (2) applies only if the person dealt with the CIO in
good faith (which the person is presumed to have done unless the contrary is
proved).
(4)
A party to an arrangement or transaction with a CIO is not bound to inquire—
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(a)
whether it is within the CIO’s constitutional capacity, or
(b)
as to any constitutional limitations on the powers of its charity trustees
to bind the CIO or authorise others to do so.
(5)
If a CIO purports to transfer or grant an interest in property, the fact—
(a)
that the act was beyond its constitutional capacity, or
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(b)
that its charity trustees in connection with the act exceeded their
constitutional powers,

does not affect the title of a person who subsequently acquires the property or
any interest in it for full consideration without actual notice of any such
circumstances affecting the validity of the CIO’s act.
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(6)
In any proceedings arising out of subsections (1) to (3), the burden of proving
that a person knew that an act—
(a)
was beyond the CIO’s constitutional capacity, or
(b)
was beyond the constitutional powers of its charity trustees,

lies on the person making that allegation.
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(7)
In this section and section 219—
(a)
references to a CIO’s lack of constitutional capacity are to lack of
capacity because of anything in its constitution, and
(b)
references to constitutional limitations on the powers of a CIO’s charity
trustees are to limitations on their powers under its constitution,
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including limitations deriving from a resolution of the CIO in general
meeting, or from an agreement between the CIO’s members, and the
references to constitutional powers are to be read accordingly.

Charities Bill [HL]
Part 11 — Charitable incorporated organisations (CIOs)
Chapter 2 — Powers, capacity and procedure etc.
111

219
Limits to s.218
(1)
Nothing in section 218 prevents a person from bringing proceedings to restrain
the doing of an act which would be—
(a)
beyond the CIO’s constitutional capacity, or
(b)
beyond the constitutional powers of the CIO’s charity trustees.
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(2)
But no such proceedings may be brought in respect of an act to be done in
fulfilment of a legal obligation arising from a previous act of the CIO.
(3)
Subsection (2) does not prevent the Commission from exercising any of its
powers.
(4)
Nothing in section 218(2) affects any liability incurred by the CIO’s charity
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trustees (or any one of them) for acting beyond their (or that charity trustee’s)
constitutional powers.
(5)
Nothing in section 218 absolves the CIO’s charity trustees from their duty to
act within the CIO’s constitution and in accordance with any constitutional
limitations on their powers.
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220
Duty of CIO members
Each member of a CIO must exercise the powers that the member has in that
capacity in the way that the member decides, in good faith, would be most
likely to further the purposes of the CIO.
221
Duties of charity trustees
20
(1)
Each charity trustee of a CIO must exercise the powers and perform the
functions that the charity trustee has in that capacity in the way that the charity
trustee decides, in good faith, would be most likely to further the purposes of
the CIO.
(2)
Each charity trustee of a CIO must in the performance of functions in that
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capacity exercise such care and skill as is reasonable in the circumstances,
having regard in particular—
(a)
to any special knowledge or experience that the charity trustee has or
purports to have, and
(b)
if the charity trustee acts as such in the course of a business or
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profession, to any special knowledge or experience that it is reasonable
to expect of a person acting in the course of that kind of business or
profession.

But this is subject to any provision of a CIO’s constitution permitted by virtue
of regulations made under subsection (3).
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(3)
CIO regulations may permit a CIO’s constitution to provide that the duty in
subsection (2)—
(a)
does not apply, or
(b)
does not apply in so far as is specified in the constitution.
(4)
Regulations under subsection (3) may provide for limits on the extent to which,
40
or the cases in which, a CIO’s constitution may disapply the duty in subsection
(2).