Charities Bill [HL]

Session 2010 - 12
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Other Bills before Parliament

Charities Bill [HL]

Charities Bill [HL]
Part 9 — Charity trustees, trustees and auditors etc.
97

Condition B

Condition B is that, before entering into that agreement, the charity trustees

decided that they were satisfied that it would be in the best interests of the

charity for the services to be provided by P to or on behalf of the charity for

the amount or maximum amount of remuneration set out in the agreement.

5

Condition C

Condition C is that if immediately after the agreement is entered into there is,

in the case of the charity, more than one person who is a charity trustee and

is—

(a)
a person in respect of whom an agreement within Condition A is in

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force,

(b)
a person who is entitled to receive remuneration out of the funds of

the charity otherwise than by virtue of such an agreement, or

(c)
a person connected with a person falling within paragraph (a) or (b),

the total number of them constitute a minority of the persons for the time

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being holding office as charity trustees of the charity.

Condition D

Condition D is that the trusts of the charity do not contain any express

provision that prohibits P from receiving the remuneration.

(3)
Nothing in this section applies to—
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(a)
any remuneration for services provided by a person in the person’s
capacity as a charity trustee or trustee for a charity or under a contract
of employment, or
(b)
any remuneration not within paragraph (a) which a person is entitled
to receive out of the funds of a charity by virtue of—
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(i)
any provision contained in the trusts of the charity;
(ii)
any order of the court or the Commission;
(iii)
any statutory provision contained in or having effect under an
Act other than this section.
(4)
Before entering into an agreement within Condition A the charity trustees
30
must have regard to any guidance given by the Commission concerning the
making of such agreements.
(5)
The duty of care in section 1(1) of the Trustee Act 2000 applies to a charity
trustee when making such a decision as is mentioned in Condition B.
(6)
For the purposes of Condition C an agreement within Condition A is in force
35
so long as any obligations under the agreement have not been fully discharged
by a party to it.
(7)
Sections 187 and 188 (interpretation) apply for the purposes of this section.
186
Disqualification of charity trustee or trustee receiving remuneration under
s.185
40
(1)
This section applies to any charity trustee or trustee for a charity—
(a)
who is or would be entitled to remuneration under an agreement or
proposed agreement within Condition A, or

Charities Bill [HL]
Part 9 — Charity trustees, trustees and auditors etc.
98

(b)
who is connected with a person who is or would be so entitled.
(2)
The charity trustee or trustee for a charity is disqualified from acting as such in
relation to any decision or other matter connected with the agreement.
(3)
But if an act is done by a person who is disqualified from doing it by virtue of
subsection (2), the act is not invalid merely because of that disqualification.
5
(4)
If the Commission is satisfied—
(a)
that a person (“P”) has done any act which P was disqualified from
doing by virtue of subsection (2), and
(b)
that P or a person connected with P has received or is to receive from
the charity any remuneration under the agreement in question,
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it may make an order under subsection (5) or (6) (as appropriate).
(5)
An order under this subsection is one requiring P—
(a)
to reimburse to the charity the whole or part of the remuneration
received as mentioned in subsection (4)(b);
(b)
to the extent that the remuneration consists of a benefit in kind, to
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reimburse to the charity the whole or part of the monetary value (as
determined by the Commission) of the benefit in kind.
(6)
An order under this subsection is one directing that P or (as the case may be)
the connected person is not to be paid the whole or part of the remuneration
mentioned in subsection (4)(b).
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(7)
If the Commission makes an order under subsection (5) or (6), P or (as the case
may be) the connected person accordingly ceases to have any entitlement
under the agreement to so much of the remuneration (or its monetary value) as
the order requires P to reimburse to the charity or (as the case may be) as it
directs is not to be paid to P.
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(8)
Sections 187 and 188 (interpretation) apply for the purposes of this section.
187
Meaning of “benefit”, “remuneration”, “services” etc.
In sections 185 and 186—
“benefit” means a direct or indirect benefit of any nature;
“maximum amount”, in relation to remuneration, means the maximum
30
amount of the remuneration whether specified in or ascertainable
under the terms of the agreement in question;
“remuneration” includes any benefit in kind (and “amount” accordingly
includes monetary value);
“services”, in the context of remuneration for services, includes goods that
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are supplied in connection with the provision of services.
188
Meaning of “connected person”
(1)
For the purposes of sections 185 and 186, the following persons are connected
with a charity trustee or trustee for a charity—
(a)
a child, parent, grandchild, grandparent, brother or sister of the trustee;
40
(b)
the spouse or civil partner of the trustee or of any person falling within
paragraph (a);
(c)
a person carrying on business in partnership with the trustee or with
any person falling within paragraph (a) or (b);

Charities Bill [HL]
Part 9 — Charity trustees, trustees and auditors etc.
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(d)
an institution which is controlled—
(i)
by the trustee or by any person falling within paragraph (a), (b)
or (c), or
(ii)
by two or more persons falling within sub-paragraph (i), when
taken together.
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(e)
a body corporate in which—
(i)
the trustee or any connected person falling within any of
paragraphs (a) to (c) has a substantial interest, or
(ii)
two or more persons falling within sub-paragraph (i), when
taken together, have a substantial interest.
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(2)
Sections 350 to 352 (meaning of child, spouse and civil partner, controlled
institution and substantial interest) apply for the purposes of subsection (1).
Indemnity insurance for charity trustees and trustees
189
Indemnity insurance for charity trustees and trustees
(1)
The charity trustees of a charity may arrange for the purchase, out of the funds
15
of the charity, of insurance designed to indemnify the charity trustees or any
trustees for the charity against any personal liability in respect of—
(a)
any breach of trust or breach of duty committed by them in their
capacity as charity trustees or trustees for the charity, or
(b)
any negligence, default, breach of duty or breach of trust committed by
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them in their capacity as directors or officers of—
(i)
the charity (if it is a body corporate), or
(ii)
any body corporate carrying on any activities on behalf of the
charity.
(2)
But the terms of such insurance must be so framed as to exclude the provision
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of any indemnity for a person (“P”) in respect of—
(a)
any liability incurred by P to pay—
(i)
a fine imposed in criminal proceedings, or
(ii)
a sum payable to a regulatory authority by way of a penalty in
respect of non-compliance with any requirement of a regulatory
30
nature (however arising),
(b)
any liability incurred by P in defending any criminal proceedings in
which P is convicted of an offence arising out of any fraud or
dishonesty, or wilful or reckless misconduct, by P, or
(c)
any liability incurred by P to the charity that arises out of any conduct—
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(i)
which P knew (or must reasonably be assumed to have known)
was not in the interests of the charity, or
(ii)
in the case of which P did not care whether it was in the best
interests of the charity or not.
(3)
For the purposes of subsection (2)(b)—
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(a)
the reference to any such conviction is a reference to one that has
become final,
(b)
a conviction becomes final—
(i)
if not appealed against, at the end of the period for bringing an
appeal, or
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Charities Bill [HL]
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(ii)
if appealed against, at the time when the appeal (or any further
appeal) is disposed of, and
(c)
an appeal is disposed of—
(i)
if it is determined and the period for bringing any further
appeal has ended, or
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(ii)
if it is abandoned or otherwise ceases to have effect.
(4)
The charity trustees of a charity may not purchase insurance under this section
unless they decide that they are satisfied that it is in the best interests of the
charity for them to do so.
(5)
The duty of care in section 1(1) of the Trustee Act 2000 applies to a charity
10
trustee when making such a decision.
(6)
This section—
(a)
does not authorise the purchase of any insurance whose purchase is
expressly prohibited by the trusts of the charity, but
(b)
has effect despite any provision prohibiting the charity trustees or
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trustees for the charity receiving any personal benefit out of the funds
of the charity.
190
Power to amend s.189
The Minister may by order make such amendments of section 189(2) and (3) as
the Minister considers appropriate.
20
Powers to relieve trustees and auditors etc. from liability
191
Commission’s power to relieve trustees and auditors etc. from liability
(1)
This section applies to a person (“P”) who is or has been—
(a)
a charity trustee or trustee for a charity,
(b)
a person appointed to audit a charity’s accounts (whether appointed
25
under an enactment or otherwise), or
(c)
an independent examiner or other person appointed to examine or
report on a charity’s accounts (whether appointed under an enactment
or otherwise).
(2)
If the Commission considers—
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(a)
that P is or may be personally liable for a breach of trust or breach of
duty committed in P’s capacity as a person within subsection (1)(a), (b)
or (c), but
(b)
that P has acted honestly and reasonably and ought fairly to be excused
for the breach of trust or duty,
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the Commission may make an order relieving P wholly or partly from any such
liability.
(3)
An order under subsection (2) may grant the relief on such terms as the
Commission thinks fit.
(4)
Subsection (2) does not apply in relation to any personal contractual liability of
40
a charity trustee or trustee for a charity.
(5)
For the purposes of this section and section 192—

Charities Bill [HL]
Part 10 — Charitable companies etc.
101

(a)
subsection (1)(b) is to be read as including a reference to the Auditor
General for Wales acting as auditor under Part 8, and
(b)
subsection (1)(c) is to be read as including a reference to the Auditor
General for Wales acting as examiner under Part 8;

and in subsection (1)(b) and (c) any reference to a charity’s accounts is to be
5
read as including any group accounts prepared by the charity trustees of a
charity.
(6)
This section does not affect the operation of—
(a)
section 61 of the Trustee Act 1925 (power of court to grant relief to
trustees),
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(b)
section 1157 of the Companies Act 2006 (power of court to grant relief
to officers or auditors of companies), or
(c)
section 192 (which extends section 1157 to auditors etc. of charities
which are not companies).
192
Court’s power to grant relief to apply to all auditors etc. of charities which are
15
not companies
(1)
Section 1157 of the Companies Act 2006 (power of court to grant relief to
officers or auditors of companies) has effect in relation to a person to whom this
section applies as it has effect in relation to a person employed as an auditor by
a company.
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(2)
This section applies to—
(a)
a person acting in a capacity within section 191(1)(b) or (c) in a case
where, apart from this section, section 1157 of the 2006 Act would not
apply in relation to that person as a person so acting, and
(b)
a charity trustee of a CIO.
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Part 10
Charitable companies etc.
Introductory
193
Meaning of “charitable company”
In this Act “charitable company” means a charity which is a company.
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Disclosure of charitable status by companies
194
Requirement to disclose charitable status
(1)
Where a charitable company’s name does not include the word “charity” or
“charitable”, the fact that the company is a charity must be stated in legible
characters—
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(a)
in every location, and in every description of document or
communication, in which it is required by 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 company.

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Part 10 — Charitable companies etc.
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(2)
Where a company’s name includes the word “elusen” or “elusennol” (the
Welsh equivalents of “charity” and “charitable”), subsection (1) does not apply
in relation to any document that is wholly in Welsh.
(3)
The statement required by subsection (1) must be in English, except that, in the
case of a document that is otherwise wholly in Welsh, the statement may be in
5
Welsh if it consists of or includes the word “elusen” or “elusennol”.
(4)
In subsection (1)(b) “conveyance” means any instrument creating, transferring,
varying or extinguishing an interest in land.
195
Civil consequences of failure to make required disclosure
(1)
This section applies to any legal proceedings brought by a charitable company
10
to which section 194 applies to enforce a right arising out of a contract or
conveyance in connection with which there was a failure to comply with that
section.
(2)
The proceedings must be dismissed if it is shown that the defendant to the
proceedings—
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(a)
has a claim against the company arising out of the contract or
conveyance that the defendant has been unable to pursue because of
the company’s failure to comply with section 194, or
(b)
has suffered some financial loss in connection with the contract or
conveyance because of the company’s failure to comply with that
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section,

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
person may have against another in any proceedings brought by the other.
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196
Criminal consequences of failure to make required disclosure
(1)
Where a charitable company fails, without reasonable excuse, to comply with
section 194, an offence is committed by—
(a)
the company, and
(b)
every officer of the company who is in default.
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(2)
For this purpose a shadow director of the company is treated as an officer of
the company if the failure is to comply with section 194(1)(a) and that person
would be treated as an officer of the company for the purposes of the
corresponding requirement of regulations under section 82 of the Companies
Act 2006.
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(3)
A person guilty of such an offence is liable on summary conviction to a fine not
exceeding level 3 on the standard scale and, for continued contravention, a
daily default fine not exceeding 10% of level 3 on the standard scale.
(4)
Expressions used in this section have the same meaning as in section 84 of the
Companies Act 2006 (criminal consequences of failure to disclose company’s
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registered name).