Charities (Protection and Social Investment) Bill (HL Bill 55)

Charities (Protection and Social Investment) BillPage 10

(3) While a person is disqualified by virtue of an order under this section
in relation to a charity, the person is also disqualified, subject to
subsection (5), from holding an office or employment in the charity
with senior management functions.

(4) 5A function of an office or employment held by a person (A) is a senior
management function if—

(a) A is not responsible for it to another officer or employee (other
than a charity trustee or trustee for the charity), or

(b) it involves control over money and the only officer or employee
10(other than a charity trustee or trustee for the charity) to whom
A is responsible for it is a person with senior management
functions other than ones involving control over money.

(5) An order under this section may provide for subsection (3) not to
apply—

(a) 15generally, or

(b) in relation to a particular office or employment or to any office
or employment of a particular description.

(6) The Commission may make an order disqualifying a person under this
section only if it is satisfied that—

(a) 20one or more of the conditions listed in subsection (7) are met in
relation to the person,

(b) the person is unfit to be a charity trustee or trustee for a charity
(either generally or in relation to the charities or classes of
charity specified or described in the order), and

(c) 25making the order is desirable in the public interest in order to
protect public trust and confidence in charities generally or in
the charities or classes of charity specified or described in the
order.

(7) These are the conditions—

A 30that the person has been cautioned for a disqualifying offence
against a charity or involving the administration of a charity.
B

that—

(a)

under the law of a country or territory outside the United
35Kingdom the person has been convicted in respect of an
offence against a charity or involving the administration
of a charity, and

(b)

the act which constituted the offence would have
constituted a disqualifying offence if it had been done in
40any part of the United Kingdom.


C that the person has been found by Her Majesty’s Revenue and
Customs not to be a fit and proper person to be a manager of a
body or trust, for the purposes of paragraph 4 of Schedule 6 to
45the Finance Act 2010 (definition of charity for tax purposes), and
the finding has not been overturned.

Charities (Protection and Social Investment) BillPage 11

D

that the person was a trustee, charity trustee, officer, agent or
employee of a charity at a time when there was misconduct or
mismanagement in the administration of the charity, and
5either—

(a)

the person was responsible for or privy to the
misconduct or mismanagement, or

(b)

the person’s conduct contributed to or facilitated the
misconduct or mismanagement.


10
E

that the person was an officer or employee of a body corporate at
a time when the body was a trustee or charity trustee for a
charity and when there was misconduct or mismanagement by
15it in the administration of the charity, and either—

(a)

the person was responsible for or privy to the
misconduct or mismanagement, or

(b)

the person’s conduct contributed to or facilitated the
misconduct or mismanagement.


20
F that any other past or continuing conduct by the person,
whether or not in relation to a charity, is damaging or likely to
be damaging to public trust and confidence in charities
generally or in the charities or classes of charity specified or
25described in the order.

(8) The Minister may amend this section by regulations to add or remove
a condition.

(9) In this section “disqualifying offence” means an offence within Case A
in section 178(1).

(10) 30Conditions A and B apply whether the caution or conviction occurred
before or after the commencement of this section.

(11) Condition B does not apply in relation to a conviction which is spent
under the law of the country or territory concerned.

(12) For the purposes of condition B—

(a) 35an act punishable under the law of a country or territory outside
the United Kingdom constitutes an offence under that law,
however it is described in that law, and

(b) “charity” means an institution that is a charity under the law of
any part of the United Kingdom or that is established under the
40law of another country or territory principally for charitable,
benevolent or philanthropic purposes.

181B Duration of disqualification, and suspension pending
disqualification

(1) An order under section 181A must specify the period for which the
45person is disqualified.

(2) The period—

(a) must be not more than 15 years beginning with the day on
which the order takes effect, and

(b) must be proportionate, having regard in particular to the time
50when a conviction becomes spent, and to circumstances in

Charities (Protection and Social Investment) BillPage 12

which the Commission may or must grant a waiver under
section 181 where a person is disqualified under section 178.

(3) An order takes effect—

(a) at the end of the time specified by Tribunal Procedure Rules for
5starting proceedings for an appeal against the order, if no
proceedings are started within that time, or

(b) (subject to the decision on the appeal) when any proceedings
started within that time are withdrawn or finally determined.

(4) The Commission may by order suspend a person from being a charity
10trustee or trustee for a charity if it has given notice under section
181C(1)(a) of its proposal to make an order under section 181A in
respect of the person.

(5) The Commission may not make an order under subsection (4) so as to
suspend a person for a period of more than 12 months, but at any time
15before the expiry of an order the Commission may extend or further
extend the suspension by a further order under that subsection,
provided that—

(a) the order does not extend the suspension for a period of more
than 12 months, and

(b) 20the total period of suspension is not more than 2 years.

(6) An order under subsection (4) ceases to have effect—

(a) if the Commission notifies the person that it will not proceed
with its proposal, on the notification being given;

(b) if the Commission makes the order under section 181A, on the
25order taking effect;

or, if earlier, at the end of the period specified in accordance with
subsection (5).

(7) The Commission must review any order under subsection (4), at such
intervals as it thinks fit.

(8) 30If on a review it appears to the Commission that it would be
appropriate to discharge an order under subsection (4) in whole or in
part, the Commission must do so (whether subject to any savings or
other transitional provisions or not).

(9) An order under subsection (4) made in the case of any person (“P”) may
35make provision, as respects the period of P’s suspension, for matters
arising out of it, and in particular—

(a) for enabling any person to execute any instrument in P’s name
or otherwise act for P, and

(b) in the case of a charity trustee, for adjusting any rules governing
40the proceedings of the charity trustees to take account of the
reduction in the number capable of acting.

This does not affect the generality of section 337(1) and (2).

(10) While an order under subsection (4) is in force suspending a person
from being a charity trustee or trustee for a charity, the person must not
45take up any appointment as a charity trustee or trustee for any other
charity without the written approval of the Commission.

Charities (Protection and Social Investment) BillPage 13

181C Disqualification orders: procedure

(1) Before making an order in respect of a person under section 181A
without the person’s consent the Commission must—

(a) give the person not less than one month’s notice of its
5proposals, and

(b) invite representations to be made to it within a period specified
in the notice.

(2) Before making an order under section 181A in respect of a person who
the Commission knows or believes to be a charity trustee or trustee for
10a charity, the Commission must also—

(a) give notice of its proposals to each of the charity trustees of the
charity in question;

(b) comply with the publicity requirement, unless the Commission
is satisfied that for any reason compliance with the requirement
15is unnecessary.

(3) The publicity requirement is that the Commission must give public
notice of its proposals, inviting representations to be made to it within
a period specified in the notice.

(4) The time when any such notice is given is to be decided by the
20Commission.

(5) Any notice of any proposals which is to be given under this section is
to contain such particulars of the proposals, or such directions for
obtaining information about them, as the Commission thinks sufficient
and appropriate.

(6) 25Where the Commission gives notice of any proposals under this
section—

(a) it must take into account any representations made to it within
the period specified in the notice, and

(b) it may (without further notice) proceed with the proposals
30either without modifications or with such modifications as it
thinks desirable;

but a notice under subsection (2)(a) need not specify a period for the
purposes of paragraph (a) if the charity came to the Commission’s
knowledge or belief after the expiry of the period specified for the
35purposes of subsection (1)(b).

(7) A notice under subsection (1) or (2)(a)

(a) may be given by post, and

(b) if given by post, may be addressed to the recipient’s last known
address in the United Kingdom.

(8) 40A notice under subsection (2)(b) is to be given in such manner as the
Commission thinks sufficient and appropriate.

(9) Where the Commission makes an order under section 181A in respect
of a person it knows or believes to be a charity trustee or trustee for a
charity it must (as well as serving it on that person) send a copy of the
45order and a statement of the Commission’s reasons for making it—

(a) to the charity in question (if a body corporate), or

(b) (if not) to each of the charity trustees of the charity in question.

Charities (Protection and Social Investment) BillPage 14

(10) Nothing in this section requires the Commission to give notice, or send
a document, to a person who cannot be found or has no known address
in the United Kingdom.

(11) Any documents required to be sent to a person under this section may
5be sent to, or otherwise served on, the person in the same way as an
order made by the Commission under this Act could be served on the
person in accordance with section 339.

181D Disqualification orders: variation and revocation

A person in respect of whom an order under section 181A is in force
10may at any time apply to the Commission for an order varying or
discharging that order.”

(3) In section 183 (criminal consequences of acting while disqualified)—

(a) in subsection (1), after “section 178” insert “or an order under section
181A”;

(b) 15in subsection (2)(b), after “G” insert “in section 178”.

(4) In section 184 (civil consequences of acting while disqualified)—

(a) in subsection (1), after “section 178” insert “or an order under section
181A”;

(b) in subsection (2)(a), after “section 178” insert “or an order under section
20181A.”

(5) Section 348 (regulations subject to affirmative procedure etc) is amended as
follows.

(6) In subsection (1), before paragraph (c) insert—

(ba) regulations under section 181A(8) (conditions for
25disqualification by order);”.

(7) In subsection (2) before “or (c)” insert “, (bb)”.

(8) In subsection (4) before paragraph (a) insert—

(zb) section 181A(8), if the regulations add a condition,”.

(9) In Schedule 6 (appeals and applications to tribunal), after the entry relating to
30a decision of the Commission under section 181(2) to waive, or not waive, a
person’s disqualification insert—

“Order made by the
Commission under
section 181A.
The persons are the person
who is the subject of the
order.

Power to—

(a)

quash the order in whole or in part
35and (if appropriate) remit the
matter to the Commission;

(b)

substitute for all or part of the
order any other order which could
have been made by the
40Commission;

(c)

add to the order anything which
could have been contained in an
order made by the Commission.



45

Charities (Protection and Social Investment) BillPage 15

Order made by the
Commission under
section 181B(4).
The persons are the person
who is the subject of the
order.

Power to—

(a)

quash the order in whole or in part
and (if appropriate) remit the
5matter to the Commission;

(b)

substitute for all or part of the
order any other order which could
have been made by the
Commission;

(c)

10add to the order anything which
could have been contained in an
order made by the Commission.




15
Decision of the
Commission— to discharge
an order
following a
review under
section
181B(7), or not to
discharge an
order
following
such a review.
The persons are— the person who is
the subject of the
order, the charity
trustees of the
charity to which
the order relates, (if a body
corporate) the
charity itself, and any other person
who is or may be
affected by the
order.

Power to—

(a)

quash the decision and (if
appropriate) remit the matter to
20the Commission;

(b)

make the discharge of the order
subject to savings or other
transitional provisions;

(c)

remove any savings or other
25transitional provisions to which
the discharge of the order was
subject;

(d)

discharge the order in whole or in
part (whether subject to any
30savings or other transitional
provisions or not).

Decision of the
Commission under
section 181D not to
revoke or vary an order
under section 181A.
The persons are the person
who is the subject of the
order.

Power to—

(a)

quash the decision and (if
35appropriate) remit the matter to
the Commission;

(b)

substitute for the decision any
other decision of a kind which
could have been made by the
40Commission.”






45

11 Records of disqualification and removal

(1) Section 182 of the Charities Act 2011 (records of persons removed from office)
is amended as follows.

(2) In subsection (1)—

(a) 50for “181” substitute “181A”.

(b) after “a register of” insert, “the following.”

(3) The words in subsection (1) from “all persons” to the end become subsection
(1A).

(4) At the beginning of that subsection insert—

(1A) 55The register must include”.

(5) After subsection (1A) insert—

(1B) The register must include all persons who have been disqualified by an
order of the Commission under section 181A.

(1C) The register must include all persons who have been removed from
60office by an order of the Commission under section 79A (removal of
disqualified trustee).”

Charities (Protection and Social Investment) BillPage 16

12 Participation in corporate decisions while disqualified

In the Charities Act 2011, after section 184 insert—

184A Sections 183 and 184: participation in corporate decisions

(1) For the purposes of sections 183 and 184, a person who is not a charity
5trustee or trustee for a charity is treated as acting as one if that person—

(a) is an officer of a body corporate which is a charity trustee or
trustee for a charity, and

(b) takes part in that capacity in any decision relating to the
administration of the charity.

(2) 10In subsection (1) “officer” includes any of the persons having general
control and management of the administration of the body.”

13 Power to make social investments

(1) In the Charities Act 2011, after section 292 insert—

“Part 14A 15Social investments

292A Meaning of “social investment”

(1) This section applies for the purposes of this Part.

(2) A social investment is made when a relevant act of a charity is carried
out with a view to both—

(a) 20directly furthering the charity’s purposes; and

(b) achieving a financial return for the charity.

(3) References to an act of a charity are, in the case of an unincorporated
charity, to an act of the charity trustees.

(4) A relevant act of a charity is—

(a) 25an application or use of funds or other property; or

(b) taking on a commitment in relation to a liability of another
person (such as a guarantee) that puts the charity’s funds or
other property at risk of being applied or used.

(5) An act mentioned in subsection (4)(a) is to be regarded as achieving a
30financial return if its outcome is better for the charity in financial terms
than expending the whole of the funds or other property in question.

(6) A commitment mentioned in subsection (4)(b) is to be regarded as
achieving a financial return if—

(a) it is not called upon; or

(b) 35it is called upon without resulting in the expenditure of the
whole of the funds or other property put at risk.

(7) The fact that a relevant act of a charity is regarded as the making of a
social investment for the purposes of this Part does not of itself make
the act an investment for any other purpose.

Charities (Protection and Social Investment) BillPage 17

292B General power to make social investments

(1) An incorporated charity has, and the charity trustees of an
unincorporated charity have, power to make social investments.

(2) The power conferred by this section may not be used to make a social
5investment involving—

(a) the application or use of permanent endowment, or

(b) taking on a commitment mentioned in section 292A(4)(b) that
puts permanent endowment at risk of being applied or used,

unless the charity trustees expect that making the social investment will
10not contravene any restriction with respect to expenditure that applies
to the permanent endowment in question.

(3) The power conferred by this section—

(a) may be restricted or excluded by the trusts of the charity;

(b) is (subject to paragraph (a)) in addition to any other power to
15make social investments that the charity or charity trustees may
have.

(4) This section does not apply in relation to—

(a) charities established by an Act or subordinate legislation; or

(b) charities established by a Royal charter;

20but it applies in relation to other charities, whether established before
or after this Part comes into force.

292C Charity trustees’ duties in relation to social investments

(1) This section applies in relation to social investments that are made after
this Part comes into force, whether or not made by the exercise of the
25power conferred by section 292B.

(2) The charity trustees of a charity must, before exercising a power to
make a social investment—

(a) consider whether in all the circumstances any advice about the
proposed social investment ought to be obtained;

(b) 30obtain and consider any advice they conclude ought to be
obtained; and

(c) satisfy themselves that it is in the interests of the charity to make
the social investment.

(3) The charity trustees of a charity must from time to time review the
35charity’s social investments.

(4) When carrying out a review the charity trustees must—

(a) consider whether any advice about the social investments (or
any particular social investment) ought to be obtained; and

(b) obtain and consider any advice they conclude ought to be
40obtained.

(5) The duties under this section may not be restricted or excluded by the
charity’s trusts.

(6) In the case of an unincorporated charity, the duties under this section
apply in relation to relevant social investments in place of any duties
45under sections 4 and 5 of the Trustee Act 2000 that would otherwise
apply.

Charities (Protection and Social Investment) BillPage 18

(7) In subsection (6) “relevant social investments” means social
investments that are investments for the purposes of Part 2 of the
Trustee Act 2000.”

(2) The Trustee Act 2000 is amended as follows.

(3) 5In section 4 (standard investment criteria), after subsection (3) insert—

(4) This section has effect subject to section 292C(6) of the Charities Act
2011 (which disapplies the duties under this section in cases where they
would otherwise apply in relation to a social investment within the
meaning of Part 14A of that Act).”

(4) 10In section 5 (advice), after subsection (4) insert—

(5) This section has effect subject to section 292C(6) of the Charities Act
2011 (which disapplies the duties under this section in cases where they
would otherwise apply in relation to a social investment within the
meaning of Part 14A of that Act).”

14 15Reviews of the operation of this Act

(1) The Minister for the Cabinet Office must carry out reviews of the operation of
this Act including, on each review, how the Act affects—

(a) public confidence in charities,

(b) the level of charitable donations, and

(c) 20people’s willingness to volunteer.

(2) After each review the Minister must publish a report of the review and lay a
copy before Parliament.

(3) The reports must be published not more than 5 years apart, and the first must
be published within 5 years after this Act is passed.

15 25Short title, extent and commencement

(1) This Act may be cited as the Charities (Protection and Social Investment) Act
2015.

(2) This Act extends to England and Wales only.

(3) This section and section 14 come into force on the day on which this Act is
30passed.

(4) The other provisions of this Act come into force on whatever day the Minister
for the Cabinet Office appoints by regulations made by statutory instrument.

(5) The regulations—

(a) may appoint different days for different purposes;

(b) 35may make transitional, transitory or saving provision.