Charities Bill [HL]

House of Commons

Session 2005 - 06
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Charities Bill [HL]

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
127

      (4)
But sub-paragraphs (2) and (3) apply only in favour of a person
who gives full consideration in money or money’s worth in
relation to the act in question, and does not know—
(a)
in a sub-paragraph (2) case, that the act is beyond the CIO’s
constitutional capacity, or
5
(b)
in a sub-paragraph (3) case, that the act is beyond the
constitutional powers of its charity trustees,

and (in addition) sub-paragraph (3) applies only if the person
dealt with the CIO in good faith (which he shall be presumed to
have done unless the contrary is proved).
10
      (5)
A party to an arrangement or transaction with a CIO is not bound
to inquire—
(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
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so.
      (6)
If a CIO purports to transfer or grant an interest in property, the
fact that the act was beyond its constitutional capacity, or that its
charity trustees in connection with the act exceeded their
constitutional powers, does not affect the title of a person who
20
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.
      (7)
In any proceedings arising out of sub-paragraphs (2) to (4), the
burden of proving that a person knew that an act—
25
(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.
      (8)
In this paragraph and paragraphs 6 to 8—
30
(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
35
under its constitution, including limitations deriving from
a resolution of the CIO in general meeting, or from an
agreement between the CIO’s members, and
“constitutional powers” is to be construed accordingly.
6     (1)
Nothing in paragraph 5 prevents a person from bringing
40
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.
      (2)
But no such proceedings may be brought in respect of an act to be
45
done in fulfilment of a legal obligation arising from a previous act
of the CIO.

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
128

      (3)
Sub-paragraph (2) does not prevent the Commission from
exercising any of its powers.
7
Nothing in paragraph 5(3) affects any liability incurred by the
CIO’s charity trustees (or any one of them) for acting beyond his
or their constitutional powers.
5
8
Nothing in paragraph 5 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.
Duties
9
It is the duty of—
10
(a)
each member of a CIO, and
(b)
each charity trustee of a CIO,

to exercise his powers, and (in the case of a charity trustee) to
perform his functions, in his capacity as such, in the way he
decides, in good faith, would be most likely to further the
15
purposes of the CIO.
10    (1)
Subject to any provision of a CIO’s constitution permitted by
virtue of regulations made under sub-paragraph (2), each charity
trustee of a CIO shall in the performance of his functions in that
capacity exercise such care and skill as is reasonable in the
20
circumstances, having regard in particular—
(a)
to any special knowledge or experience that he has or
holds himself out as having, and
(b)
if he acts as a charity trustee in the course of a business or
profession, to any special knowledge or experience that it
25
is reasonable to expect of a person acting in the course of
that kind of business or profession.
      (2)
The Secretary of State may make regulations permitting a CIO’s
constitution to provide that the duty in sub-paragraph (1) does not
apply, or does not apply in so far as is specified in the constitution.
30
      (3)
Regulations under sub-paragraph (2) may provide for limits on
the extent to which, or the cases in which, a CIO’s constitution
may disapply the duty in sub-paragraph (1).
Personal benefit and payments
11    (1)
A charity trustee of a CIO may not benefit personally from any
35
arrangement or transaction entered into by the CIO if, before the
arrangement or transaction was entered into, he did not disclose
to all the charity trustees of the CIO any material interest of his in
it or in any other person or body party to it (whether that interest
is direct or indirect).
40
      (2)
Nothing in sub-paragraph (1) confers authority for a charity
trustee of a CIO to benefit personally from any arrangement or
transaction entered into by the CIO.
12
A charity trustee of a CIO—
(a)
is entitled to be reimbursed by the CIO, or
45

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
129

(b)
may pay out of the CIO’s funds,

expenses properly incurred by him in the performance of his
functions as such.
Procedure
13    (1)
The Secretary of State may by regulations make provision about
5
the procedure of CIOs.
      (2)
Subject to—
(a)
any such regulations,
(b)
any other requirement imposed by or by virtue of this Act
or any other enactment, and
10
(c)
anything in the CIO’s constitution,

a CIO may regulate its own procedure.
      (3)
But a CIO’s procedure shall include provision for the holding of a
general meeting of its members, and the regulations referred to in
sub-paragraph (1) may in particular make provision about such
15
meetings.
Amendment of constitution
14    (1)
A CIO may by resolution of its members amend its constitution
(and a single resolution may provide for more than one
amendment).
20
      (2)
Such a resolution must be passed—
(a)
by a 75% majority of those voting at a general meeting of
the CIO (including those voting by proxy or by post, if
voting that way is permitted), or
(b)
unanimously by the CIO’s members, otherwise than at a
25
general meeting.
      (3)
The date of passing of such a resolution is—
(a)
the date of the general meeting at which it was passed, or
(b)
if it was passed otherwise than at a general meeting, the
date on which provision in the CIO’s constitution or in
30
regulations made under paragraph 13 deems it to have
been passed (but that date may not be earlier than that on
which the last member agreed to it).
      (4)
The power of a CIO to amend its constitution is not exercisable in
any way which would result in the CIO’s ceasing to be a charity.
35
      (5)
Subject to paragraph 15(5) below, a resolution containing an
amendment which would make any regulated alteration is to that
extent ineffective unless the prior written consent of the
Commission has been obtained to the making of the amendment.
      (6)
The following are regulated alterations—
40
(a)
any alteration of the CIO’s purposes,
(b)
any alteration of any provision of the CIO’s constitution
directing the application of property of the CIO on its
dissolution,

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 2 — Other amendments of 1993 Act
130

(c)
any alteration of any provision of the CIO’s constitution
where the alteration would provide authorisation for any
benefit to be obtained by charity trustees or members of
the CIO or persons connected with them.
      (7)
For the purposes of sub-paragraph (6)(c)—
5
(a)
“benefit” means a direct or indirect benefit of any nature,
except that it does not include any remuneration (within
the meaning of section 73A of this Act) whose receipt may
be authorised under that section, and
(b)
the same rules apply for determining whether a person is
10
connected with a charity trustee or member of the CIO as
apply, in accordance with section 73B(6) and (7) of this Act,
for determining whether a person is connected with a
charity trustee for the purposes of section 73A.
Registration and coming into effect of amendments
15
15    (1)
A CIO shall send to the Commission a copy of a resolution
containing an amendment to its constitution, together with—
(a)
a copy of the constitution as amended, and
(b)
such other documents and information as the Commission
may require,
20

by the end of the period of 15 days beginning with the date of
passing of the resolution (see paragraph 14(3)).
      (2)
An amendment to a CIO’s constitution does not take effect until it
has been registered.
      (3)
The Commission shall refuse to register an amendment if—
25
(a)
in the opinion of the Commission the CIO had no power to
make it (for example, because the effect of making it would
be that the CIO ceased to be a charity, or that the CIO or its
constitution did not comply with any requirement
imposed by or by virtue of this Act or any other
30
enactment), or
(b)
the amendment would change the name of the CIO, and
the Commission could have refused an application under
section 69E of this Act for the constitution and registration
of a CIO with the name specified in the amendment on a
35
ground set out in subsection (4) of that section.
      (4)
The Commission may refuse to register an amendment if the
amendment would make a regulated alteration and the consent
referred to in paragraph 14(5) had not been obtained.
      (5)
But if the Commission does register such an amendment,
40
paragraph 14(5) does not apply.”
Part 2
Other amendments of 1993 Act
3
The 1993 Act is further amended as follows.

Charities Bill [HL]
Schedule 8 — Minor and consequential amendments
131

4
In section 45 (annual reports), after subsection (3A) insert—
“(3B)
But in the case of a charity which is constituted as a CIO—
(a)
the requirement imposed by subsection (3) applies whatever
the charity’s gross income is, and
(b)
subsection (3A) does not apply.”
5
5
In section 48 (annual returns), in subsection (1A), at the end add “(but this
subsection does not apply if the charity is constituted as a CIO)”.
6
In section 86 (regulations and orders)—
(a)
in subsection (2), after paragraph (a) insert—
“(aa)
to regulations of the Secretary of State under section
10
69N above; and no regulations shall be made under
that section unless a draft of the regulations has been
laid before and approved by a resolution of each
House of Parliament; or”,
(b)
in subsection (4), for “or 45” substitute “, 45, 69N or 69Q”.
15
7
In section 97 (general interpretation), in subsection (1), at the appropriate
place insert—
““CIO” means charitable incorporated organisation;”.
Schedule 8
Section 74

Minor and consequential amendments
20
Literary and Scientific Institutions Act 1854 (c. 112)
1
In section 6 of the Literary and Scientific Institutions Act 1854 (power of
corporations etc. to convey land for the purposes of that Act) for “without
the consent of the Charity Commissioners” substitute “except with the
consent of the Charity Commission or in accordance with such provisions of
25
section 36(2) to (8) of the Charities Act 1993 as are applicable”.
Places of Worship Registration Act 1855 (c. 81)
2
In section 9(1) of the Places of Worship Registration Act 1855 (certified places
exempt from requirement to register)—
(a)
for “shall be excepted under subsection (5) of section 3 of the
30
Charities Act 1993, from registration under that section” substitute
“shall, so far as it is a charity, be treated for the purposes of section
3A(4)(b) of the Charities Act 1993 (institutions to be excepted from
registration under that Act) as if that provision applied to it”, and
(b)
for “Charity Commissioners” substitute “Charity Commission”.
35
Bishops Trusts Substitution Act 1858 (c. 71)
3
The Bishops Trusts Substitution Act 1858 has effect subject to the following
amendments.
4
In section 1 (substitution of one bishop for another as trustee)—
(a)
for “Charity Commissioners” substitute “Charity Commission”, and
40

Charities Bill [HL]
Schedule 8 — Minor and consequential amendments
132

(b)
for “them” substitute “it”.
5
In section 3 (how costs are to be defrayed) for “said Charity Commissioners”
(in both places) substitute “Charity Commission”.
Places of Worship Sites Amendment Act 1882 (c. 21)
6
In section 1(d) of the Places of Worship Sites Amendment Act 1882
5
(conveyance of lands by corporations and other public bodies) for “without
the consent of the Charity Commissioners” substitute “except with the
consent of the Charity Commission or in accordance with such provisions of
section 36(2) to (8) of the Charities Act 1993 as are applicable”.
Municipal Corporations Act 1882 (c. 50)
10
7
In section 133(2) of the Municipal Corporations Act 1882 (administration of
charitable trusts and vesting of legal estate) for “Charity Commissioners”
substitute “Charity Commission”.
Technical and Industrial Institutions Act 1892 (c. 29)
8
In section 9(1) of the Technical and Industrial Institutions Act 1892 (site may
15
be sold or exchanged) for “with the consent of the Charity Commissioners”
substitute “with the consent of the Charity Commission or in accordance
with such provisions of section 36(2) to (8) of the Charities Act 1993 as are
applicable”.
Local Government Act 1894 (c. 73)
20
9     (1)
In section 75(2) of the Local Government Act 1894 (construction of that Act)
the definition of “ecclesiastical charity” is amended as follows.
      (2)
In the second paragraph (proviso)—
(a)
for “Charity Commissioners” substitute “Charity Commission”, and
(b)
for “them” substitute “it”.
25
      (3)
In the third paragraph (inclusion of other buildings) for “Charity
Commissioners” substitute “Charity Commission”.
Commons Act 1899 (c. 30)
10
In section 18 of the Commons Act 1899 (power to modify provisions as to
recreation grounds)—
30
(a)
for “Charity Commissioners” substitute “Charity Commission”, and
(b)
for “their” substitute “its”.
Open Spaces Act 1906 (c. 25)
11
The Open Spaces Act 1906 has effect subject to the following amendments.
12
In section 3(1) (transfer to local authority of spaces held by trustees for
35
purposes of public recreation) for “Charity Commissioners” substitute
“Charity Commission”.
13    (1)
Section 4 (transfer by charity trustees of open space to local authority) is
amended as follows.

Charities Bill [HL]
Schedule 8 — Minor and consequential amendments
133

      (2)
In subsection (1), for the words from “and with the sanction” to “as
hereinafter provided” substitute “and in accordance with subsection (1A)”.
      (3)
After subsection (1) insert—
“(1A)
The trustees act in accordance with this subsection if they convey or
demise the open space as mentioned in subsection (1)—
5
(a)
with the sanction of an order of the Charity Commission or
with that of an order of the court to be obtained as provided
in the following provisions of this section, or
(b)
in accordance with such provisions of section 36(2) to (8) of
the Charities Act 1993 as are applicable.”
10
      (4)
In subsection (4)—
(a)
for “Charity Commissioners” substitute “Charity Commission”, and
(b)
for “them” substitute “it”.
14
In section 21(1) (application to Ireland)—
(a)
for “Charity Commissioners” substitute “Charity Commission”, and
15
(b)
for “Commissioners of Charity Donations and Bequests for Ireland”
substitute “the Department for Social Development”.
National Trust Charity Scheme Confirmation Act 1919 (c. lxxxiv)
15
The National Trust Charity Scheme Confirmation Act 1919 has effect subject
to the following amendments.
20
16
In section 1 (confirmation of the scheme) for “Charity Commissioners”
substitute “Charity Commission”.
17
In paragraph 3 of the scheme set out in the Schedule, for “Charity
Commissioners upon such application made to them for the purpose as they
think” substitute “Charity Commission upon such application made to it for
25
the purpose as it thinks”.
Settled Land Act 1925 (c. 18)
18
In section 29(3) of the Settled Land Act 1925 (charitable and public trusts:
saving) for “Charity Commissioners” substitute “Charity Commission”.
Landlord and Tenant Act 1927 (c. 36)
30
19
In Part 2 of the Second Schedule to the Landlord and Tenant Act 1927
(application to ecclesiastical and charity land), in paragraph 2, for “Charity
Commissioners” substitute “Charity Commission”.
Voluntary Hospitals (Paying Patients) Act 1936 (c. 17)
20
The Voluntary Hospitals (Paying Patients) Act 1936 has effect subject to the
35
following amendments.
21
In section 1 (definitions), in the definition of “Order”, for “Charity
Commissioners” substitute “Charity Commission”.
22    (1)
Section 2 (accommodation for and charges to paying patients) is amended as
follows.
40