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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

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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—

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(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.

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