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Charities Bill [HL]


Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 9 — Charity trustees etc.

36

 

(c)   

a person carrying on business in partnership with the trustee or

with any person falling within paragraph (a) or (b);

(d)   

an institution which is controlled—

(i)   

by the trustee or by any person falling within paragraph

(a), (b) or (c), or

5

(ii)   

by two or more persons falling within sub-paragraph (i),

when taken together.

(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

10

(ii)   

two or more persons falling within sub-paragraph (i),

when taken together, have a substantial interest.

(6)   

Paragraphs 2 to 4 of Schedule 5 to this Act apply for the purposes of

subsection (5) above as they apply for the purposes of provisions of that

Schedule.”

15

37      

Disqualification of trustee receiving remuneration by virtue of section 36

After section 73B of the 1993 Act (inserted by section 36 above) insert—

“73C    

Disqualification of trustee receiving remuneration under section 73A

(1)   

This section applies to any charity trustee or trustee for a charity—

(a)   

who is or would be entitled to remuneration under an

20

agreement or proposed agreement within section 73A(3) above,

or

(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

25

agreement.

(3)   

But any act done by such a person which he is disqualified from doing

by virtue of subsection (2) above shall not be invalid by reason only of

that disqualification.

(4)   

Where the Commission is satisfied—

30

(a)   

that a person (“the disqualified trustee”) has done any act which

he was disqualified from doing by virtue of subsection (2)

above, and

(b)   

that the disqualified trustee or a person connected with him has

received or is to receive from the charity any remuneration

35

under the agreement in question,

it may make an order under subsection (5) or (6) below (as appropriate).

(5)   

An order under this subsection is one requiring the disqualified

trustee—

(a)   

to reimburse to the charity the whole or part of the

40

remuneration received as mentioned in subsection (4)(b) above;

(b)   

to the extent that the remuneration consists of a benefit in kind,

to reimburse to the charity the whole or part of the monetary

value (as determined by the Commission) of the benefit in kind.

 
 

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 9 — Charity trustees etc.

37

 

(6)   

An order under this subsection is one directing that the disqualified

trustee or (as the case may be) connected person is not to be paid the

whole or part of the remuneration mentioned in subsection (4)(b)

above.

(7)   

If the Commission makes an order under subsection (5) or (6) above,

5

the disqualified trustee or (as the case may be) 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

him to reimburse to the charity or (as the case may be) as it directs is not

to be paid to him.

10

(8)   

Subsections (5) to (7) of section 73B above apply for the purposes of this

section as they apply for the purposes of section 73A above.”

Liability of trustees etc.

38      

Power of Commission to relieve trustees, auditors etc. from liability for

breach of trust or duty

15

After section 73C of the 1993 Act (inserted by section 37 above) insert—

73D     

Power to relieve trustees, auditors etc. from liability for breach of trust

or duty

(1)   

This section applies to a person who is or has been—

(a)   

a charity trustee or trustee for a charity,

20

(b)   

a person appointed to audit a charity’s accounts (whether

appointed under an enactment or otherwise), or

(c)   

an independent examiner, reporting accountant or other person

appointed to examine or report on a charity’s accounts

(whether appointed under an enactment or otherwise).

25

(2)   

If the Commission considers—

(a)   

that a person to whom this section applies is or may be

personally liable for a breach of trust or breach of duty

committed in his capacity as a person within paragraph (a), (b)

or (c) of subsection (1) above, but

30

(b)   

that he has acted honestly and reasonably and ought fairly to be

excused for the breach of trust or duty,

   

the Commission may make an order relieving him wholly or partly

from any such liability.

(3)   

An order under subsection (2) above may grant the relief on such terms

35

as the Commission thinks fit.

(4)   

Subsection (2) does not apply in relation to any personal contractual

liability of a charity trustee or trustee for a charity.

(5)   

For the purposes of this section and section 73E below—

(a)   

subsection (1)(b) above is to be read as including a reference to

40

the Auditor General for Wales acting as auditor under section

43B above, and

(b)   

subsection (1)(c) above is to be read as including a reference to

the Auditor General for Wales acting as examiner under that

section;

45

 
 

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 9 — Charity trustees etc.

38

 

   

and in subsection (1)(b) and (c) any reference to a charity’s accounts is

to be read as including any group accounts prepared by the charity

trustees or directors 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

5

to trustees),

(b)   

section 727 of the Companies Act 1985 (power of court to grant

relief to officers or auditors of companies), or

(c)   

section 73E(2) below (which extends section 727 to auditors etc.

of charities which are not companies).

10

73E     

Court’s power to grant relief to apply to all auditors etc. of charities

which are not companies

(1)   

This section applies to a person acting in a capacity within section

73D(1)(b) or (c) above in relation to—

(a)   

the accounts of a charity which is not a company, or

15

(b)   

any group accounts prepared by the charity trustees of such a

charity.

(2)   

Section 727 of the Companies Act 1985 (power of court to grant relief to

officers or auditors of companies) shall have effect in relation to a

person to whom this section applies as it has effect in relation to a

20

person employed as auditor by a company.”

39      

Trustees’ indemnity insurance

After section 73E of the 1993 Act (inserted by section 38 above) insert—

“73F    

Trustees’ indemnity insurance

(1)   

The charity trustees of a charity may arrange for the purchase, out of

25

the funds 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

30

(b)   

any negligence, default, breach of duty or breach of trust

committed by them in their capacity as directors or officers of

the charity (if it is a body corporate) or of any body corporate

carrying on any activities on behalf of the charity.

(2)   

The terms of such insurance must, however, be so framed as to exclude

35

the provision of any indemnity for a person in respect of—

(a)   

any liability incurred by him 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

40

requirement of a regulatory nature (however arising);

(b)   

any liability incurred by him in defending any criminal

proceedings in which he is convicted of an offence arising out of

any fraud or dishonesty, or wilful or reckless misconduct, by

him; or

45

 
 

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 10 — Powers of unincorporated charities

39

 

(c)   

any liability incurred by him to the charity that arises out of any

conduct which he knew (or must reasonably be assumed to

have known) was not in the interests of the charity or in the case

of which he did not care whether it was in the best interests of

the charity or not.

5

(3)   

For the purposes of subsection (2)(b) above—

(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

10

bringing an appeal, or

(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

15

further appeal has ended, or

(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.

20

(5)   

The duty of care in section 1(1) of the Trustee Act 2000 applies to a

charity trustee when making such a decision.

(6)   

The Secretary of State may by order make such amendments of

subsections (2) and (3) above as he considers appropriate.

(7)   

No order may be made under subsection (6) above unless a draft of the

25

order has been laid before and approved by a resolution of each House

of Parliament.

(8)   

This section—

(a)   

does not authorise the purchase of any insurance whose

purchase is expressly prohibited by the trusts of the charity, but

30

(b)   

has effect despite any provision prohibiting the charity trustees

or trustees for the charity receiving any personal benefit out of

the funds of the charity.”

Chapter 10

Powers of unincorporated charities

35

40      

Power to transfer all property

For section 74 of the 1993 Act substitute—

“74     

Power to transfer all property of unincorporated charity

(1)   

This section applies to a charity if—

(a)   

its gross income in its last financial year did not exceed £10,000,

40

(b)   

it does not hold any designated land, and

(c)   

it is not a company or other body corporate.

 
 

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 10 — Powers of unincorporated charities

40

 

   

“Designated land” means land held on trusts which stipulate that it is

to be used for the purposes, or any particular purposes, of the charity.

(2)   

The charity trustees of such a charity may resolve for the purposes of

this section—

(a)   

that all the property of the charity should be transferred to

5

another charity specified in the resolution, or

(b)   

that all the property of the charity should be transferred to two

or more charities specified in the resolution in accordance with

such division of the property between them as is so specified.

(3)   

Any charity so specified may be either a registered charity or a charity

10

which is not required to be registered.

(4)   

But the charity trustees of a charity (“the transferor charity”) do not

have power to pass a resolution under subsection (2) above unless they

are satisfied—

(a)   

that it is expedient in the interests of furthering the purposes for

15

which the property is held by the transferor charity for the

property to be transferred in accordance with the resolution,

and

(b)   

that the purposes (or any of the purposes) of any charity to

which property is to be transferred under the resolution are

20

substantially similar to the purposes (or any of the purposes) of

the transferor charity.

(5)   

Any resolution under subsection (2) above must be passed by a

majority of not less than two-thirds of the charity trustees who vote on

the resolution.

25

(6)   

Where charity trustees have passed a resolution under subsection (2),

they must send a copy of it to the Commission, together with a

statement of their reasons for passing it.

(7)   

Having received the copy of the resolution, the Commission—

(a)   

may direct the charity trustees to give public notice of the

30

resolution in such manner as is specified in the direction, and

(b)   

if it gives such a direction, must take into account any

representations made to it by persons appearing to it to be

interested in the charity, where those representations are made

to it within the period of 28 days beginning with the date when

35

public notice of the resolution is given by the charity trustees.

(8)   

The Commission may also direct the charity trustees to provide the

Commission with additional information or explanations relating to—

(a)   

the circumstances in and by reference to which they have

decided to act under this section, or

40

(b)   

their compliance with any obligation imposed on them by or

under this section in connection with the resolution.

(9)   

Subject to the provisions of section 74A below, a resolution under

subsection (2) above takes effect at the end of the period of 60 days

beginning with the date on which the copy of it was received by the

45

Commission.

(10)   

Where such a resolution has taken effect, the charity trustees must

arrange for all the property of the transferor charity to be transferred in

 
 

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 10 — Powers of unincorporated charities

41

 

accordance with the resolution, and on terms that any property so

transferred—

(a)   

is to be held by the charity to which it is transferred (“the

transferee charity”) in accordance with subsection (11) below,

but

5

(b)   

when so held is nevertheless to be subject to any restrictions on

expenditure to which it was subject as property of the transferor

charity;

   

and the charity trustees must arrange for the property to be so

transferred by such date after the resolution takes effect as they agree

10

with the charity trustees of the transferee charity or charities concerned.

(11)   

The charity trustees of any charity to which property is transferred

under this section must secure, so far as is reasonably practicable, that

the property is applied for such of its purposes as are substantially

similar to those of the transferor charity.

15

   

But this requirement does not apply if those charity trustees consider

that complying with it would not result in a suitable and effective

method of applying the property.

(12)   

For the purpose of enabling any property to be transferred to a charity

under this section, the Commission may, at the request of the charity

20

trustees of that charity, make orders vesting any property of the

transferor charity—

(a)   

in the transferee charity, in its charity trustees or in any trustee

for that charity, or

(b)   

in any other person nominated by those charity trustees to hold

25

property in trust for that charity.

(13)   

The Secretary of State may by order amend subsection (1) above by

substituting a different sum for the sum for the time being specified

there.

(14)   

In this section references to the transfer of property to a charity are

30

references to its transfer—

(a)   

to the charity, or

(b)   

to the charity trustees, or

(c)   

to any trustee for the charity, or

(d)   

to a person nominated by the charity trustees to hold it in trust

35

for the charity,

   

as the charity trustees may determine.

(15)   

Where a charity has a permanent endowment, this section has effect in

accordance with section 74B.

74A     

Resolution not to take effect or to take effect at later date

40

(1)   

This section deals with circumstances in which a resolution under

section 74(2) above either—

(a)   

does not take effect under section 74(9) above, or

(b)   

takes effect at a time later than that mentioned in section 74(9).

(2)   

A resolution does not take effect under section 74(9) above if before the

45

end of—

 
 

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 10 — Powers of unincorporated charities

42

 

(a)   

the period of 60 days mentioned in section 74(9) (“the 60-day

period”), or

(b)   

that period as modified by subsection (3) or (4) below,

   

the Commission notifies the charity trustees in writing that it objects to

the resolution, either on procedural grounds or on the merits of the

5

proposals contained in the resolution.

   

“On procedural grounds” means on the grounds that any obligation

imposed on the charity trustees by or under section 74 above has not

been complied with in connection with the resolution.

(3)   

If under section 74(7) above the Commission directs the charity trustees

10

to give public notice of a resolution, the running of the 60-day period is

suspended by virtue of this subsection—

(a)   

as from the date on which the direction is given to the charity

trustees, and

(b)   

until the end of the period of 42 days beginning with the date on

15

which public notice of the resolution is given by the charity

trustees.

(4)   

If under section 74(8) above the Commission directs the charity trustees

to provide any information or explanations, the running of the 60-day

period is suspended by virtue of this subsection—

20

(a)   

as from the date on which the direction is given to the charity

trustees, and

(b)   

until the date on which the information or explanations is or are

provided to the Commission.

(5)   

Subsection (6) below applies once the period of time, or the total period

25

of time, during which the 60-day period is suspended by virtue of

either or both of subsections (3) and (4) above exceeds 120 days.

(6)   

At that point the resolution (if not previously objected to by the

Commission) is to be treated as if it had never been passed.

74B     

Transfer where charity has permanent endowment

30

(1)   

This section provides for the operation of section 74 above where a

charity within section 74(1) has a permanent endowment (whether or

not the charity’s trusts contain provision for the termination of the

charity).

(2)   

In such a case section 74 applies as follows—

35

(a)   

if the charity has both a permanent endowment and other

property (“unrestricted property”)—

(i)   

a resolution under section 74(2) must relate to both its

permanent endowment and its unrestricted property,

and

40

(ii)   

that section applies in relation to its unrestricted

property in accordance with subsection (3) below and in

relation to its permanent endowment in accordance

with subsections (4) to (11) below;

(b)   

if all of the property of the charity is comprised in its permanent

45

endowment, that section applies in relation to its permanent

endowment in accordance with subsections (4) to (11) below.

 
 

 
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