Charities Bill [HL]

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Charities Bill [HL]

Charities Bill [HL]
Schedule 5 — Exempt charities: increased regulation under 1993 Act
106

Schedule 5
Section 12

Exempt charities: increased regulation under 1993 Act
Power to require charity’s name to be changed
1
In section 6 of the 1993 Act (power of Commission to require charity’s name
to be changed) omit subsection (9) (exclusion of exempt charities).
5
Power to institute inquiries
2
In section 8(1) of the 1993 Act (power of Commission to institute inquiries
with regard to charities but not in relation to any exempt charity) after “any
exempt charity” insert “except where this has been requested by its principal
regulator.”
10
Power to call for documents etc.
3
In section 9 of the 1993 Act (power of Commission to call for documents and
search records) omit subsection (4) (exclusion of documents relating only to
exempt charities).
Concurrent jurisdiction of Commission with High Court
15
4     (1)
Section 16 of the 1993 Act (concurrent jurisdiction of Commission with High
Court for certain purposes) is amended as follows.
      (2)
In subsection (4)(c) (application for Commission to exercise powers may be
made by Attorney General except in case of exempt charity) omit “in the case
of a charity other than an exempt charity,”.
20
      (3)
In subsection (5) (jurisdiction exercisable in case of charity which is not an
exempt charity and whose annual income does not exceed £500) omit
“which is not an exempt charity and”.
Further powers of Commission
5
In section 17(7) of the 1993 Act (expenditure by charity on promoting
25
Parliamentary Bill needs consent of court or Commission except in case of
exempt charity) omit the words from “but this subsection” onwards.
Power to act for protection of charities
6
In section 18 of the 1993 Act (power of Commission to act for protection of
charities) for subsection (16) substitute—
30
“(16)
In this section—
(a)
subsections (1) to (3) apply in relation to an exempt charity,
and
(b)
subsections (4) to (6) apply in relation to such a charity at any
time after the Commission have instituted an inquiry under
35
section 8 with respect to it,

and the other provisions of this section apply accordingly.”

Charities Bill [HL]
Schedule 6 — Group Accounts
107

Power to give directions about dormant bank accounts
7
In section 28 of the 1993 Act (power of Commission to give directions about
dormant bank accounts of charities), omit subsection (10) (exclusion of
accounts held by or on behalf of exempt charity).
Proceedings by persons other than Commission
5
8     (1)
Section 33 of the 1993 Act (charity proceedings by persons other than
Commission) is amended as follows.
      (2)
In subsection (2) (proceedings relating to a charity other than an exempt
charity must be authorised by the Commission) omit “(other than an exempt
charity)”.
10
      (3)
In subsection (7) (participation by Attorney General in proceedings relating
to charity other than exempt charity) omit “(other than an exempt charity)”.
Power to order disqualified person to repay sums received from charity
9
In section 73 of the 1993 Act (consequences of person acting as charity trustee
while disqualified), in subsection (4) (power of Commission to order
15
disqualified person to repay sums received from a charity other than an
exempt charity) omit “(other than an exempt charity)”.
Schedule 6
Section 30

Group Accounts
20

After Schedule 5 to the 1993 Act insert—
“Schedule 5A
Section 49A

Group Accounts
Interpretation
1     (1)
This paragraph applies for the purposes of this Schedule.
25
      (2)
A charity is a “parent charity” if—
(a)
it is (or is to be treated as) a parent undertaking in relation
to one or more other undertakings in accordance with the
provisions of section 258 of, and Schedule 10A to, the
Companies Act 1985, and
30
(b)
it is not a company.
      (3)
Each undertaking in relation to which a parent charity is (or is to
be treated as) a parent undertaking in accordance with those
provisions is a “subsidiary undertaking” in relation to the parent
charity.
35

Charities Bill [HL]
Schedule 6 — Group Accounts
108

      (4)
But sub-paragraph (3) does not have the result that any of the
following is a “subsidiary undertaking”—
(a)
any special trusts of a charity,
(b)
any institution which, by virtue of a direction under
section 96(5) of this Act, is to be treated as forming part of
5
a charity for the purposes of this Part of this Act, or
(c)
any charity to which a direction under section 96(6) of this
Act applies for those purposes.
      (5)
“The group”, in relation to a parent charity, means that charity and
its subsidiary undertaking or undertakings, and any reference to
10
the members of the group is to be construed accordingly.
      (6)
For the purposes of—
(a)
this paragraph, and
(b)
the operation of the provisions mentioned in sub-
paragraph (2) above for the purposes of this paragraph,
15

“undertaking” has the meaning given by sub-paragraph (7) below.
      (7)
For those purposes “undertaking” means—
(a)
an undertaking as defined by section 259(1) of the
Companies Act 1985, or
(b)
a charity which is not an undertaking as so defined.
20
Accounting records
2     (1)
The charity trustees—
(a)
of a parent charity, or
(b)
of any charity which is a subsidiary undertaking,

must ensure that the accounting records kept in respect of the
25
charity under section 41(1) of this Act not only comply with the
requirements of that provision but also are such as to enable the
charity trustees of the parent charity to ensure that, where any
group accounts are prepared by them under paragraph 3(2), those
accounts comply with the relevant requirements.
30
      (2)
If a parent charity has a subsidiary undertaking in relation to
which the requirements of section 41(1) of this Act do not apply,
the charity trustees of the parent charity must take reasonable
steps to secure that the undertaking keeps such accounting
records as to enable the trustees to ensure that, where any group
35
accounts are prepared by them under paragraph 3(2), those
accounts comply with the relevant requirements.
      (3)
In this paragraph “the relevant requirements” means the
requirements of regulations under paragraph 3.
Preparation of group accounts
40
3     (1)
This paragraph applies in relation to a financial year of a charity if
it is a parent charity at the end of that year.
      (2)
The charity trustees of the parent charity must prepare group
accounts in respect of that year.
      (3)
“Group accounts” means consolidated accounts—
45

Charities Bill [HL]
Schedule 6 — Group Accounts
109

(a)
relating to the group, and
(b)
complying with such requirements as to their form and
contents as may be prescribed by regulations made by the
Secretary of State.
      (4)
Without prejudice to the generality of sub-paragraph (3),
5
regulations under that sub-paragraph may make provision—
(a)
for any such accounts to be prepared in accordance with
such methods and principles as are specified or referred to
in the regulations;
(b)
for dealing with cases where the financial years of the
10
members of the group do not all coincide;
(c)
as to any information to be provided by way of notes to the
accounts.
      (5)
Regulations under that sub-paragraph may also make provision—
(a)
for determining the financial years of subsidiary
15
undertakings for the purposes of this Schedule;
(b)
for imposing on the charity trustees of a parent charity
requirements with respect to securing that such financial
years coincide with that of the charity.
      (6)
If the requirement in sub-paragraph (2) applies to the charity
20
trustees of a parent charity in relation to a financial year—
(a)
that requirement so applies in addition to the requirement
in section 42(1) of this Act, and
(b)
the option of preparing the documents mentioned in
section 42(3) of this Act is not available in relation to that
25
year (whatever the amount of the charity’s gross income
for that year).
      (7)
Sub-paragraph (2) has effect subject to paragraph 4.
Exceptions relating to requirement to prepare group accounts
4     (1)
The requirement in paragraph 3(2) does not apply to the charity
30
trustees of a parent charity in relation to a financial year if at the
end of that year it is itself a subsidiary undertaking in relation to
another charity.
      (2)
The requirement in paragraph 3(2) does not apply to the charity
trustees of a parent charity in relation to a financial year if the
35
aggregate gross income of the group for that year does not exceed
such sum as is specified in regulations made by the Secretary of
State.
      (3)
Regulations made by the Secretary of State may prescribe
circumstances in which a subsidiary undertaking may or (as the
40
case may be) must be excluded from group accounts required to
be prepared under paragraph 3(2) for a financial year.
      (4)
Where, by virtue of such regulations, each of the subsidiary
undertakings which are members of a group is either permitted or
required to be excluded from any such group accounts for a
45
financial year, the requirement in paragraph 3(2) does not apply to
the charity trustees of the parent charity in relation to that year.

Charities Bill [HL]
Schedule 6 — Group Accounts
110

Preservation of group accounts
5     (1)
The charity trustees of a charity shall preserve any group accounts
prepared by them under paragraph 3(2) for at least six years from
the end of the financial year to which the accounts relate.
      (2)
Subsection (4) of section 41 of this Act shall apply in relation to the
5
preservation of any such accounts as it applies in relation to the
preservation of any accounting records (the references to
subsection (3) of that section being construed as references to sub-
paragraph (1) above).
Audit of accounts of larger groups
10
6     (1)
This paragraph applies where group accounts are prepared for a
financial year of a parent charity under paragraph 3(2) and—
(a)
the aggregate gross income of the group in that year
exceeds the relevant income threshold, or
(b)
the aggregate gross income of the group in that year
15
exceeds the relevant income threshold and at the end of the
year the aggregate value of the assets of the group (before
deduction of liabilities) exceeds the relevant assets
threshold.
      (2)
In sub-paragraph (1)—
20
(a)
the reference in paragraph (a) or (b) to the relevant income
threshold is a reference to the sum prescribed as the
relevant income threshold for the purposes of that
paragraph, and
(b)
the reference in paragraph (b) to the relevant assets
25
threshold is a reference to the sum prescribed as the
relevant assets threshold for the purposes of that
paragraph.

“Prescribed” means prescribed by regulations made by the
Secretary of State.
30
      (3)
This paragraph also applies where group accounts are prepared
for a financial year of a parent charity under paragraph 3(2) and
the appropriate audit provision applies in relation to the parent
charity’s own accounts for that year.
      (4)
If this paragraph applies in relation to a financial year of a parent
35
charity by virtue of sub-paragraph (1) or (3), the group accounts
for that year shall be audited—
(a)
(subject to paragraph (b) or (c) below) by a person within
section 43(2)(a) or (b) of this Act;
(b)
if section 43A of this Act applies in relation to that year, by
40
a person appointed by the Audit Commission (see section
43A(7));
(c)
if section 43B of this Act applies in relation to that year, by
the Auditor General for Wales.
      (5)
Where it appears to the Commission that sub-paragraph (4)(a)
45
above has not been complied with in relation to that year within
ten months from the end of that year—

Charities Bill [HL]
Schedule 6 — Group Accounts
111

(a)
the Commission may by order require the group accounts
for that year to be audited by a person within section
43(2)(a) or (b) of this Act, and
(b)
if it so orders, the auditor shall be a person appointed by
the Commission.
5
      (6)
Section 43(6) of this Act shall apply in relation to any such audit as
it applies in relation to an audit carried out by an auditor
appointed under section 43(5) (reading the reference to the funds
of the charity as a reference to the funds of the parent charity).
      (7)
Section 43A(4) and (6) of this Act apply in relation to any
10
appointment under sub-paragraph (4)(b) above as they apply in
relation to an appointment under section 43A(2).
      (8)
If this paragraph applies in relation to a financial year of a parent
charity by virtue of sub-paragraph (1), the appropriate audit
provision shall apply in relation to the parent charity’s own
15
accounts for that year (whether or not it would otherwise so
apply).
      (9)
In this paragraph “the appropriate audit provision”, in relation to
a financial year of a parent charity, means—
(a)
(subject to paragraph (b) or (c) below) section 43(2) of this
20
Act;
(b)
if section 43A of this Act applies in relation to that year,
section 43A(2);
(c)
if section 43B of this Act applies in relation to that year,
section 43B(2).
25
Examination of accounts of smaller groups
7     (1)
This paragraph applies where—
(a)
group accounts are prepared for a financial year of a parent
charity under paragraph 3(2), and
(b)
paragraph 6 does not apply in relation to that year.
30
      (2)
If—
(a)
this paragraph applies in relation to a financial year of a
parent charity, and
(b)
sub-paragraph (4) or (5) below does not apply in relation
to it,
35

subsections (3) to (7) of section 43 of this Act shall apply in relation
to the group accounts for that year as they apply in relation to the
accounts of a charity for a financial year in relation to which
subsection (2) of that section does not apply, but subject to the
modifications in sub-paragraph (3) below.
40
      (3)
The modifications are—
(a)
any reference to the charity trustees of the charity is to be
construed as a reference to the charity trustees of the
parent charity;
(b)
any reference to the charity’s gross income in the financial
45
year in question is to be construed as a reference to the
aggregate gross income of the group in that year; and

Charities Bill [HL]
Schedule 6 — Group Accounts
112

(c)
any reference to the funds of the charity is to be construed
as a reference to the funds of the parent charity.
      (4)
If—
(a)
this paragraph applies in relation to a financial year of a
parent charity, and
5
(b)
section 43A of this Act also applies in relation to that year,

subsections (3) to (6) of that section shall apply in relation to the
group accounts for that year as they apply in relation to the
accounts of a charity for a financial year in relation to which
subsection (2) of that section does not apply.
10
      (5)
If—
(a)
this paragraph applies in relation to a financial year of a
parent charity, and
(b)
section 43B of this Act also applies in relation to that year,

subsection (3) of that section shall apply in relation to the group
15
accounts for that year as they apply in relation to the accounts of a
charity for a financial year in relation to which subsection (2) of
that section does not apply.
      (6)
If the group accounts for a financial year of a parent charity are to
be examined or audited in accordance with section 43(3) of this
20
Act (as applied by sub-paragraph (2) above), section 43(3) shall
apply in relation to the parent charity’s own accounts for that year
(whether or not it would otherwise so apply).
      (7)
Nothing in sub-paragraph (4) or (5) above affects the operation of
section 43A(3) to (6) or (as the case may be) section 43B(3) in
25
relation to the parent charity’s own accounts for the financial year
in question.
Supplementary provisions relating to audits etc.
8     (1)
Section 44(1) of this Act shall apply in relation to audits and
examinations carried out under or by virtue of paragraph 6 or 7,
30
but subject to the modifications in sub-paragraph (2) below.
      (2)
The modifications are—
(a)
in paragraph (b), the reference to section 43, 43A or 43B of
this Act is to be construed as a reference to paragraph 6
above or to any of those sections as applied by paragraph
35
7 above;
(b)
also in paragraph (b), the reference to any such statement
of accounts as is mentioned in sub-paragraph (i) of that
paragraph is to be construed as a reference to group
accounts prepared for a financial year under paragraph
40
3(2) above;
(c)
in paragraph (c), any reference to section 43, 43A or 43B of
this Act is to be construed as a reference to that section as
applied by paragraph 7 above;
(d)
in paragraphs (d) and (e), any reference to the charity
45
concerned or a charity is to be construed as a reference to
any member of the group; and