Charities Bill [HL]

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Charities Bill [HL]

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 3 — Registration of charities
15

Exempt charities: registration and regulation
11
Changes in exempt charities
(1)
Schedule 2 to the 1993 Act (exempt charities) is amended as follows.
(2)
In paragraph (a) (general exemption by reference to law existing prior to
Charities Act 1960 (c. 58)) after “1855” insert “(but see Note 1)”.
5
(3)
In paragraph (b) (certain specified universities, colleges and schools)—
(a)
before “Queen Mary and Westfield College” insert “and”; and
(b)
omit “and the colleges of Winchester and Eton”.
(4)
Before paragraph (i) insert—
“(h)
a higher education corporation;”.
10
(5)
After paragraph (i) insert—
“(j)
a further education corporation;”.
(6)
In paragraph (w) (exemption for institutions administered by or on behalf of
institutions exempted under preceding provisions) after “last-mentioned
institution” insert “(but see Note 2)”.
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(7)
Omit paragraph (x) (Church Commissioners and institutions administered by
them).
(8)
In paragraph (y) (industrial and provident societies etc.) for the words from
“and any” onwards substitute “and which is also registered in the register of
social landlords under Part 1 of the Housing Act 1996;”.
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(9)
Omit paragraph (zb) (the National Lottery Charities Board).
(10)
At the end insert—

“Notes
1.   Paragraph (a) above does not include—
(a)
any Investment Fund or Deposit Fund within the meaning of
25
the Church Funds Investment Measure 1958,
(b)
any investment fund or deposit fund within the meaning of the
Methodist Church Funds Act 1960, or
(c)
the representative body of the Welsh Church or property
administered by it.
30
2. Paragraph (w) above does not include any students’ union.”
(11)
In section 24 of the 1993 Act (schemes to establish common investment funds),
in subsection (8) (fund is to be a charity and, if the scheme admits only exempt
charities, an exempt charity) omit the words from “; and if the scheme”
onwards.
35
(12)
The Secretary of State may by order make such further amendments of
Schedule 2 to the 1993 Act as he considers appropriate for securing—
(a)
that (so far as they are charities) institutions of a particular description
become or (as the case may be) cease to be exempt charities, or
(b)
that (so far as it is a charity) a particular institution becomes or (as the
40
case may be) ceases to be an exempt charity,

or for removing from that Schedule an institution that has ceased to exist.

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 3 — Registration of charities
16

(13)
An order under subsection (12) may only be made for the purpose mentioned
in paragraph (a) or (b) of that subsection if the Secretary of State is satisfied that
the order is desirable in the interests of ensuring appropriate or effective
regulation of the charities or charity concerned in connection with compliance
by the charity trustees of the charities or charity with their legal obligations in
5
exercising control and management of the administration of the charities or
charity.
(14)
The Secretary of State may by order make such amendments or other
modifications of any enactment as he considers appropriate in connection
with—
10
(a)
charities of a particular description becoming, or ceasing to be, exempt
charities, or
(b)
a particular charity becoming, or ceasing to be, an exempt charity,

by virtue of any provision made by or under this section.
(15)
In this section “exempt charity” has the same meaning as in the 1993 Act.
15
12
Increased regulation of exempt charities under 1993 Act
The 1993 Act is amended in accordance with Schedule 5 (which has effect for
increasing the extent to which exempt charities are subject to regulation under
that Act).
13
General duty of principal regulator in relation to exempt charity
20
(1)
This section applies to any body or Minister of the Crown who is the principal
regulator in relation to an exempt charity.
(2)
The body or Minister must do all that it or he reasonably can to meet the
compliance objective in relation to the charity.
(3)
The compliance objective is to promote compliance by the charity trustees with
25
their legal obligations in exercising control and management of the
administration of the charity.
(4)
In this section—
(a)
“exempt charity” has the same meaning as in the 1993 Act; and
(b)
“principal regulator”, in relation to an exempt charity, means such
30
body or Minister of the Crown as is prescribed as its principal regulator
by regulations made by the Secretary of State.
(5)
Regulations under subsection (4)(b) may make such amendments or other
modifications of any enactment as the Secretary of State considers appropriate
for the purpose of facilitating, or otherwise in connection with, the discharge
35
by a principal regulator of the duty under subsection (2).

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 4 — Application of property cy-près
17

14
Commission to consult principal regulator before exercising powers in
relation to exempt charity
After section 86 of the 1993 Act insert—
“86A
Consultation by Commission before exercising powers in relation to
exempt charity
5
Before exercising in relation to an exempt charity any specific power
exercisable by it in relation to the charity, the Commission must consult
the charity’s principal regulator.”
Chapter 4
Application of property cy-près
10
Cy-près occasions
15
Application cy-près by reference to current circumstances
(1)
Section 13 of the 1993 Act (occasions for applying property cy-près) is amended
as follows.
(2)
In subsection (1)(c), (d) and (e)(iii), for “the spirit of the gift” substitute “the
15
appropriate considerations”.
(3)
After subsection (1) insert—
“(1A)
In subsection (1) above “the appropriate considerations” means—
(a)
(on the one hand) the spirit of the gift concerned, and
(b)
(on the other) the social and economic circumstances prevailing
20
at the time of the proposed alteration of the original purposes.”
16
Application cy-près of gifts by donors unknown or disclaiming
(1)
Section 14 of the 1993 Act (application cy-près of gifts of donors unknown or
disclaiming) is amended as follows.
(2)
In subsection (4) (power of court to direct that property is to be treated as
25
belonging to donors who cannot be identified) after “court”, in both places,
insert “or the Commission”.
17
Application cy-près of gifts made in response to certain solicitations
After section 14 of the 1993 Act insert—
“14A
Application cy-près of gifts made in response to certain solicitations
30
(1)
This section applies to property given—
(a)
for specific charitable purposes, and
(b)
in response to a solicitation within subsection (2) below.
(2)
A solicitation is within this subsection if—
(a)
it is made for specific charitable purposes, and
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(b)
it is accompanied by a statement to the effect that property
given in response to it will, in the event of those purposes

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 4 — Application of property cy-près
18

failing, be applicable cy-près as if given for charitable purposes
generally, unless the donor makes a relevant declaration at the
time of making the gift.
(3)
A “relevant declaration” is a declaration in writing by the donor to the
effect that, in the event of the specific charitable purposes failing, he
5
wishes the trustees holding the property to give him the opportunity to
request the return of the property in question (or a sum equal to its
value at the time of the making of the gift).
(4)
Subsections (5) and (6) below apply if—
(a)
a person has given property as mentioned in subsection (1)
10
above,
(b)
the specific charitable purposes fail, and
(c)
the donor has made a relevant declaration.
(5)
The trustees holding the property must take the prescribed steps for the
purpose of—
15
(a)
informing the donor of the failure of the purposes,
(b)
enquiring whether he wishes to request the return of the
property (or a sum equal to its value), and
(c)
if within the prescribed period he makes such a request,
returning the property (or such a sum) to him.
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(6)
If those trustees have taken all appropriate prescribed steps but—
(a)
they have failed to find the donor, or
(b)
the donor does not within the prescribed period request the
return of the property (or a sum equal to its value),

section 14(1) above shall apply to the property as if it belonged to a
25
donor within paragraph (b) of that subsection (application of property
where donor has disclaimed right to return of property).
(7)
If—
(a)
a person has given property as mentioned in subsection (1)
above,
30
(b)
the specific charitable purposes fail, and
(c)
the donor has not made a relevant declaration,

section 14(1) above shall similarly apply to the property as if it
belonged to a donor within paragraph (b) of that subsection.
(8)
For the purposes of this section—
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(a)
“solicitation” means a solicitation made in any manner and
however communicated to the persons to whom it is addressed,
(b)
it is irrelevant whether any consideration is or is to be given in
return for the property in question, and
(c)
where any appeal consists of both solicitations that are
40
accompanied by statements within subsection (2)(b) and
solicitations that are not so accompanied, a person giving
property as a result of the appeal is to be taken to have
responded to the former solicitations and not the latter, unless
he proves otherwise.
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(9)
In this section “prescribed” means prescribed by regulations made by
the Commission, and any such regulations shall be published by the
Commission in such manner as it thinks fit.

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 4 — Application of property cy-près
19

(10)
Subsections (7) and (10) of section 14 shall apply for the purposes of this
section as they apply for the purposes of section 14.”
Schemes
18
Cy-près schemes
After section 14A of the 1993 Act (inserted by section 17 above) insert—
5
“14B
Cy-près schemes
(1)
The power of the court or the Commission to make schemes for the
application of property cy-près shall be exercised in accordance with
this section.
(2)
Where any property given for charitable purposes is applicable cy-près,
10
the court or the Commission may make a scheme providing for the
property to be applied—
(a)
for such charitable purposes, and
(b)
(if the scheme provides for the property to be transferred to
another charity) by or on trust for such other charity,
15

as it considers appropriate, having regard to the matters set out in
subsection (3).
(3)
The matters are—
(a)
the spirit of the original gift,
(b)
the desirability of securing that the property is applied for
20
charitable purposes which are close to the original purposes,
and
(c)
the need for the relevant charity to have purposes which are
suitable and effective in the light of current social and economic
circumstances.
25
The “relevant charity” means the charity by or on behalf of which the
property is to be applied under the scheme.
(4)
If a scheme provides for the property to be transferred to another
charity, the scheme may impose on the charity trustees of that charity a
duty to secure that the property is applied for purposes which are, so
30
far as is reasonably practicable, similar in character to the original
purposes.
(5)
In this section references to property given include the property for the
time being representing the property originally given or property
derived from it.
35
(6)
In this section references to the transfer of property to a charity are
references to its transfer—
(a)
to the charity, or
(b)
to the charity trustees, or
(c)
to any trustee for the charity, or
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(d)
to a person nominated by the charity trustees to hold it in trust
for the charity,

as the scheme may provide.”

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 5 — Assistance and supervision of charities by court and Commission
20

Chapter 5
Assistance and supervision of charities by court and Commission
Suspension or removal of trustees etc. from membership
19
Power to suspend or remove trustees etc. from membership of charity
After section 18 of the 1993 Act insert—
5
“18A
Power to suspend or remove trustees etc. from membership of charity
(1)
This section applies where the Commission makes—
(a)
an order under section 18(1) above suspending from his office
or employment any trustee, charity trustee, officer, agent or
employee of a charity, or
10
(b)
an order under section 18(2) above removing from his office or
employment any officer, agent or employee of a charity,

and the trustee, charity trustee, officer, agent or employee (as the case
may be) is a member of the charity.
(2)
If the order suspends the person in question from his office or
15
employment, the Commission may also make an order suspending his
membership of the charity for the period for which he is suspended
from his office or employment.
(3)
If the order removes the person in question from his office or
employment, the Commission may also make an order—
20
(a)
terminating his membership of the charity, and
(b)
prohibiting him from resuming his membership of the charity
without the Commission’s consent.
(4)
If an application for the Commission’s consent under subsection (3)(b)
above is made five years or more after the order was made, the
25
Commission must grant the application unless satisfied that, by reason
of any special circumstances, it should be refused.”
Directions by Commission
20
Power to give specific directions for protection of charity
After section 19 of the 1993 Act insert—
30
“19A
Power to give specific directions for protection of charity
(1)
This section applies where, at any time after the Commission has
instituted an inquiry under section 8 above with respect to any charity,
it is satisfied as mentioned in section 18(1)(a) or (b) above.
(2)
The Commission may by order direct—
35
(a)
the charity trustees,
(b)
any trustee for the charity,
(c)
any officer or employee of the charity, or
(d)
(if a body corporate) the charity itself,

Charities Bill [HL]
Part 2 — Regulation of charities
Chapter 5 — Assistance and supervision of charities by court and Commission
21


to take any action specified in the order which the Commission
considers to be expedient in the interests of the charity.
(3)
An order under this section—
(a)
may require action to be taken whether or not it would
otherwise be within the powers exercisable by the person or
5
persons concerned, or by the charity, in relation to the
administration of the charity or to its property, but
(b)
may not require any action to be taken which is prohibited by
any Act of Parliament or expressly prohibited by the trusts of
the charity or is inconsistent with its purposes.
10
(4)
Anything done by a person or body under the authority of an order
under this section shall be deemed to be properly done in the exercise
of the powers mentioned in subsection (3)(a) above.
(5)
Subsection (4) does not affect any contractual or other rights arising in
connection with anything which has been done under the authority of
15
such an order.”
21
Power to direct application of charity property
After section 19A of the 1993 Act (inserted by section 20 above) insert—
“19B
Power to direct application of charity property
(1)
This section applies where the Commission is satisfied—
20
(a)
that a person or persons in possession or control of any property
held by or on trust for a charity is or are unwilling to apply it
properly for the purposes of the charity, and
(b)
that it is necessary or desirable to make an order under this
section for the purpose of securing a proper application of that
25
property for the purposes of the charity.
(2)
The Commission may by order direct the person or persons concerned
to apply the property in such manner as is specified in the order.
(3)
An order under this section—
(a)
may require action to be taken whether or not it would
30
otherwise be within the powers exercisable by the person or
persons concerned in relation to the property, but
(b)
may not require any action to be taken which is prohibited by
any Act of Parliament or expressly prohibited by the trusts of
the charity.
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(4)
Anything done by a person under the authority of an order under this
section shall be deemed to be properly done in the exercise of the
powers mentioned in subsection (3)(a) above.
(5)
Subsection (4) does not affect any contractual or other rights arising in
connection with anything which has been done under the authority of
40
such an order.”