OG510-1 Charity Trustees: Making and Ending Appointments

Last reviewed:
5 November 2013
Last updated:
21 November 2016

Policy Statement/Overview

We will not usually get involved in making trustee appointments. We expect appointments to be made by continuing trustees or other named appointers using the provisions of the governing document or statutory provisions. Our involvement will be restricted to exceptional circumstances where the normal legal provisions are not available or are unworkable and we are working with the charity to update its trusts, or as part of a statutory inquiry.

Likewise we will not get involved in trustee resignations, retirements or removals where trustees can take action on their own account unless we consider it necessary, for example, as part of a statutory inquiry.  

Throughout this guidance we use the term "trustee(s)" to mean charity trustee(s). This term does not mean trustees for non-charitable trusts or other organisations that are not charitable.

Summary of the guidance

Casework Guidance includes descriptions of different types of trustees, the types of trustee bodies and the mechanisms that may be used for trustee appointments. It then goes on to look at the considerations and checks that need to be made where we, or others, are involved in making appointments.

Case Studies include circumstances from different cases where we may or may not be involved in trustee appointments and other related issues, they include:

  • inducement payments made to attract new trustees
  • appointment of minors as trustees and parental liability for minors
  • administering school funds where the school has become an academy
  • the use of the New Parishes Act 1983 where parishes change leaving charities without ex officio trustees

The Legal/ Policy and Accountancy Framework sets out who may or may not become a trustee and the legal basis for making appointments. It also sets out the legal basis for retirement, resignation and removal by the trustees or by us and considers the position of invalidly appointed trustees. It also looks at what can be done where an AGM cannot take place at the correct time because of exceptional circumstances.   

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Casework Guidance

B1 Basic principles when considering making or ending trustee appointments

Our approach in cases that do not involve regulatory issues is:

  • to check whether the governing document contains the provisions necessary to make the changes required (ie appoint, remove or discharge trustees or for trustees to resign or retire).  

Where these powers are not available the trustees or appointers would need to rely on statutory provisions. These will depend on the type of charity (ie charitable trusts, companies or unincorporated associations) but in most cases this will mean:

  • the Trustee Act 1925 in the case of unincorporated charities  
  • the Companies Act 2006 for charitable companies  
  • by their nature charitable unincorporated associations will usually have sufficient powers in the constitutions although the Trustee Act 1925 powers may sometimes be applicable.  

Where a charity's governing document or the statutory powers cannot be used we will consider action by making an Order, or sometimes a Scheme, to appoint the minimum number of trustees required by law. Those appointed can then use statutory powers to make further appointments or amend the governing document.

In cases where regulatory issues arise we will use powers to appoint or remove trustees that fit in with the case strategy. The use of these powers is set out in OG117-9.  

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B2 General information about trustees

B2.1 Who are the trustees? 

Charity trustees are individuals who, collectively, have general control and management of the administration of a charity. Different types of charity administration (a trust, an unincorporated association, a charitable company or a charitable incorporated organisation (CIO)) give rise to different titles for trustee bodies. These will not always have the word trustee in the title and might include:

  • management committee
  • committee
  • council members
  • executive committee
  • governors
  • directors
  • board 

Within those trustee bodies there may be different types of trustees that might include:

  • self perpetuating bodies
  • elected trustees
  • nominated trustees
  • co-opted trustees
  • ex officio trustees
  • user trustees
  • sole trustees  

These types of trustees reflect the different types of charity and those who put them forward for appointment. Some will be chosen by other trustees, some elected at members' meetings, some may be nominated by outside bodies or become a trustee because of an office or position they hold.  Custodian and holding trustees may be appointed to hold property for the charity but will not usually be part of the decision making body.

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B2.2 Different types of trustees and how they are appointed

Self perpetuating trustee bodies are most often associated with charitable trusts. Individual trustees are appointed by existing trustees by passing a resolution at an ordinary trustee meeting, or where required by the governing document, at a special meeting of the trustees called for that purpose.

Typically, a trustee body consists of 3, 5 or 7 trustees who are appointed for life or until they resign or their trusteeship is terminated for other reasons. Modern trust deeds and Commission Schemes will sometimes allow appointments for a fixed term or terms.  Additionally, the trustees have the ability to appoint a new trustee by resolution and a memorandum made following such a resolution may be signed by the person presiding and witnessed by two persons present at the meeting. This is done under section 334 of the Charities Act. The memorandum may also be executed as a deed and this has the effect of transferring title of any charity property to the continuing trustees. 

Elected trustees are common in unincorporated associations where the trustees are elected by the members of the charity each year at the annual general meeting. Many charitable companies also have a clause in the Articles that allows for some or all of the directors to be elected by the membership at the company's annual general meeting.  

The provisions for appointment of elected members are set in a charity's governing document and it is important that procedures are followed correctly to ensure that valid appointments are made. Trustees may find our guidance Charities and Meetings CC48 useful in preparing for meetings where trustees are to be appointed.

Nominated trustees may sometimes be known as "representative trustees". They are nominated by bodies outside of a charity, such as a local authority, to become a trustee of that charity. Those nominated may or may not be members of the nominating body. The governing document will specify the organisations that are able to make nominations and the number of nominations they can make. In rare cases the nominating body may be able to nominate an alternate if the person nominated originally is unable to attend trustee meetings. The role of the alternate is to put forward comments where required and to report back to the nominated trustee, they are not a trustee in their own right.

We do not encourage the use of the term "representative trustee" as this title can be misleading because the trustees are not there to represent the interests of the nominating body. Nominated trustees have exactly the same duties and responsibilities the other trustees in acting to further the interests of the charity independently of any interests of the nominating body.

Co-opted trustees are found most commonly in unincorporated associations or charitable companies where the charity has a membership. Their appointment is under express provisions in the governing document allowing the trustee body to fill vacancies on an ad hoc basis or to supplement the skills of existing trustees. The vacancies may come up part way through a term of office and co-opting a trustee means that there is no need to wait until the annual general meeting to fill the vacancy.

We usually recommend that co-opted trustees make up no more than a third of the trustee body, particularly where the charity is a service provider. This means that the majority of trustees are either elected or nominated, which helps to maintain links with beneficiaries, funders or other key stakeholders.

Ex officio trustees become trustees because of the office that he or she holds. It may be a religious role, for example, the vicar of a parish, an imam or a priest, or a secular role such as a mayor, mayoress or the headteacher of a school. Ex officio trustees have the same duties and responsibilities as the other trustees.  The person stops being a trustee if he or she ceases to hold the office concerned or if the particular office ceases to exist. Further information about ex officio trusteeship coming to an end or ex officio trustees not wishing to act can be found in section E5.5

User trustees is a description we use for trustees who also use or benefit from a charity's services or facilities. They may be appointed in the same way as any other trustees described above but the governing document will not usually describe them as a "user trustee". Some governing documents may limit the number of user trustees.

Advantages in having user trustees might include:

  • their experience of using the charity's services may help in developing services and provide insight to other trustees on the services they provide
  • taking on trusteeship may give a sense of ownership and empowerment to users
  • it may help to promote diversity in the trustee body and the charity
  • it may increase support for a charity among other users and help to create more cohesive communities
  • it may broaden a charity's contacts and influence and sometimes increase opportunities for funding

Advantages of having user trustees must be carefully considered and managed by the trustees as there is also potential for conflict of interest. This might occur where the user trustee becomes involved in discussions and decision making where they might benefit personally. Personal benefit is not allowed unless:

  • there is specific provision in the governing document to allow for it
  • we have given our consent
  • the benefits are available to all users

The trustee body must make sure there are adequate safeguards to manage potential conflicts. Our guidance Users on Board: Beneficiaries who become trustees (CC24) has more information.

A sole trustee is a single trustee that can be an individual or a corporation (such as a local authority, a charitable or commercial company or other body corporate).  Whilst a sole trustee is permitted in law for non-company charities there are few advantages and a number of disadvantages to this arrangement. For instance, there is greater scope for unmanageable conflict of interest and it can be difficult to put in place processes for effective decision making and financial controls. We recommend as good practice that a charity is run by a minimum of three trustees.

Where we make an appointment of a body corporate as sole trustee it gives that trustee the status of a trust corporation in respect of the charity to which they are appointed - schedule 7 para 3(1) - (4) of the Charities Act. Having a trust corporation as sole trustee allows for the charity property to be vested in that corporation without the need to vest property with each new individual trustee as they are appointed. It also means that as a trust corporation the sole trustee has legal authority to give receipts relating to the charity's money, investments and property held on trust - a sole trustee that is not a trust corporation is unable to do this unless there is a contrary provision in the trust document - see section 14(2) of the Trustee Act 1925 and OG38 B1 section 4.2. 

Alternatively, where a sole trustee is not a trust corporation good practice would be to vest the charity property in a corporate body as a holding trustee or custodian trustee or the OC. Neither a holding trustee nor a custodian trustee, nor the OC would play any part in managing the charity but their appointment would avoid the need to vest the property each time the managing trustees changed.

However a corporate trustee is appointed, it is likely that the trustee provisions of the charity’s governing document will need to be amended to ensure it is compatible with the appointment of such a trustee, eg quorum requirements.   

The Official Custodian for Charities (OC). The Official Custodian is a corporation created by statute to hold land on behalf of charities; in practice he/she is a member of the Charity Commission's staff who is appointed to this role. If land is to be held by the Official Custodian it has to be 'vested' in him/her by Order of the Commission or the court. The OC may also hold equipment, money and investments where we act to protect charity, see OG117-08.

Where the Official Custodian for Charities (OC) is appointed as trustee he/she is able to give a valid receipt for capital money because of his/her status as a corporation sole (see schedule 2 of the Charities Act 2011 - and OG39 A1 section 4). In practice section 91(3) of the Charities Act allows the charity trustees act on behalf of the OC for transfer of property held in the name of the OC so we do not need to be involved in signing documents or conveyances.  

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B3 Appointment of trustees 

Our approach to appointing trustees is that this should be done by existing trustees or other persons entitled to make appointments without any involvement from us. Our input will be required only where there is no other legal way of making the appointment. The legislation that is used for appointing trustees to different charity types is set out in section E2 and E3.

This section looks at what must be considered when appointing trustees and by whom and what we must do when our involvement is required. 

B3.1 What needs to be considered when appointing new trustees

In most cases the existing trustees of a charity will be responsible for appointing new trustees. We have produced guidance on what they need to consider and how they might find new trustees. This guidance, Finding New Trustees CC30, can be found on our website. Key points outlined in the guidance are that:

  • existing trustees should be clear in their own minds about the charity's purpose and aims
  • existing trustees may wish to consider carrying out a "skills audit" to help them identify gaps in the skills of the trustee body as a whole
  • recruitment methods should be open and inclusive when searching for new trustees, this might include advertising and networking between charities
  • trustees should seek wide diversity across their boards
  • trustees should be aware of the legal rules on eligibility to serve as a trustee, bearing in mind that it is a criminal offence to act as a trustee if disqualified from doing so
  • charities should provide sufficient induction material to allow new trustees to understand their role
  • there should be ongoing training of trustees
  • trustees should ensure any particular checks that are needed before appointments are made - see B3.2 below.

Further guidance, The Essential Trustee CC3, can also be found on our website and will give potential trustees an idea of what being a trustee entails.

Case study 1 also considers trustees using a form of financial inducement to attract new trustees.

A scheme may be needed to cover the situation where an ex officio trustee declines to act - see E5.5 Resignation and retirement of ex officio trustees. Our policy on scheme making is set out in OG500 Schemes and scheme drafting guidance highlights the criteria needed to ensure balanced trustee bodies. 

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B3.2 Action to be taken before appointing new trustees

Those appointing new trustees should consider whether it is necessary or desirable to check a potential trustee's background through the Disclosure and Barring Service (DBS). We will use the DBS where we appoint trustees to children's charities and charities that carry out regulated activity for both children and adults. Whilst being a trustee is not in itself a regulated activiity we will make a check even where the trustee will not be involved in work with those beneficiaries, thereby limiting risks to the beneficiaries and the charity. See section E4 of OG510-2 which sets out our policy in full and the type of checks we can request in different circumstances.

Our guidance for trustees appointing new trustees for their charities is set out in our guidance CC30 Finding New Trustees: what charities need to know. CC30 recommends as good practice that charities adopt the same policy as the Charity Commission for making checks on trustee appointments. The Commission's policy statement "Protecting Vulnerable Groups Including Children" is also available for trustees on our website and explains about DBS checks and provides links to the DBS website.  

Section E4 gives further guidance on using DBS checks as part of making trustee appointments. Publicity issues for appointing trustees and rights of appeal are highlighted at section E4.1.  

We also have the option to interview potential trustees where we are making the appointment so that we can assess their suitability. Caseworkers would need to establish the level of risk involved in making the appointment and determine whether further research into the background and motivation of a potential candidate is necessary. Arrangements for interview will be determined by the circumstances of the case and location of the potential trustee.

Potential trustees need to be made aware of the circumstances of the charity and the background to their appointment. They should be given a copy of the governing document and other relevant documents, such as the accounts. They should also be given a copy of, or email link to, CC3 The Essential Trustee so that they understand about trusteeship in general. The length of any appointment should be relevant to the circumstances of the charity and the type of governing document, for instance, should the appointment last only until the next AGM?    

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B4 Termination of Trusteeship

Trusteeship may come to an end for a variety of reasons, broadly the this will occur because of retirement, resignation or removal. It may also include the discharge of trustees who simply hold property on behalf of the charity.

Retirement will usually take place because of reasons imposed by law, provisions in a governing document or by rules, whereas, resignation implies an element of personal choice although this choice may still be governed by law or governing document provisions (eg where the trustee numbers may not fall below a certain level). Removal may take place as part of a statutory inquiry, because of disqualification, removal under the Companies Act 2006 or removal by other trustees.

Some reasons that result in termination of trusteeship include:

  • the period for which the trustee was appointed has expired
  • the office to which the trusteeship is tied (ex officio trustee) has been vacated and that person ceases to be a trustee
  • a trustee has lost a particular qualification which was a requirement of being a trustee - this would include certain religious charities that require membership of the faith or of a particular church
  • the trustee wishes to resign or retire
  • the trustee is disqualified from acting as trustee for the statutory reasons set out in sections 178 and 179 of the Charities Act.
  • a trustee is removed from office for the statutory reasons set out in section 80(1) of the Charities Act
  • a trustee is removed from office because of reasons identified as part of a statutory inquiry under section 46 of the Charities Act. 

Where the trustees can act to end a person's trusteeship in line with the charity's governing document or using legislation, they should do so without our intervention and take their own legal advice on such matters. Section E5 sets out the legal powers that may be used to end trusteeship and where we act to remove trustees as part of a statutory inquiry.

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Case Studies

D1 Charities offering inducement payments when recruiting new trustees

This case study reflects a practice that was happening some time ago. Whilst it may no longer be common practice the guidance has been retained in case it re-emerges.

Circumstances

Some charities adopted the practice of offering small "one off" inducement payments when recruiting trustees. The payments are usually in the form of a donation to any charity, voluntary organisation or appeal nominated by the new trustee.

They may do this to attract:

  • individuals of a suitable calibre;
  • particular competences or skills needed by the charity that may be in short supply;
  • people from a background that reflects the community in which the charity operates.

 

Considerations for the trustees

The trustees will need to consider whether such a payment is within the scope of the charity's objects or a legitimate administrative cost of recruitment - see next section about our involvement.

The recipient of the donation does not have to be a charity, however, the trustees will need to take care that the recipient is not engaged in activities that would reflect badly on the charity, damaging its reputation, or that of the charitable sector.

Trustees should be aware that donations made outside of charity may carry a greater risk of private benefit or a public perception that there is a private benefit and that they may need authority for their action. Trustee benefits are covered in CC11 Trustee expenses and payments.

The trustees will need to ensure when applying for tax relief that they can justify any donation to a non-charitable organisation to HMRC on the basis of a legitimate expense. This will not apply if the donation is within the charity's objects or where a payment is clearly applied for charitable purposes.

 

How we decide if our involvement is needed

Where we are approached in such matters the starting point is to ask whether the donation concerned is clearly within the scope of the charity's objects. If it is then we would not be involved to authorise the payment.

Where the payment is not within the scope of the charity's objects the trustees may be able to justify the payment as being a legitimate administrative cost of recruitment. Where the trustees are satisfied, on the basis of reasonable efforts to recruit without such payments, that this type of inducement would attract a suitable candidate then we would not object or need to be involved.

We would consider authorising the payment only in limited circumstances, particularly where we have concerns that:

  • indicate the payment could give rise to a conflict of interest or duty; or
  • the payment is being used to try and influence or restrict the personal judgement of the appointed person in relation to the administration of the charity, for example, an implication that the payment is a favour to be repaid by voting a certain way in trustee meetings.

Any such case would be considered in line with Operational casework priorities and where we give approval it will be done by Order under section 105 of the Charities Act.  

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D2 What happens if a minor is appointed as a trustee of a settlement or trust 

Circumstances

Minors (young people under age 18) may sometimes be appointed in error to settlements or trusts as a trustee. Section 20 of the Law of Property Act 1925 confirms that such appointments are invalid. 

In principle, a minor acting in the administration of a charity would be liable for any breaches of trust which he or she committed when acting as a "de facto" trustee, provided that he or she understood:

  • the meaning and consequences of carrying out those duties; and
  • the importance of discharging those duties properly. 

The adult trustees would not be directly liable for losses of the minor acting as a trustee, but they could be liable for losses resulting from allowing someone not validly appointed to act.  

Because the appointment of a minor to a trust or unincorporated association is invalid their involvement in the charity's decision-making processes is an irregularity. In many cases the irregularity will be immaterial because the remaining trustees at the meeting are sufficient in number to form a quorum and any decision would still be valid if the minor's vote was discounted.

 

How we decide if our involvement is needed

We would not usually be involved in the formal removal of a minor because in law the appointment is void. Therefore, it is as though the appointment never took place and formal removal is not required. The trustees may fill the vacancy in line with their governing document or where there are no specific provisions in line with section 36(1) of the Trustee Act 1925.

Where we are asked to comment on the validity of a decision taken in which the minor had taken part our involvement would be looked at in line with Operational casework priorities contained in the Risk Framework. Generally we would not involve ourselves where:

  • there was a quorum irrespective of the minor's involvement; or
  • the original decision was not taken by a quorum but the other trustees can make arrangements for the decision to be properly taken by a quorate trustee body

lawyer_referIf there is any doubt about the nature of the decision or the way it was taken legal advice should be sought.

 

See also section E1.3 Trusteeship and young people.

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D3 Parental liability for a breach of trust by a minor 

Circumstances

In certain cases parents can be liable for the actions of their children as trustees. This would arise normally where the parent is directly implicated in a breach of trust. This might occur because:

  • a parent has advised or encouraged the minor to do, or not do, a particular act; or
  • the minor's defaults as a director or de facto trustee (ie a trustee not properly appointed) are a result of a lack of ordinary parental supervision.

Additionally, if a minor incurs a tax liability in the administration of a trust (which might happen where trustees apply tax relieved income or gains for non-charitable purposes) the parent may be made liable under section 73 of the Tax Management Act 1970.

A minor cannot hold any legal estate in land. This means that a minor cannot (with or without other people) be the legal owner of freehold or leasehold land. With some exceptions, legal contracts entered into by minors are not binding on the minor and they cannot, therefore, be compelled to carry out obligations under a contract. Whilst the contract cannot be enforced against the minor it can normally be enforceable against any adults who were party to it. 

How we decide if our involvement is needed

As in case study D2 above we would not expect to be involved in cases where a parent is liable for the minor's breach of trust. If we are approached we would consider the case in line with Operational casework priorities as set out in the Risk Framework. We would not involve ourselves where:

  • there was a quorum irrespective of the minor's involvement.

lawyer_referIf there is any doubt about the nature of the decision or the way it was taken legal advice should be sought.

 

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D4 Appointing trustees to a school fund where the school had closed to become an academy 

Circumstances

We received a request to appoint trustees for a charity that supported a particular school where that school had closed to become an academy. The charity trustees were the school's governing body, which no longer existed, because the school had closed. The academy that replaced the school is a separate legal entity so the governing body of the school is not the same as the governing body of the academy.

How we decide if our involvement is needed

Where a school has already closed it means that there are no properly appointed trustees to make decisions about the future of the charity. Therefore, we would need to be involved. Our involvement would be limited to:  

  • appointing 2 people who are willing to act as trustees

Usually these would be people who were previously involved with the charity but this is not a legal requirement. It would be for those trustees to appoint further trustees, where required by the governing document to form a quorum. A reconstituted trustee body could then decide on the charity's future. This might include whether to wind up, change the charity's objects or run the charity as it is (where allowed by the trusts).   

See the guidance at B2 before making trustee appointments.  

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D5 Appointing trustees for charities where the area of benefit is a parish that no longer exists 

Circumstances

We received a request from a Diocesan Board to appoint trustees to a charity operating in a particular parish where that parish no longer existed. The original trustees were the vicar and churchwardens. Initially we thought that the Parish Measures Act 1983 would apply so that trusteeship could be transferred to the vicar and churchwardens in the replacement parish. However, on further examination we found out that the charity was not an ecclesiastical charity and therefore the Act did not apply.  We appointed the Diocesan Board as trustee as they were willing to undertake the administration of the charity.

How we decide if our involvement is needed

As the request was from the Diocesan Board we initially thought we were dealing with an ecclesiastical charity and this is a key point when we receive this type of request. Ecclesiastical charities will come within the Parish Measures Act 1983 and therefore we will not be involved in appointing new trustees.

However, where it is a non ecclesiastical charity which has ecclesiastical trustees, we would need to be involved as the original trustees have ceased to exist through the reorganisation of parishes.   

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Legal, Policy and Accountancy Framework

E1 Who can and who cannot be appointed as trustees

E1.1 Who can be a trustee?

The starting point in law is that anyone over 18 (or 16 in the case of a charitable company) is free to act as a trustee subject to any rules a charity might have about its own trustees. That said, the law also aims to protect charities by preventing certain people from being trustees. It is useful, therefore, to consider who is not able to act as a trustee.

 

E1.2 Who cannot be a trustee?

Persons who cannot act as a trustee are:

  • Someone who is disqualified by law under sections 178 and 179 of the Charities Act - see OG 41 Disqualification from acting as a charity trustee. There is an exception to this where a waiver has been granted by us or by the court - see OG42 Waiver of disqualification for acting as a charity trustee.
  • A person under the age of 18 may not be appointed as a charity trustee of a charitable trust or a charitable unincorporated association. However, it can be lawful for a person aged 16 or over to be a director of a charitable company, and therefore, a charity trustee. This is considered in more detail at section E1.3 below. There are no upper age limits in law for trustees of any type of charity, although some organisations may have rules within their constitution or governing documents setting out age restrictions. Any restrictions of this nature must comply with the Equality Act 2010 (see guidance on the Charity Commission website).
  • In some cases mental disorder can deprive a person of the legal capacity to be a trustee. This would be the case if the person is of unsound mind or is seriously ill so as to be unable to conduct his or her affairs. In such cases it is for the other trustees to seek legal advice about their position in removing and replacing the person concerned, if already in post, or their condition being a bar to their appointment.   
  • A dissolved corporation is deemed to be incapable of acting on the date of dissolution and as such cannot continue as trustee or be capable of being appointed as a trustee.
  • Those persons subject to a disqualification order made by the court under the Criminal Justice and Court Services Act 2000 for offences against children where the trusteeship is for a regulated position.  A regulated position may include, amongst other things, being a trustee of a school or any children's charity. Lists of individuals who are barred from working with children and vulnerable adults are administered by the Disclosure and Barring Service. It is an offence for such a person to apply for a regulated position. See OG510-2 Disclosure and Barring Service for more details. 

Usually, there is no objection to the appointment of someone who does not have British nationality or who lives abroad, provided that they can act effectively for the purposes of the charity in terms of taking an active part in trustee decision making and the majority of the trustees live in England and Wales. However, the appointment of a person resident abroad needs careful consideration, particularly where the person may not be amenable to direction by the court or by the Commission, although this may not become apparent until after the appointment has been made, for instance, unwillingness to act. We may have power to removal such a person under section 69 or section 80(1)(e) of the Charities Act.

Even where none of the above circumstances apply a person may still be considered as unfit to act as a charity trustee by the existing trustees or other appointers. It is for those making appointments to be clear about what circumstances might give rise to someone being regarded as unfit to act. An example might be a bankrupt who has been discharged and is no longer disqualified under section 178 of the Charities Act but who may generally have a poor record in positions of trust.  We do not get involved where dissatisfaction about appointments occurs. OG565 Disputes in Charities gives more information about how we deal with disputes. Section E5 considers the legal basis for ending trusteeship.  

 

E1.3 Trusteeship and young people

A minor (a person under the age of 18 who may also be referred to as an "infant" in older legislation) cannot be appointed as a trustee of a charitable trust (the exception to this is where minors can act as trustee of a PCC). Also, as the property of a charitable unincorporated association is held on trust we take the view that a minor cannot serve on the board of this type of charity. There are also specific statutory prohibitions on minors acting as trustees of some other types of charity - for example, those set up as industrial and provident societies or as societies registered under the Friendly Societies Act 1974.

The minimum age that an individual can be appointed as a director of a charitable company is 16 (unless the government makes regulations permitting younger directors). The directors of a charitable company, whilst they have fiduciary duties to the company, are not technically its trustees. However, are charity trustees as set out in section 177 of the Charities Act and a minor becoming a director of a charitable company will need to be made fully aware of his or her responsibilities before taking office. Charity trusteeship brings with it a number of responsibilities, including overall responsibility for safeguarding the charity's assets and managing its administration and finances. A minor, like an adult, will be liable for his or her own breaches of legal duty towards a charitable company of which he or she is a director. A minor is also responsible for his or her criminal acts.

If a charity has taken out insurance against the consequences, to the charity, of a breach of duty by a director, the insurance might not cover directors who are minors. This is for the trustees to check with the insurer.

There are two case studies which pick out the particular issues that can arise with trustees under 18.

Case Study 2 - What happens if a minor is appointed as a trustee of a trust?

Case Study 3 - Parental liability for a breach of trust by a minor. 

 

E1.4 Invalid appointments ('de facto' trustees)

Occasionally we find charities, or they approach us, where the trustees have not been appointed in accordance with the governing document or the law. We sometimes refer to these people as 'de facto' trustees. Basically these individuals carry out the duties of trustees for all practical purposes but they have no legal basis for doing so.

Where other properly appointed trustees exist they should regularise the position using the governing document provisions, where possible. If not, it may be possible for the appointments to be made properly by those involved using statutory provisions such as those contained in the Trustee Act 1925, the Charities Act 2011 (and the Companies Act 2006), which are discussed below in section E2.  Irrespective of the invalid appointments it is unlikely we would become involved where the charity is being run effectively and those involved are able to make the appointments. Where the individuals ask us to use our powers of appointment because they are unable to correct the position themselves we would appoint the minimum number of trustees, ie 2. We would then expect those trustees to act to appoint further trustees as required for the effective administration of the charity. 

Where we identify charities with invalidly appointed trustees and we have concerns about the running of the charity we may want to intervene to appoint trustees rather than leave it to the individual to rectify the position themselves. Our intervention will be dependent upon the concerns we have about the running of the charity, how we view these issues in line with our Risk Framework and any other action we intend to take, such as an inquiry under section 46 of the Act.

Within the limited circumstance of a charitable unincorporated association or charitable companies (ie where the charity has a membership) we may not always take action to appoint new trustees where invalid appointments occur. We would leave the members of the charity to regularise the position in line with the charity's governing document at the next annual general meeting. As in other cases, where we are not satisfied with the running of the charity and where we have other concerns that need to be addressed we may consider intervention in line with our Risk Framework.  

Where conflicts arise within a charity surrounding invalid trustee appointments we are sometimes asked to regularise the position. Our involvement will be in line with our assessment of the issues and within our Risk Framework.  

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E2 Legal powers for making trustee appointments

This section sets out the legal basis for making trustee appointments

E2.1 Where powers to appoint trustees can be found

The powers available to appoint trustees will vary depending on the nature and type of charity involved and sometimes the circumstances surrounding the vacancy. However, in most cases the first place to look when considering trustee appointments is the charity's governing document as the provisions there will usually take precedence over any statutory powers.

If there are no provisions in the governing document or if the provisions have become unworkable those making trustee appointments will need to look at what statutory powers are available to them. The statutory powers available depend on the type of charity involved. Charities set up by will or a trust deed would look to the Trustee Act 1925 to make trustee appointments, although this may have limitations. Other forms of charities, such as charitable companies or NHS charities may have access to particular legislation for making appointments. Sections E2.2 to E2.9 consider the different charity types and the legislation that allows for appointment of charity trustees.

In cases where the governing document or other legislation fails to provide the power to make the appointment and it is not possible to amend the governing document to remedy this, or where we act for the protection of charity in our regulatory capacity (in line with our Risk Framework), the powers in the Charities Act 2011 may be used - see section E3 below.

Once a trustee body is quorate the trustees may wish to consider amendments to the trustee provisions in the governing document to avoid future problems with trustee numbers. Section 280 of the Charities Act could be used by unincorporated charities to make such changes.

As the regulator of charities we have model governing documents that we recommend for use by those setting up new charities; these are:

Charitable trusts - Model Declaration of Trust (GD2)

Unincorporated associations - Model Constitution for a Charitable Unincorporated Association (GD3)

Charitable company - Memorandum and Articles of Association (GD1). 

We may also direct trustees to these models where they wish to make changes to their charity's governing document as they contain suitable trustee appointment provisions.

 

E2.2 Trustee appointments in trusts and wills

A settlor of a trust or testator/testatrix of a will (where it creates a trust) usually sets out whom the first trustees of the trust are and in some cases there may be provisions for appointment of successor trustees. In some will cases the executors become first trustees after the administration of the estate is completed; in other will cases the Commission or the court has power to make the first trustee appointments.

The provisions usually set out who is allowed to appoint trustees, the qualifications required to be a trustee (if any) and how the appointments are to be made. 

Where the governing document fails to make provision for appointing trustees or the provisions that exist are unworkable then the trustees may use the Trustee Act 1925 to replace trustees in certain circumstances - see section E2.3 below.  Where the charity is a parochial charity set up by trust deed or will see section E2.7 below.    

 

E2.3 The Trustee Act 1925 - uses and limitations

Section 36 of the Trustee Act 1925 provides for appointment of a replacement trustee when a vacancy occurs in a charitable trust. It may be used in particular circumstances, including where a trustee:

  • wishes to be discharged (retire) from his/her duties
  • refuses to act as a trustee
  • is unfit to act as a trustee (for instance, because of disqualification or removal)
  • is incapable of acting as a trustee
  • is under 18 years of age (the term used in the Act is "infant").

If the governing document does not specify a minimum number of trustees or any quorum provision the remaining trustees have discretion to decide whether or not to replace the trustee. Where a minimum trustee number or quorum is specified then the remaining trustees must act to bring the trustee body back to the required number. Until this is done the trustees may act only to appoint a new trustee and to protect charity assets.

Any appointment must be made in writing:

  • by the person(s) nominated in the governing document for this purpose - usually, but not necessarily, one or more of the continuing trustees

or, if there is not such a person or none willing or able to act:

  • by the surviving or continuing trustees

or, where there are no surviving trustees:

  • by the personal representatives of the last of these.

If the appointment is made by deed it can vest charity property jointly in the new and continuing trustees. The new trustee has all the same powers as the original trustee, even where the appointment is made before charity property is vested.  

A current trustee who is being replaced because they wish to retire or they refuse to act can be considered to be a continuing trustee for the purposes of the deed where they are willing to act for the purpose of appointing their successor. This may be of particular practical use if he or she is the sole surviving trustee, or if the governing document stipulates a minimum number of trustees for any action to have effect.  

Difficulties arise where a charity is being run by individuals who have not been properly appointed as trustees as they will not be able to make valid appointments. Those individuals will need to seek their own legal advice on how they should proceed. See section E1.4 on invalid trustee appointments. 

This section of the Act would also be used to replace trustees where the provisions of the governing document become unworkable. If there are provisions for trustee appointment in the governing document the Trustee Act 1925 powers can be used in addition to those constitutional powers so long as they are not contrary to the governing document provisions for appointing trustees (either express or implied).

The test to see if the Trustee Act can be used is whether the arrangements contained in the governing document are intended to be an exclusive system for the replacement of trustees. This is shown in the following examples:

  • The governing document makes time-limited trustee appointments (eg, trustees hold office for 3 years). The Trustee Act 1925 makes provision only for appointments that are not time-limited and, therefore, could not be used if all trustee appointments are time-limited. Where the governing document makes provision for open-ended as well as time-limited appointments then the Trustee Act can be used in appropriate circumstances for the open-ended appointments.
  • Where the governing document makes provision for ex-officio trusteeship and that trustee is unwilling to act the Trustee Act 1925 could not be used to replace the office holder. Trusteeship is tied to the office and the governing document provides an exclusive system for replacement.
  • The Trustee Act 1925 could be used where the governing document makes particular requirements for appointing trustees, such as appointment by a specific person; only by a quorate meeting of the trustees or by 'x' number of trustees. Whilst these powers might default to surviving or continuing trustees or representatives of the last surviving trustee where those provisions fail the Trustee Act 1925 powers could be used.  

Appointment of additional (non-replacement) trustees can also be effected by the Trustee Act 1925, but the power is quite limited; it cannot be used:

  • to increase the number of trustees beyond four

As with replacement trustees, the Act may not be used where provisions of the governing document would prevent its use. But, where the governing document makes no provision for creating additional trustee posts it is possible to use these powers.

Where the governing document provides powers to appoint additional trustees they can be used by continuing or replacement trustees, however, this does not include use by the personal representatives of a last surviving trustee. 

Where the Trustee Act 1925 has a limited application the existing trustees may consider use of section 280 of the Charities Act 2011 to modify their administrative powers. These powers are available to any charity that is not a company or body corporate and are set out in section E5.1 of OG519. Possible uses for section 280 powers are set out in E2.4 below. 

The Trustee Act 1925 powers may be available to the charity trustees of unincorporated associations in certain circumstances. However, generally the governing document will deal exhaustively with the appointment and removal of trustees and there may not be any scope for the exercise of such powers. 

 

E2.4 Unincorporated associations

The first trustees will normally be those individuals who set up the unincorporated association and who adopted the constitution by signing it. In such organisations the trustees are often elected by members at the Annual General Meeting but there may also be provisions for ex officio trustees and/or nominated trustees and appointments by existing trustees (co-opted trustees).

When appointing trustees the governing document should be consulted in the first instance. However, there may be other ways of appointing trustees depending upon circumstances.

Where the provisions of the governing document have become unworkable then they must be modified by the members using available powers, either:

  • a power of amendment in the governing document to amend the provisions and any restrictive clauses, for example, changes to minimum trustee numbers or quorum requirements

or

  • the use of section 280 of the Charities Act 2011 to modify powers used to administer the charity which can include trustee provisions such as:
    • changing the total number of trustees (this can include provision to appoint a sole corporate trustee, but trustees would need to be aware of the impact of this action, see OG38 B1) 
    • the qualifications trustees must have, for instance, the requirement to hold a particular belief, be of a certain age or live in a particular place
    • removal of the requirement for an ex officio trustee where that office has been abolished
    • removal of the requirement for an ex officio trustee where the office holder does not wish to be involved with the charity and consents that the position should not be filled (note - the person concerned may not wish to be involved but may not consent to abolish the position permanently because of rights of future office holders) 
    • changing who appoints trustees, providing that the existing appointing body or person either agrees to the change, has ceased to exist, or is dead
    • the number of trustees required to form a quorum

Where there are insufficient members present to pass a resolution to make the required changes the trustees will need to approach us for an Order to permit the changes.

Other ways for appointing trustees might include:

  • where the trustees of the association's property (held as a separate trust) are appointed under the Trustee Act 1925, this Act may be used in respect of trusts of land to appoint trustees up to a total number of four trustees or in other cases to appoint replacement trustees where a vacancy occurs.
  • where permitted by the trusts of the charity, trustees may be appointed under section 334 of the Charities Act 2011. Such appointments require a resolution of a meeting of the charity trustees. The resolution must be recorded by memorandum and signed at the meeting by the person presiding, or in another manner directed by the meeting and witnessed by two persons present at the meeting. If the resolution is executed by deed it can also vest charity property in the new or continuing trustees (section 334(1) and (2) of the 2011 Act).

 

E2.5 Incorporated charities (charitable companies)

The duties and responsibilities of directors of a charitable company are similar to those of the trustees of other charities in that they must act in the way they consider, in good faith, would be most likely to achieve the charitable purposes of the charitable company. Provisions for the appointment of directors to a charitable company are usually set out in the Articles of Association which is the charity's governing document.

The Articles of Association of a company are governed by company law and any problems that arise must be considered in accordance with the Companies Act 2006. Certain amendments to the Articles of Association of a charitable company will require our consent under section 198(2) of the Charities Act before being submitted to Companies House. Such amendments will rarely concern provisions relating to appointing directors and further information can be found in OG518 Alterations to Governing Documents: Charitable Companies.   

There may be situations where the governing document provisions become unworkable, for example:

  • it is consistently difficult to achieve a quorum at meetings but the quorum provision cannot be changed because there are insufficient members present to pass the resolution to change the quorum

or

  • there are insufficient directors to administer the charitable company.

The directors would need to take their own legal advice and, on many occasions will be able to use company law to resolve the problem. However, where this is not possible the directors may need to come to us. Using the above examples, we may be able to use our powers:

  • under section 105 of the Charities Act to permit a change to the quorum
  • under section 76 of the Charities Act to make time limited appointments of directors to allow the company to be brought under proper control.

These situations will be rare and we will not use them where the directors can make the changes with powers available to them.   

 

E2.6 Charities established by Royal Charter

Royal Charter charities have incorporated trustee bodies. The composition of the board of trustees is set out in the Royal Charter or the Act of Parliament by which the charity is established. These charities are individual and unique and it is, therefore, vital to consider carefully the terms set out in the governing document where there is any doubt about procedure. We will not usually be involved in appointment or retirement of trustees.  

In cases where the provisions of the charter have become unclear we may need to be involved. Further guidance on Royal Charter Charities and our involvement can be found on our website - Royal Charter Charities: the Charity Commission's role. lawyer_referLegal advice should be taken where we consider our involvement is necessary.

 

 

E2.7 Parochial charities

Sections 298 to 304 of the Charities Act 2011 contains several provisions for trusteeship of parochial charities.

The definition of a parochial charity is set out in section 303(1) of the 2011 Act and is a charity where the benefits or separate distribution of benefits are confined to:

  • the inhabitants of a parish (or, in Wales, a community)
  • a single ancient ecclesiastical parish which includes all or part of that parish (or community)
  • an area consisting of that parish or community with not more than four neighbouring parishes or communities.

Section 298(1) and (2) of the Act provides for the transfer of recreation grounds, allotments or other property held for other charitable purposes connected with the parish (except for ecclesiastical charities - see case study D5 where an ecclesiastical charity was confused with a parochial charity) to be transferred to a parish council or persons appointed by the parish council. The property is to be held on the same trusts and subject to the same conditions as applied to the previous trustees. The transfer must be done with the approval of the Commission and the consent of the parish council, or in Wales the community council. Our approval will be given by letter. Whilst these cases may be rare they might occur when a charity is failing for want of validly appointed trustees and this provides an opportunity for the charity to continue without the need for a Scheme or Order from us.

The provisions of sections 300 and 301 concern parochial charities outside the London Boroughs; their effect is to ensure that in certain very specific circumstances local councils have the right to appoint trustees to these charities where there are none. A local council means the council of a county, or of a district, a London borough, parish, or in Wales a community and includes the Common Council of the City of London.    

 

E2.8 Armed forces charities

The work of armed service charities is a specialised area within operational casework. For most of the non-public funds the commanding officer or equivalent is the sole, ex officio, trustee of the fund. Examples of this are an RAF station commander, a ship's captain, the commanding officer of a regiment or battalion or an officer commanding a company or squadron.

The commanding officer may, in practice, delegate responsibility and day to day running of any of the funds to another officer under his or her command under general service regulations. In some regimental charities a Scheme may often provide that a trustee stationed overseas can appoint a deputy to attend and vote at meetings on his or her behalf and that a change to the composition of the trustee body can be made by Order. 

There is a variety of other charitable organisations connected with the armed services. These may be trusts, unincorporated associations or incorporated bodies. Some have elected bodies as trustees, whereas others are managed by ex officio, nominated or co-opted trustees. The trustees of these charities remain subject to statutory provisions for appointing additional or alternative trustees or for their removal or retirement.  

 

E2.9 National Health Service (NHS) charities

NHS charities are those that are administered by a health service body such as an NHS trust acting as corporate trustee or by bodies of individual trustees appointed under the NHS Act 2006 or the NHS (Wales) Act 2006. Leagues of Friends or other charities for the relief of sickness not administered by a health service body are not NHS charities.

Our involvement in trustee appointments or removals for NHS charities would happen only in exceptional circumstances. In England corporate NHS bodies acting as trustees are appointed by the Secretary of State for Health, usually by Statutory Instrument. The Appointments Commission (to be replaced by the NHS Trust Development Agency (NTDA) in October 2012) appoints Special Trustees (who act for particular funds attached to a specific hospital) and other bodies of individual trustees under the NHS Act 2006. The Appointments Commission also appoints the chairs and non-executives to the boards of NHS Trusts and NHS Foundation Trusts. The corporate trustee often has a charitable funds sub-committee to manage day to day business but the members of those committees are not trustees. A parallel system applies in Wales with appointments being made by Ministers of the Welsh Assembly government.

Further information about NHS charities and trusteeship can be found in our NHS Guidance which is published on our website. Any queries about NHS charities should be referred to Operations Liverpool.

 

E2.10 Postponement or adjournment of a meeting where trustees are to be appointed

Our general advice on law and practice about the conduct of charity meetings can be found in CC48 Charities and Meetings. However, this section is about particular situations where the trustees are unable to convene the general meeting at which trustee appointments are to be made. An example would be where trustees or members are prevented from attending because of travel restrictions being suggested or imposed by external bodies (as in the case of the foot and mouth epidemic in 2001).  

This type of situation could give rise to two distinct situations:

  • where the charity has, or the charity membership has, already given proper notice calling an AGM or other general meeting; or
  • where the AGM (or other general meeting) has yet to be called but, if the trustees postpone the meeting, it would cause it to be held out of time in breach of the statutory or constitutional requirements for holding the meeting

There is, in our view, a general legal principle that the non-performance of a legal obligation is justified if external circumstances effectively prevent the action from being carried out. So, if a situation, such as the foot and mouth epidemic in 2001, makes it impractical for a charity to hold its AGM or other general meeting at a time when the law or the charity constitution requires, then the charity should hold the meeting as soon as is reasonably practicable. This principle applies whether or not the meeting has been called. 

In some cases it may still be practical for the actual AGM or other meeting to go ahead but the circumstances may prevent people from attending. The charity may then prefer to postpone the meeting. In this case we advise that the meeting should be called and held as planned but should then be adjourned. 'Adjournment' means extending the meeting to another time (and possibly another place) in order to deal with unfinished business. The charity's constitution may contain explicit provisions about how the AGM or other meeting should be adjourned. Where the constitution has no provisions on this point it is reasonable to infer that the meeting can be adjourned by agreement of a majority of members present and voting. Where there is no quorum of members present it would be for the charity trustees present to take the decision. 

Postponement of the AGM or other meeting may have an impact where the term of office of a trustee is connected to the meeting. It will not be a problem if the meeting is adjourned as the trustees continue in office until the end of the second part of the meeting. However, if the trustee appointment expires on a fixed or specified date, or after a fixed period (eg twelve months from the date of the appointment), then alternative solutions will be needed. These might include:

  • where there are sufficient continuing trustees for the proper administration of the charity they may wish to invite the trustees whose appointments have ended to attend trustee meetings in an advisory capacity
  • continuing trustees may be able to make use of other constitutional powers to appoint trustees, eg filling casual vacancies by co-option 
  • where there are insufficient trustees to form a quorum we may be prepared to make an order under section 105 of the Charities Act authorising the existing trustees to act until the AGM can be held

Charities have legal obligations to send annual updates, annual reports and accounts to us (according to income thresholds) within ten months of the financial year end. Some charity constitutions require them to be copied to members and presented at an AGM. Even where this is delayed by postponement it does not prevent the charity from sending them to us. Charities should inform us if they cannot get the documents to us in time and keep us updated on progress so that we know that the charity has not ceased to exist and is still operating.

Trustees should be aware that even where they inform us of potential late filing:

  • the online information for the charity will still show that the accounts and annual report/update have not been filed or were filed late

and

  •  we may also continue to send out automated follow-up enquires  

These points may influence the trustees' decision to file accounts and reports with us even where these have not been presented to members or the AGM.

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E3 Charity Commission involvement in trustee appointments 

This section sets out when we may become involved in making trustee appointments.

E3.1 When will we become involved?

Our general policy is that we will not get involved in making trustee appointments when others are legally able to make the appointment.

There are four types of situation where we might use our powers to appoint trustees:

  • Where it is brought to our attention that vacant trustee posts have arisen which cannot be filled because normal provisions are not available or are unworkable or previous invalid appointments make new appointments impossible. See E3.2 below.
  • Where we have been working with a charity to update some or all of its trusts and we update or restate the ways in which the trustee body is appointed. See E3.3 below.
  • When we have opened a statutory inquiry into a charity and we conclude that new, additional or replacement trustees should be appointed. See E3.4 below.
  • Where we are asked to make a scheme to appoint a trustee simply so the trustee becomes a trust corporation. Our action in these cases is set out in OG38 B1 section 4.3.

Case studies D4 and D5 give brief details of where we became involved in trustee appointments where the trustee bodies had disappeared because the changing status of a school and a reorganisation of parish boundaries.

 

E3.2 When appointers are unable to act

Section E2 sets out the legal powers for making appointments. In most cases trustees or others responsible for appointing trustees will be able to use either the governing document provisions or statutory powers to make trustee appointments. This section is concerned only with cases where this is not possible and we are being asked to consider an application for a Scheme under section 69 to reconstitute the trustee body or use the powers under section 80(2) of our own motion.

In cases where the administration of the charity has become unworkable we may use our powers under section 80(2) of the Charities Act to appoint a quorum of trustees. Those trustees would then be expected to use section 280 of the Charities Act to make amendment to the charity's governing document and make provision for future trustee appointments.

The powers under section 80(2) of the Charities Act allow us to make trustee appointments, without an application by another party, in particular circumstances. Those circumstances are:

  • to replace trustees we have removed under section 79 of the Act as part of a statutory inquiry or for reasons stated in section 80(1)
  • where there are no trustees or because of vacancies in their number or the absence or incapacity of trustees and the charity cannot apply for appointment [please note this cannot be used in reverter cases where there are no properly appointed trustees to make the application for a Scheme and the revertee is not a charity - see OG27 B2.
  • where there is a single trustee which is not a corporation aggregate (a number of people acting as a single corporate trustee - see OG38 A1 section 5) and we consider it necessary to increase the number of trustees for the proper administration of the charity
  • where it is necessary for the proper administration of a charity to have additional trustees where an existing or continuing trustee cannot be found, is outside England and Wales or does not act.

We may use section 337(1) & (2) in conjunction with a section 80(2) Order to add supplementary provisions, for example, to state that the appointments are for a limited period only and the trustees known as “interim trustees”. 
 

keypointsPlease note that we cannot use our powers under section 76, 79 or 80 of the Charities Act to remove or appoint trustees where it relates to an exempt charity.  Also, any Schemes or Orders made under these sections must be accompanied by a Statement of Reasons.  Examples of Statement of Reasons can be found in OG 501

 

E3.3 Updating a charity's trusts

There will be some occasions where we will need to update the trusts of a charity, particularly where they have failed and the trustees are unable to use the powers in sections 275 or 280 of the Charities Act to replace purposes or modify procedures. When we are re-stating the trusts of the charity in a section 69 Scheme we may take the opportunity to update or re-state the way the trustee body is constituted and the way the trustees are appointed. However, we would do this only in circumstances where the existing trustee provisions have become unworkable.  In all other cases we would expect the trustees to use section 280 of the Charities Act to make such amendments. 

In some cases there may not be any trustees to make an application for a Scheme and we may need to appoint trustees by Order. See OG 500 Schemes for guidance on Scheme application, particularly section E5.1 which explains our process when there are no trustees to make the Scheme application.

 

E3.4 Using our powers as part of or following a statutory inquiry

Where we have opened a statutory inquiry under section 46 of the Charities Act we sometimes act to protect a charity's property or beneficiaries by removing some or all of the existing trustees and appointing replacements or by appointing additional trustees. These actions will be of our own motion - ie they do not require an application from trustees or other interested parties.  

Section 76(3)(b) allows us to appoint additional trustees to ensure the proper administration of a charity. This may be used as an interim measure to help fill a gap created where we have suspended trustees or where we consider more trustees are needed to make up a more effective trustee body to administer the charity. 

We may also establish a Scheme for the administration of the charity under section 79(1) & (2) which may include provisions for appointing trustees and administrative procedures for their appointment. Section 79 Schemes are rare and would be used only where there are no other mechanisms for achieving the desired outcome.

Legal advice is required when using any of these powers and further information about their use can be found in OG117-9.  

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E4 Other issues surrounding the making of Orders and Schemes for trustee appointments  

This section sets out particular requirements when making Schemes and Orders for trustee appointments and our policy for making checks on prospective trustees for charities involving children or vulnerable adults. 

E4.1 Publicity issues and rights of appeal

Casework issues about assessing the suitability of potential trustees can be found in section B2. Our policy principles on giving publicity to Schemes and Orders can be found in OG500 Schemes and OG501 Orders.

Particular requirements for Orders appointing trustees under sections 76(3)(b) and 79(2)(b) and by Scheme under section 79(2)(b) are shown in the following table:   

S.46 Inquiry required? Advance notice to other trustees? Statement of Reasons? Appeal to the Tribunal? CC power to review limited to S.337?
S.76(3)(b) Appoint additional trustees Yes No Yes Yes Yes
S.79(2)(b) Scheme Yes Yes Yes Yes Yes
S80(2) Appoint additional trustees No Yes Yes Yes Yes

It is not necessary to have a section 46 inquiry to use section 80(2) which allows us to make the appointments where trustees cannot act - see E3.2 above .

We are required under section 82(1) to inform the other trustees of the charity where we intend to use section 79(2)(b) and section 80(2). This gives them an opportunity make specific representations to us about the proposed appointments. This will not prevent them from making further representations where we issue public notice.  

Section 86 requires us to present a Statement of Reasons to accompany any Order or Scheme we make under the sections shown in the table. The letter accompanying the Statement and the Order/Scheme will be sent to any other trustees or the charitable company if a body corporate; it also sets out details of decision review and appeal.

An appeal to the Tribunal First-tier (Charity) can be made by any charity trustee, the charity itself (if a body corporate) or any other person affected by the Order or Scheme. The appeal must be made within 42 days from the date on which we sent notice of the Order being made. The 42 days includes weekends and bank holidays.

Once the Order or Scheme is made our ability to review it is limited under section 337 to cases where the Order or Scheme has been made:

  • by mistake
  • under a misrepresentation
  • not accordance with the Act  

See OG117-9 about matters to be taken into consideration when using these powers.

 

E4.2 Our policy on making checks on prospective trustees

Before making trustee appointments we must ensure that the person being appointed is not disqualified from being a charity trustee. We ask them to sign a Trustee Declaration confirming their eligibility and we also check the Register of Removed Trustees on our website. See OG 41 Disqualification from Acting as a Charity Trustee for the reasons why someone may be disqualified.

Where a charity carries out regulated activity or involves work with children we may also need a check done by the Disclosure and Barring Service. OG510-2 sets out what regulated activity is at section E2.1, our policy for making DBS checks is set out in section E4 and how those checks are carried out is set out at section B.

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E5 Termination of trusteeship

Section B4 looks at the overarching reasons why trusteeship comes to an end. This section sets out the legal basis for ending trustee appointments.

Our general position is that where the trustees can act to effect retirement, resignation or removal in line with the charity's governing document or with legislation, they should do so without our intervention. However, this may not apply in cases where we open a statutory inquiry and we may take action to remove trustees where misconduct or mismanagement has taken place or we need to act to protect charity, or in other cases where trustees make application to us to remove trustees.  

 

E5.1 Retirement or resignation in line with the governing document

In most cases retirement of trustees is carried out in line with the charity's governing document provisions. For instance, fixed term appointments or a forced retirement where trustees fail to meet particular attendance requirements. Where provisions are set out in the governing document any retirement or resignation should be handled in accordance with those provisions. Some governing documents stipulate a minimum number of trustees below which the trustee body may not fall, which could limit when a resignation might take effect. Also, there may be a specific time period for which a trustee may hold office and therefore the trustee must retire at a particular time.

In unincorporated associations the trustees are often elected at the annual general meeting and it is usual for the outgoing trustees to retire automatically and newly elected trustees to take over. In many instances a retiring trustee can be appointed for a further period, unless the governing document prohibits this. Sometimes there can be a limit on the number of terms that someone might be appointed for or whether there is a specific period which must elapse before reappointment. See also section E2.10 about postponement of AGMs.

In addition to retirement provisions in a governing document trustees may simply decide to resign. This can arise for a variety of reasons. The reasons for resignation are not generally a matter for us, however, we would advocate that trustees should regularly examine their own contribution to the charity and consider resignation where: 

  • they are unable to make an effective contribution to the running of the charity (for instance not being able to attend sufficient meetings)
  • their own interests conflict with those of the charity and cannot be managed by the other trustees 
  • they are too ill or infirm to act

The desire to resign may be limited, in the same way as retirement, by the governing document provisions that stipulate a minimum number of trustees.  

 

E5.2 Retirement or resignation under the Trustee Act 1925

In the case of a trust, where there are no provisions in the governing document, a trustee's resignation can be effected:

  • by the appointment of a successor under section 36 of the Trustee Act 1925; or
  • without the appointment of a successor under section 39 of the 1925 Act, where this is appropriate

Section 39 of this Act provides trustees with the power to resign from office provided that there are enough continuing trustees to act. The trustee is discharged by deed to which the continuing trustees must consent.

Under the Act a trustee may retire without anyone being appointed in his or her place, if:

  • at least two individuals remain in office; or
  • the sole continuing trustee is a trust corporation; and
  • the retirement is accepted by the rest of the trustees or by any person having the power to appoint new trustees

Trusts that were set up with a sole trustee or where a sole trustee remains alone require the remaining trustee to ensure that at least two individual trustees or a sole trust corporation is appointed before he or she retires. This should apply even where the trust is constituted with a sole trustee as it will ensure that a valid receipt for capital money can be given - see section B2.2 Sole Trustees.

 

E5.3 Retirement given by authority of the High Court

The High Court has the power to authorise a trustee retirement. In practice the Commission is likely to exercise this power under section 69(1)(b) of the Charities Act to release a trustee from office. We are unlikely to use this power where the governing document or the Trustee Act 1925 can be used to effect the retirement, as outlined by section E5.1 and E5.2 above.

Referral to the court is only likely to take place where an issue of trusteeship is particularly contentious or where the case involves a particular point of law.

 

E5.4 Discharge of trustees who hold property on behalf of a charity

Section 334 of the Charities Act may be used by the trustees, where permitted by the trusts of the charity, to give effect to discharge (and appointment) of trustees who hold property for the charity - either holding trustees or charity trustees in whom property title is vested. This can be done by a resolution of a meeting of:

  • the trustees; or
  • members; or
  • others, including another body involved in nominating trustees, for instance, where a trustee for a recreation ground is appointed by a committee of a local sports club

The general rule at common law is that a trustee is only discharged from a continuing trust by the valid appointment of his or her successor. 

In these circumstances a memorandum declaring a trustee discharged is sufficient evidence of that discharge, provided that:

  • the memorandum is signed by the person presiding at the meeting and witnessed by two persons present at the meeting; or
  • is presented in another manner that is directed by the meeting and again witnessed by two persons who were present

If the memorandum is executed as a deed it can also be used to make a transfer of charity land to continuing trustees. Where there is any question over the discharge or transfer of land the trustees should seek their own legal advice.

 

E5.5 Retirement or resignation of ex officio trustees

An ex officio trustee is automatically a trustee of a charity because he or she holds:

  • religious office such as a vicar, priest or imam; or
  • a civil or military position such as a town mayor, commanding officer or a head teacher 

As such the person holding that office or position cannot resign from their trusteeship where they have already acted and they remain a trustee until they leave the office to which the trusteeship is attached.

On taking up office the office holder may decline the position as trustee or refuse to act as trustee. In this case a vacancy exists until that person leaves office. Some governing documents may have a provision to appoint an additional or substitute trustee in place of an ex officio who is unwilling to act. In these cases a substitute or additional trustee would remain in place until the office holder changes. Also, there may be additional provisions in a governing document that allow for a change of that additional or substitute trustee where they retire or resign before the office holder relinquishes their position.

If the ex officio post ceases to exist, for instance, in the Church of England where the post of vicar disappears through reorganisation due to merging of parishes or creation of a team ministry, it may be possible to change the composition of the trustee body using the provisions of section 280 of the Charities Act or by Scheme. See OG519.    

 

E5.6 Removal from office

Removal can take different forms and not every removal will be made against a trustee's will; it may be with their agreement or be uncontroversial, such as removal of a trustee who can no longer be found or contacted, or a board of trustees stepping down in favour of  a corporate trustee. However, at times we will take decisions to remove trustees against their will as part of a statutory inquiry where misconduct or mismanagement has occurred and we need to protect the charity.

 

E5.7 Removal from office by other trustees 

Sometimes charity trustees or members of an organisation will take action to remove one of their number in line with a charity's governing document. Governing documents may contain a variety of removal provisions, typical examples include:

  • where a trustee has failed to attend a stated number of meetings
  • where a trustees becomes incapable of acting due to mental illness or other long term incapacity
  • where it is held that a trustee has not acted in the best interests of the charity or that he or she should be removed for "good and sufficient reasons" (usually only exercised by a qualified majority)

Under section 36 of the Trustee Act 1925 the trustees or other appointers may appoint new trustees who replace others. The trustees may have no control over the events leading to the appointment for instance, where someone has died or been appointed in error. The Act allows for other occasions where trustees are removed by the appointment of a new trustee; these include when an existing trustee is removed because he or she:

  • is absent from England and Wales for an unbroken 12 month period (the trustees are entitled to make the removal but have the discretion whether or not to act, however, there may be overriding clauses in the governing document that result in automatic removal )
  • refuses to act and is then liable to removal by the other trustees
  • is unfit to act - this might include cases where a trustee is disqualified from being a trustee, however, the trustees will still have discretion whether or not to remove the trustee concerned, unless it is overridden by the governing document
  • is incapable of acting as a trustee, perhaps due to mental illness or other long-term incapacity

In some cases there will be little controversy and the trustees should be able to proceed using the Trustee Act.

In cases of mental disorder as defined by the Mental Health Act 1983 (mental illness, arrested or incomplete development of mind, psychopathic disorder or disability of mind), the other trustees would need to present evidence to this effect and show that, as a result, that person is incapable of acting as a trustee.    

In case where trustees are disqualified from trusteeship under the circumstances set out in section 178 of the Charities Act; that disqualification may not lead to automatic removal. Whether the trustee can be removed may depend on the wording of the governing document. Where the other trustees have discretion on whether to remove the disqualified trustee they will need to consider whether it would be in the best interests of the charity - see OG41. There may be some instances where a trustee is seeking a waiver from disqualification - see OG42.

There may be cases where a trustee becomes unsuitable to act and the governing document contains no power to remove them. The other trustees may wish to use section 280 of the Charities Act to provide a power to remove. This may be used only in the best interests of the charity and in line with the procedures set out in sections B5.2 and E5 of OG519

 

E5.8 Removal of directors of a charitable company

There will often be a fixed term of office for company directors and at the end of that term they will usually retire and may be eligible to stand for re-election. In other circumstances there are other ways of removing a director from office.

There may be express provisions in the Articles that give trustees power to remove one of their number similar to those outlined in section 5.8 above - failure to attend, incapable of acting, not acting in the best interests of the charity.

Section 168 of the Companies Act 2006 gives members power to remove a director from office by ordinary resolution and replace him or her at the same meeting. "Special notice" of the resolution as defined in section 312 of the Companies Act must be given to the company. There are also other formalities including giving notice to the director concerned and allowing him or her to make a statement for their own defence at the meeting. There are other circumstances under the Act that result in automatic vacation of office; these are:

  • bankruptcy or making an arrangement with creditors
  • mental disorder where the director is admitted to hospital or an order is made for his or her detention, or for the appointment of a receiver
  • resignation from office
  • being absent from meetings for more than six months and the directors resolve that he or she shall vacate office

 

keypoints

The Companies Act states, at section 154, that a private company must have at least one director. Section 155 states that a company must have at least one director who is a natural person. However, section 156 clearly envisages that there may be situations in which a company may have no directors and provides a procedure for the Secretary of State to make directions with which the company has to comply.  

As these situations are covered by company law we will not usually become involved. If there is anything contentious it is for the company to resolve with its own legal advisers. 

 

E5.9 Removal of trustees requiring our involvement - Section 69 of the Charities Act

Under section 69(1)(a) we may make a Scheme for the administration of a charity (a fully regulating Scheme), and under section 69(1)(b) we may appoint, discharge or remove trustees officers or employees of the charity. This power can generally only be exercised on the application of the charity or the Attorney General or under a court order. We also have power without such an application to appoint and remove trustees in certain circumstances under section 80(1) & (2). 

 

E5.10 Suspension and removal requiring our involvement - Inquiry under section 46 of the Charities Act 

As part of a statutory inquiry we may need to suspend a trustee pending consideration of removal. Suspension is carried out in line with section 76(1) & (3)(a). As part of our inquiry into misconduct or mismanagement within the charity and the need to act to protect the charity's property we then give consideration to removal under section 79(1) & (2). Removal takes place where the inquiry shows that the trustee concerned has been responsible for the misconduct or mismanagement, or they knew about it and failed to take any reasonable steps to oppose it, or contributed to it or facilitated it by their conduct. Further information on using our powers to suspend or remove a trustee can be found in OG117-9.

 

E5.11 Removal of trustees of our own motion - Section 80(1) of the Charities Act

We use this power where particular circumstances specified in the Act arise. It can be used outside of a section 46 inquiry (although equally we may wish to use it as part of an inquiry) and it does not require an application by any other party for its use. It may be used in conjunction with an Order appointing trustees under section 80(2) - see E3.2.

The circumstances that give rise to this power are set out in section 80(1)(a) to (e). Briefly these include matters of:

  • bankruptcy or making composition or arrangements with creditors
  • liquidation of a corporation which is a trustee
  • incapability of a trustee because of mental disorders as defined in the Mental Health Act 1983
  • where a trustee does not act and will not declare willingness or unwillingness to act; or
  • where the trustee is outside England and Wales or cannot be found or does not act, and by absence or not acting he or she is inhibiting the administration of the charity

 As a matter of policy, we are unlikely to use this power where other trustees are able to act to make the removal.   

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Q & A

F1 Who can and who can't be a trustee?

Most people over the age of 18 can become a charity trustee, however, there are certain circumstances where they are not allowed to act. Young people under age 18 cannot be trustees but may be appointed directors of charitable companies. See section E1.2 for the circumstances where individuals cannot act as a trustee.

F2 What are the issues surrounding the appointment of young people under 18 being appointed as trustees?

Section E1.3 sets out the legal position with young people as trustees and case studies D2 and D3 considers the invalid appointment of a young person and parental liability for actions undertaken by a young person.

F3 What action do existing trustees have to take to appoint new trustees?

This will depend on the type of charity and what the governing document says about appointing new trustees. Section E2 sets out the legal provisions that can be used, particularly the uses and limitations of the Trustee Act 1925, and the effect of governing document provisions.

F4 When do we get involved with appointing new trustees?

Wherever possible we expect the continuing trustees to make new appointments, however, where this is not possible, or we consider it necessary, we will make trustee appointments. The principles we apply to considering our involvement are set out at section B1.

F5 What do we need to consider where we make trustee appointments?

Section B2.1 looks at key issues that should be considered for making appointments; whether we or other trustees, are making the appointments. Further guidance is also contained in CC30 Finding New Trustees and CC3 The Essential Trustee. OG510-2 Disclosure and Barring Service explains about regulated activity and when checks may be required for prospective trustees.