Casework Guidance 

B1 Casework considerations

Our approach to casework issues arising from this work is consistent with our published Risk Framework. We will object to resolutions only where they fail to meet the criteria set out below.

Where a charity has power in its own governing document to make changes or to transfer property it can do so without recourse to sections 267, 275 or 280. We would encourage charities to use their own powers where possible. However, having its own power does not prevent a charity from using these provisions.

Section E sets out the legal requirements that must be met for charity trustees to use the provisions of sections 268, 275 or 280. A chart containing an overview of the provisions can be found at section C1.

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B1.1 How trustees tell us about changes

Trustees complete online forms to inform us of resolutions to transfer property and to make any amendments to governing documents.

Charities are actively encouraged to use the online forms and we will only allow submission of details by alternative means in rare cases (usually where there is no way of accessing a computer). 

The online forms take trustees through a series of screens that are designed to give us information about the resolution made and the trustees' reasons for making it. The information gives us an opportunity to take a view on the proposals for sections 268 and 275 and whether we will accept them or object to them. Timelines for acceptance or objections to a resolution are considered at sections E6.1. Section C contains examples of how the timeline for the resolution can be extended.

The trustees must tell us once changes or transfers have taken place so that we can amend the Register of Charities; again, there is an online form for this purpose.

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B2 Property Transfer Resolutions - sections 268, 273 and 274 

The legal basis for the use of these powers can be found in section E3. The timeframe we have to make objections to trustees' resolutions is set out in section E6.1

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B2.1 Considerations for resolutions to transfer property

Our initial assessment of resolutions received is based on whether we can accept the resolution as it stands or whether there are grounds to object. Reasons for objecting to a property transfer resolution arise where:

• proper process has not been followed: or
• the objects of the receiving charity are not substantially similar.

Proper process

To ensure proper process we need to know that the trustees:

• are properly appointed in accordance with the governing document of the charity;
• the resolution was passed by not less than two thirds of the trustees present and voting
• the trustee meeting was quorate where specific provisions are set out in the governing document on this point;
• the charity's gross income is not more than £10,000 in the last full accounting period* (unless the transfer is to one or more CIOs, see E2.1);
• the charity is not a company or body corporate; and
• the charity does not hold designated land.

*  In the case of a special trust, the gross income generated on the special trust fund must not be more than £10,000 in the last full accounting period. It does not matter if the gross annual income of the reporting charity exceeds this threshold.

The online form contains a self certification screen where trustees confirm that they are properly appointed, that the resolution was passed by the required two thirds majority and the charity meets the gross income requirements. The form also makes it clear that it should not be used where the charity holds designated land or if the charity is a company. We will not question these elements unless we have specific evidence to the contrary.

It is the trustees responsibility to ensure that the meeting to discuss the resolution was quorate and in line with the charity's governing document. We will not question these arrangements unless we have any evidence to suggest that the procedures for this have not been applied.

Where the information provided shows that the charity does not meet the requirements for proper process we will inform the trustees at this point that we cannot proceed with the application and why. 

We need to be alert to certain types of charity where designated land and buildings can be held by one group of trustees on trust for another charity. This happens most often, but not exclusively, in school charities. Trustees hold the school land and buildings land "to provide a site for a school" although the school itself is managed separately by the governing body. Occasionally those trustees do not recognise that they are trustees of the school land, mistakenly thinking that the governing body has this responsibility. They might use the powers to transfer all other assets to the school without realising that they are also the trustees of the school buildings and land. If we miss this and allow the charity to dissolve itself then the school is left without trustees to manage the land and buildings. 

Substantially similar

Where we have no objections on process grounds we will then consider the nature of the proposals to ensure that the objects of any receiving charity are substantially similar. The legal basis for being substantially similar is set out in section E3.3. We will consider the proposals flexibly, looking at the circumstances of the charities involved and the reasons for the transfer. Where we are satisfied that proper process has been followed and the objects of the receiving charity are substantially similar we will confirm the date upon which the resolution will take effect and that the trustees can proceed with their action.  

We will intervene only where: 

• the proposals fail to meet the requirements for transfer set out in E3.1 to E3.3; or 
• there is insufficient information to judge that the requirements are met; or
• we consider that there may be a risk to charity property by improper use of the powers.

Indicators of improper use may be:

• a substantial drop in the charity's income, bringing it within the income threshold, without good reason;
• shortening of the charity's financial year (by using the Charities (Accounts and Reports) Regulations 1995) to bring its income within the financial threshold of the transfer powers, without good reason;
• any other information which indicates that the powers are not being used for their proper purpose.

Our intervention will take one of the following forms:

• a direction asking for more information;
• a direction asking the trustees to give public notice to the proposals - see sections B2.2 and B2.3 below;
• an objection on procedural grounds or the merits of the proposal (in this case the resolution does not take effect).    

Clearing queries by telephone 

In some cases we may be able to clear outstanding issues by telephone rather than the issue of a direction; this might include:

• clarifying income levels with unregistered charities;
• asking whether a charity still owns designated land;
• clarifying information missed from the online form.

Caseworkers must make a record of the phone call as part of case management. This action may allow us to accept the resolution without publication of notices or a formal direction for further information.

Section B4 below shows a table of possible actions and outcomes in different circumstances and directs caseworkers to the appropriate letter text to fit the circumstances. 

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B2.2 Publication of notices and receipt of comments - section 269

In appropriate cases (which are likely to be exceptional) we may direct notices to be published. We should make such a direction only:

• where we are unable to take a view on whether to object to the resolution on the information supplied; and 
• there are people having a clear interest in the charity and its proposals to transfer property who can inform our decision making.

These might include:

• existing or potential beneficiaries;
• creditors, debtors or donors (including bodies that have made grants to the charity);
• local authorities;
• charity members where no consultation with membership has taken place.

The circumstances where we might ask for notices to be published include:

• where the objects of the transferring and receiving charities do not seem substantially similar and the comments we receive will inform our decision whether or not to object;
• where it seems that the proposed transfer will unnecessarily harm the interests of existing beneficiaries;
• where either the transferring or receiving charity has a history of mismanagement or misappropriation of charity assets;
• where the charity has attracted a high level of public interest, (possibly from Members of Parliament) expressing concern at the way it is run, including those where complaints are unsubstantiated;
• where the arguments for the proposals being expedient in the interests of the charity are weak and we have serious doubts that the property being transferred will be used more effectively by the receiving charity.

In most cases it will be sufficient to publish a single notice in a way chosen by the trustees using their local knowledge of the charity and area of benefit. They will need to show that the method of publication was the best way of bringing the information to interested parties and provide details of where and when published.

Interested persons who wish to comment must do so to us within 28 days of the publication of the notice.

Directing notices to be published automatically suspends the 60 day period after which a resolution would take effect. See section E6.1 which explains the effect of suspending the 60 day period and the example at section C2 where we ask for notices to be published.

See the table of action and outcomes at section B4 below which links to letter texts for directing notices. 

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B2.3 Directions to provide us with further information - section 269

These directions require the trustees to give us additional information or explanation about the circumstances under which:

• they have resolved to transfer charity property; or
• they have complied with the process of making the resolutions.

In most cases the online form will provide the information we need to confirm that we have no objection. Our reasons for directing further information will be where we are unable to take a view on whether we should object to the resolution based on the information supplied.

The question of whether we ask for notice, further information, or both will depend on the extent of the information we have. Trustees are the people who are accountable for the actions of the charity but other interested parties may be able to provide a different perspective on the proposals.

A direction for further information suspends the 60 day period after which the resolution would take effect. See section E6.1 which explains the effect of suspending the 60 day period and the example at section C3 where we ask for further information.

See the table of action and outcomes at section B4 below which also links to letter texts for directing that further information must be supplied.

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B2.4 Objections to the resolution

We can object on procedural grounds or on the merits of the proposals in the resolution. We can do so after considering the initial information provided, where this is sufficient, or after requiring further information or considering representations following a period of public notice.

Where we object the resolution does not take effect.

 

This will be a reviewable decision and may be referrable to the Charity Tribunal. 

 

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B2.5 Other issues connected with transfer of land and other assets

Transfer of land and removal from the Register

Once notified of the effective date for the resolution the trustees are responsible for transferring all property to the receiving charity or charities at a date agreed by the charities concerned. Trustees should instruct solicitors to draw up formal legal documents of transfer, the cost of which can be met out of the charity's income. In appropriate circumstances a vesting declaration under section 310 may be made. We will make an Order to transfer land only in exceptional circumstances, examples of this may be where:

• the charity is unable to do it because holding trustees no longer exist; or
• the cost of using solicitors would wipe out the monetary assets of the charity that would otherwise have been transferred.

If the transferring charity is registered the trustees must confirm to us when the transfer of assets is complete so that we can remove the charity from the Register on the basis that it has ceased to exist. We should retain documentary evidence showing the transfer on the Key Documents File.

Transferring permanent endowment to a charitable company

A charitable company or body corporate cannot use section 268 to transfer property but this does not prevent such a charity receiving transferred property. However, permanent endowment cannot be transferred to a charitable company to be held as part of its corporate property. The effect of section 272(2) means that the property transferred retains its permanently endowed status, which is administered in the form of a trust. Property held on trust is not consistent with a company structure where all of a charity's corporate property can be applied generally or disposed of to further the charitable company's objects. 

It is important that the receiving charitable company keep the transferred permanent endowment separate from corporate property; it remains a separate trust for which the company is the trustee and must be accounted for separately. A charitable company wishing to act as a receiving charity under section 268 could set up a separate charity, for which the company acts as trustee, to receive the permanent endowment.  

Land vested in the Official Custodian

Where the land to be transferred is vested in the name of the Official Custodian the charity's solicitor must make the Official Custodian a party to the deed of transfer, even though he will not be required to sign it. The deed must be completed in the name of and on behalf of the Official Custodian by all the trustees of the transferring charity (or by two of them authorised for the purpose by section 333 of the Charities Act). The deed of transfer cannot vest the transferred land in the name of the Official Custodian for the receiving charity or charities. Where required, this must be done by the receiving trustees by using our online form.

Custodian trustees

Where land has been vested in a custodian trustee, other than the Official Custodian, the charity's trustees have a corresponding power to complete the transfer on behalf of the custodian trustee. This power can be found in paragraph 4(3) of Schedule 1 of the Trusts of Land and Appointment of Trustees Act 1996.

Register of Mergers

Although it does not specifically mention the fact, section 305 of the Charities Act allows all transfers under section 268 to be entered in the Register of Mergers. This will provide a permanent record of the transfer in case the transferring charity receives any further property through a legacy or covenant. Entry on the Register of Mergers will allow the property to be passed to the receiving charity or charities automatically. Trustees can apply online for the transfer to be entered.

Transferring investments

Where investments are held in the names of individual trustees a stock transfer form will need to be completed for each security by the transferring trustees. The forms must be lodged with the registrar for the security concerned (usually shown on the stock certificate). Stock transfer forms can usually be downloaded from the internet. The forms must contain the full names and postal addresses of the receiving trustees who will then hold the stock once the transfer is complete. If the receiving charity is a company, some other form of corporate charity or a body corporate entitled to act as a custodian trustee the stock transfer form must show the full corporate name and the address of its registered office, together with any other description required by the registrar.

We cannot make the transfer for the trustees. Difficulties arising about making the transfer, such as death of all trustees, must be notified to the registrar. The registrar will ask to see death certificates and will allow the legal representative of the last surviving trustee to complete the stock transfer forms. In exceptional circumstances where death certificates cannot be obtained or stockholders cannot be traced we may be contacted to make a Vesting Order. This vests the stock in the new trustees, who will then complete the transfer forms allowing the registrar to make the transfer.  

Where investments are uncertified securities, such as Common Investment Funds, the transferring trustees must write to the Fund Manager instructing them to make the changes to the trustees. They will need to supply a certified copy of the resolution and a dividend mandate. Where the receiving charity already holds shares in the fund the Fund Manager should be instructed to amalgamate the accounts under the details of the receiving charity.

Right to receive yearly sums

Occasionally, the property of the charity making a transfer power resolution might include the right to receive a yearly sum of money from another charity or organisation. We consider that the right to such a payment comes within the definition of property contained in section 268. The transferring charity will need to notify the payment giver:

• of the details of the charity entitled to receive future payments; or
• where the property is divided between two or more charities, the details of each charity and the proportions in which future payments are to be made.

Where the receiving charity is the payment giver there will be no need to make further payments. The charity would simply retain the sum and use it for the appropriate charitable purposes. 

Where the payment giver requests authority the transferring charity should provide a copy of the resolution and our acknowledgement of the effective date.

If the payment arises from a rentcharge and is to be apportioned legal advice must be taken.

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B3 Replacing charitable purposes - section 275 

The legal basis for the use of section 275 to change a charity's purposes can be found in section E4.1. Charities within the scope of section 275 that already have provisions in their governing documents to make changes to their purposes may choose whether to use section 275 or their express power of amendment.  Even where a charity has an express prohibition on amending the objects within its governing document, as long as the charity is within scope of section 275, it can use this power to amend its objects.

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B3.1 Consideration of resolutions to replace purposes

The consideration of most section 275 resolutions will be straightforward and we should proceed on the basis that each one is valid unless there is evidence that this is not the case. We can object to the resolution where the trustees:

• have not followed the proper process for making the resolution; or
• failed to ensure that the new purposes are charitable or include purposes that are as similar in character to those being replaced as is reasonably practical.

Proper process

To ensure proper process we need to know that the trustees:

• are properly appointed; and that
• the resolution was passed by not less than two thirds of the trustees present and voting;
• the trustee meeting was quorate where specific provisions are set out in the governing document on this point;
• the decision was taken in the best interests of the charity;
• the charity's gross income is not more than £10,000 in the last full accounting period; *
• the charity is not a company or body corporate; and
• the charity does not hold designated land.

*  In the case of a special trust, the gross income generated on the special trust fund must not be more than £10,000 in the last full accounting period. It does not matter if the gross annual income of the reporting charity exceeds this threshold.

The online form asks for confirmation that the charity is unincorporated and that its income did not exceed £10,000 in the last accounting period. The form allows for details of the resolution and provides confirmation that it was passed in the best interests of the charity by a properly constituted trustee body. 

We will not question these elements further unless we have specific evidence to the contrary. However, caseworkers will need to check if this provision is being used by an incorporated charity in error. This is because the nature of the online amendments form allows it to be used by charitable companies for amendments outside of section 268.  

Where the information provided shows that the charity does not meet the requirements for proper process we will inform the trustees at this point that we cannot proceed with the application and why.  See section B4 below which sets out possible actions and links to the relevant letter text in section G1.1.

New purposes similar in character

A starting point for our consideration of new purposes being similar in character may be our guidance on Cy-près applications in OG2.

Cy-près looks to extend existing purposes within the spirit of the original gift. However, section 275 allows for a wider application and the trustees have more latitude to decide how they may use the charity's assets in different ways to achieve the same or similar purpose.

Our approach is that the trustees are in the best position to decide what is reasonably practical in the circumstances and that we will object only where:

• the purposes are no longer exclusively charitable, meaning that the organisation itself would cease to be charitable; or
• the purposes are clearly not as similar to the purposes being replaced as is reasonable practical  - for instance where:
  • existing beneficiaries are unreasonably deprived or excluded from the benefits of the charity;
• the decision of the trustees that the change of purposes is in the interests of the charity is clearly wrong.

Where possible we can clear queries by telephone and make notes on file about the response. Again, where we require substantial explanation or comments from other people with an interest in the changes then we can direct the trustees to provide more information or instruct them to publish notices.  

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B3.2 Publication of notices and receipt of comments - section 276 

In appropriate cases we should ask for notices to be published where there are those who will have a clear interest in the charity and its proposals to change its purposes and who can inform our decision making. These might include:

• existing or potential beneficiaries;
• creditors, debtors or donors (including bodies that have made grants to the charity);
• local authorities;
• charity members where no consultation with membership has taken place.

The circumstances where we might ask for notices to be published might include:

• where the proposed change of objects might harm the interests of existing or potential beneficiaries;
• where the objects may not be similar in character and comments from interested parties may inform our decision to object;
• charities that have attracted a high level of public interest (including Members of Parliament) expressing concern about the way they are run, including those where complaints are unsubstantiated.
• where there is a history of mismanagement or misconduct in the running of the charity;
• weak arguments for the proposals being in the interests of the charity and we have we have clear doubts that the change of objects will lead to a better run charity.

In most cases it will be sufficient to publish a single notice in a way chosen by the trustees using their local knowledge of the charity and area of benefit. They will need to show that the method of publication was the best way of bringing the information to interested parties and provide details of where and when published.

Interested persons who wish to comment must do so to us within 28 days of the publication of the notice. 

Directing notices to be published automatically suspends the 60 day period after which a resolution would take effect. See section E6.1 which explains the effect of suspending the 60 day period and the example at section C2 where we ask for notices to be published.

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B3.3 Directions to provide us with further information - section 276

These directions require the trustees to give us additional information or explanation about the circumstances under which:

• they have resolved to change the objects of the charity; or
• they have complied with the process of making the resolution.

In most cases the online form will provide the information we need. Our reasons for directing further information are likely to be the same as those where we ask for notice to be given - see section B3.2 above. We might also ask for further information about the governing document and latest accounts, where:

• a charity is not registered with us and we do not know the charity type, its existing purposes or income level. 

The question of whether we ask for notice, further information or both of these will depend on the extent of the information we have. Trustees are the people who are accountable for the actions of the charity but other interested parties may be able to provide a different perspective on the proposals.

A direction for further information suspends the 60 day period.

There are standard letter paragraphs for directing trustees to provide additional information at section G1.4.

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B4 Table of possible actions and outcomes 

Situation	What we do	Responsibility	Letter text
Resolution received and everything in order	Inform the charity that we have no objection to the resolution and confirm the date on which it is effective. Give further details about changing the Register of Charities.	First Contact	See text G1.3
Resolution received and it is clear that procedural and/or considerative grounds are not met.	Inform the charity that it cannot proceed with the resolution and why.	First Contact	See text G1.1 for process grounds;  or G1.2 for considerative grounds
Resolution received but is unclear about minor issues and information can be obtained by telephone.	Clear by telephone and make a record for the file: and	First Contact
	If every thing in order confirm the date on which the resolution takes effect and give further details about changing the Register entry.	First Contact	See text G1.3
	Telephone call confirms that the resolution cannot proceed on process and/or considerative grounds. Inform trustees we object.	First Contact.	See text G1.1 for process grounds; or G1.2 for considerative grounds
	Telephone call indicates that we cannot make a definitive decision and further information from the trustees or other interested parties would help us take the decision. Escalate the case to team at the next level for notice and/or direction for information.	Escalate to Next Level	See text G1.4
Resolution received where we can only take a view of whether or not to object when we have further information but the issues are too complex for telephone clearance.	Decide whether the information needed can be best obtained by direction for information, by publication of notices or both. Send out letter setting out our requirements and which confirms that the 60 day period is suspended.	Next Level	See text G1.4
Further information has been received within the specified timescale and we have no objection to the resolution.	We write to acknowledge receipt of the information and that we do not object. We will confirm the date on which the resolution becomes effective and give further details about updating the Register of Charities.	Next Level	See text G1.5
Further information has been received within the specified timescale and we wish to object to the resolution.	We write to acknowledge the receipt of the information and confirm that the requirements of the Act are not satisfied and the reason why.	Next Level	See text G1.6
Trustees confirm that public notice has taken place and we do not wish to object (whether or not comments have been made).	We write to acknowledge that public notice has taken place and that we do not wish to object. The letter confirms the date on which the resolution takes effect and gives further details about updating the Register of Charities.	Next Level	See text G1.7
Trustees confirm that public notice has taken place and comments received mean that we wish to object.	We write to confirm that the resolution cannot take effect and the reason why.	Next Level	See text G1.6

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B5 Modifying procedures for the administration of a charity - section 280

The legal basis for modifying procedures under section 280 can be found at section E5.1 - this includes potential for using the power as well as limitations for its use. The timeframe for completion for the changes to take effect should be contained within the resolution.

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B5.1 How might trustees use this power

Section 280 enables trustees of any charity which is not a company or body corporate to amend existing provisions in their governing document and/or introduce totally new provisions; provided that they:

• relate to the powers of the trustees in administering the charity; or
• relate to the procedures to be followed in its administration.

The resolutions do not require our approval and we have no power to object in the same way as for section 268 and 275.

Where the charity has a membership which is not part of the trustee body a further resolution is required to ensure the membership approves the proposals - see section E5.1.

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B5.2 What the trustees need to do

Charity trustees may wish to consider the existing powers in the charity's governing document as some charities already have a power of amendment in their governing document. However, they can elect to use section 280 instead.

Using section 280 dispenses with the need for our approval where an existing power of amendment in a charity's governing document requires it. This may apply also where approval to changes would be required from a body other than the Charity Commission; although it may be in the interests of the charity to use its own power and get that approval. This would be a matter for the charity and the body concerned and we would not express a view.

In cases where the governing document requires our approval to all amendments we should encourage the trustees to use section 280 to alter their administrative powers to reduce the future administrative burden on the charity and on us.

There is no required format for resolutions but they will need to specify the date on which the provisions come into force. If a charity does not have a membership this will usually be the day on which it is passed unless a later date is specified. Where a further resolution of the members is required the effective date is usually the date on which it is approved by the membership.  A further resolution of the members is only required if the charity is an unincorporated association with a body of members distinct from the charity trustees

The trustees must tell us of the changes by completion of the online form giving us details of the resolution and attach a copy of the updated governing document.  

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B5.3 Our consideration of section 280 resolutions

When considering information from trustees under section 280 we must satisfy ourselves that:

•  the changes are acceptable; and
• are within the scope of section 280 or the charity's governing document.

We are not concerned with:

• purely administrative provisions, such as the minimum number of meetings the trustees hold each year, or the month in which the charity's annual general meeting is to be held; or
• that the amendment procedure has complied with the governing document; this is the trustees' responsibility.

In considering acceptability we need to ensure that the changes do not: 

• affect charitable status;
• authorise benefits to trustees not previously authorised;
• alter how the charity’s property can be distributed on dissolution;
• allow permanent endowment to be spent; or  
• give a new name that is obscene or contrary to discrimination legislation, or could be mistaken for an existing charity (see section B5.4 below).

Where a resolution is received that is clearly not acceptable we should inform the trustees to say that they cannot proceed and why, using the letter text at G1.2.

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B5.4 Other issues connected with the use of section 280  

 

Change of a charity's name 

Online form requires confirmation that our Register has been checked for existing charities with a same or similar name. We do not make further checks but where we see that the name is obviously similar to an existing charity or might be viewed as obscene we must take action as in OG330 Names of charities. Any subsequent complaints to do with resolutions for name changes should also be considered in line with OG330.

Changes affecting third party rights

The extent to which trustees can affect the existing rights of third parties by amending provisions in their governing document under section 280 is unclear where the third party objects to the change. In such cases, trustees may wish the changes to be made by a Scheme of the Charity Commission. We will make such a scheme where we are satisfied that the proposed change is expedient in the interests of the charity.

Changes affecting trustee benefits or conflicts of interest provisions

Trustees cannot use section 280 to introduce any trustee benefit provisions over and above any already in place, nor can s280 be used to remove a prohibition on trustee benefit. Additionally, amendments to a charity’s conflicts of interest provisions that might authorise a trustee benefit cannot be made under s280.

Adopting clauses from one of our model governing documents

Trustees can use s280 to adopt clauses from our model governing documents where these are provisions that:

• relate to the powers exercisable by the trustees in the administration of the charity; or
• regulate the procedure to be followed in connection with the administration of the charity.

Trustees cannot use s280 to adopt clauses from our model governing document where the clauses might:

• authorise benefits to trustees over and above what the governing document already authorises;
• alter how the charity’s property can be distributed on dissolution;
• allow permanent endowment to be spent; or
• alter the conflict of interest provisions to the extent that authorises trustee benefits.

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B6 Amendments to governing documents that fall outside of the section 275 and 280 provisions

Not all charities amending their governing documents will use the section 275 and 280 provisions. The online amendments form allows for charities with power in their own governing document to make the changes and notify us in the same way as those charities using the section 268 powers.

Our consideration of these changes is restricted to compliance with the governing document and ensuring that new purposes are charitable. If the changes go beyond what is allowed then we would inform the trustees that the changes cannot take effect. In such cases we might point the trustees towards section 268 provisions where this is appropriate. 

Legal advice should be taken if we are uncertain about the effect of changes being made.

 

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Legal, Policy and Accountancy Framework

E1 Background to the relevant sections of the Charities Act 

The Charities Act 2006 extended the power of trustees of unincorporated charities to modify powers and procedures, transfer property and replace charitable purposes. It also provided a revised framework to make the resolutions for these changes.

The Charities Act 2011 now contains the following sections:

Section 268 provides for the transfer of property for particular unincorporated charities, explains which charities can take advantage of these provisions and sets out the conditions that apply for a resolution to be made. 

Section 270 & 271 set out the time frame for resolutions made under section 268.

Section 273 deals specifically with permanently endowed property which is the subject of a resolution to transfer property made under section 268.

Section 275 allows for charity trustees of particular unincorporated charities to resolve to replace the purposes of their charity.

Section 280 allows any charity which is not a company or body corporate to modify powers or procedures for administering the charity.

Our approach when dealing with any of the resolutions described above is to provide information that allows the charity trustees to carry out the necessary changes and notify us of changes to the Register of Charities as appropriate.  Charity trustees are not compelled to use (nor prevented from using) these provisions where they already have sufficient powers within their charity's own governing document. This is consistent with our published Risk Framework. 

A chart containing an overview of these provisions can be found at section C1.

Section 287(2) implies that, for purposes other than Part 8 (Charity Accounts, Reports and Returns), a special trust can be treated as a separate charity for the purposes of the 2011 Act. This means that the powers discussed in this OG may be used to transfer special trust property and to replace the purposes and modify the administrative powers and procedures of special trusts. For more information on special trusts, see OG 46. 

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E2 Which charities can use these provisions?

E2.1 Transfer of property

Charities can use the transfer powers in section 268 where:

• the gross income in the charity's last financial year did not exceed £10,000* (unless the transfer is to one or more CIOs, see below);
• the charity does not hold any designated land; and
• it is not a charitable company or other body corporate (this does not prevent charity property being transferred to such charities nor does it prevent a charitable company or body corporate which is a trustee of an unincorporated charity from using the s268 power regarding the unincorporated charity).

* In the case of a special trust, the gross income generated on the special trust fund in the last financial year must not exceed £10,000. It does not matter if the gross annual income of the reporting charity exceeds this threshold.

NOTE: Section 267(2) of the Act states that the income requirement in s267(1)(a) does not apply where the transfer of property is to one or more CIOs. This means that a qualifying charity can use the s268 power to transfer its assets to one or more CIOs even where the income of the transferring charity exceeds £10,000pa (See sections B1 & B3.2 of OG715-04.) 

 

E2.2 Replacing purposes

Charities can use the powers in section 275 to replace their purposes where:

• the gross income in the charity's last financial year did not exceed £10,000; * 
• the charity does not hold any designated land; and
• it is not a charitable company or other body corporate (this does not prevent charity property being transferred to such charities nor does it prevent a charitable company or body corporate which is a trustee of an unincorporated charity from using the s275 power regarding the unincorporated charity).

* In the case of a special trust, the gross income generated on the special trust fund in the last financial year must not exceed £10,000. It does not matter if the gross annual income of the reporting charity exceeds this threshold.

 

E2.3 Modifying administrative procedures

The provisions in section 280 to modify administrative procedures can be used by:

• any charity that is not a company or body corporate.

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E3 Making resolutions to transfer property 

E3.1 Transfer of property that is not permanent endowment

To use the section 268 power to transfer unrestricted property trustees must pass a resolution (transfer power resolution) stating that all the property of the charity is to be:

• transferred to another charity specified in the resolution; or
• transferred to two or more charities specified in the resolution with the division of the property clearly specified. 

The receiving charities can be registered charities or those which are not required to be registered.

The trustees of the transferring charity must pass the resolution only where they are satisfied that:

• it is in the best interests of the charity in furthering its purposes; and
• the purposes (or any of the purposes) of the charity or charities receiving the property are substantially similar to any of those of the transferring charity. 

In the case of a charity that wishes to transfer permanent endowment the provisions of section 273 apply (see next section E3.2).

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E3.2 Transfer of property that is permanent endowment or a mixture of permanent endowment and unrestricted property

Section 273 states that where the transferring charity has permanent endowment or both permanent endowment and non permanently endowed property the resolution must:

• relate to both the permanent endowment and the unrestricted property.

The unrestricted property remains subject to requirements of section 268 (as set out in section E3.1 above), however, there are different requirements for the purposes of receiving charities where the property is permanent endowment. 

The requirements for permanently endowed property will vary depending on whether the transfer is to a single charity or to more than one charity.

In the case of a single charity:

• the purposes of that receiving charity must be substantially similar to all of the purposes of the transferring charity.

In the case of more than one charity:

• the purposes of the receiving charities, taken together, must be substantially similar to all of the purposes of the transferring charity; and
• each of the receiving charities must have purposes that are substantially similar to one or more purposes of the transferring charity. 

This means that overall the receiving charities must have purposes that are substantially similar to all purposes of the transferring charity but each individual charity can have narrower purposes than the transferring charity. For instance, a charity that has purposes to relieve need and promote education in a particular area can transfer its property to one charity that relieves need and another that promotes education, both in that area.

We will usually accept a resolution where a receiving charity has wider purposes than those of the transferring charity. However, where a resolution has the effect of excluding beneficiaries of the transferring charity we may see this as a reason to object. 

If the receiving charity is a company it cannot hold permanently endowed property as part of the charitable company's general or corporate assets. This is because all the assets of the company can be spent generally for its purposes whereas permanent endowment is held on a trust that prevents it from being spent. We recommend that any charitable company receiving permanent endowment identify it as such and highlight the trusts upon which it is held.  

Section 273 allows us also to give guidance (in whatever form) to trustees on how permanently endowed assets may be divided between recipient charities. Where guidance has been given the trustees of the receiving charities must take account of that guidance.

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E3.3 What we mean by 'substantially similar' in the context of transferring property 

Before the transfer of property can take place we must agree that any or all (depending on whether the property is permanent endowment) of the purposes of the transferring and receiving charities are 'substantially similar'.

The Commission's understanding of the meaning of the word "similar" is set out in paragraph 3.2 of OG2 A1. The word "substantially" means something more than "insubstantial" or "insignificant" and means something like "in the main". 

We do not expect that the charities involved will have their objects worded in the same way although in some cases this might happen. We will accept that receiving charities involved may:

• carry out their work in a different way, but to the same or similar end;
• have objects that fall under a different charitable purpose in law but achieve the same result as the existing purposes;
• cover a wider area; 
• serve a wider class of beneficiaries. 

We need to be flexible in our approach when agreeing to resolutions but ensure that:

• where current beneficiaries exist they are not deprived of their access to the charity's services without a compelling reason; and
• property is not transferred for purposes completely unrelated to the original purpose. 

In cases where we are not certain that purposes are substantially similar we direct the trustees to give us further information or give public notice of the proposals - see section B2.1 for casework considerations.

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E3.4 Trustee action in making transfer power resolutions

Before passing any resolution the trustees of the transferring charity should ensure that the receiving charities are prepared to accept the assets and that those assets will be held and used, as far as reasonably practical, in line with their trusts.

To pass a transfer power resolution the trustees must call a meeting or otherwise act in the way set out in the charity's governing document for proposals to be voted on. If the governing document sets a quorum for trustees' meetings then at least that number of trustees needs to be present at the meeting. A postal vote of trustees may be used if the governing document allows it.

Any resolution using the transfer powers must be passed by a majority of not less than two-thirds of the trustees of the transferring charity who vote on the resolution. The majority should be counted from those trustees present and voting. Trustees who are present at the meeting and do not vote, or trustees that have not voted in a postal ballot, cannot be included in the calculation of the two-thirds majority.  

Where the transferring charity has a membership we recommend that the trustees consult the members about the transfer.

Once the trustees have passed the resolution they must send a copy of it to us, together with a statement of their reasons for passing it.

The trustees must send us details of the resolution and the reasons for passing it using the online form. Most power transfer resolutions will be straightforward we will object only where the charity fails to use proper process for passing the resolution (see section B2.1) or the purposes of the receiving charity are not substantially similar. We have 60 days from the date of receipt of the resolution to object - see section E6 below.

Casework considerations can be found in section B2.1 to B2.4. 

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E4 Making resolutions for replacing purposes

E4.1 Replacing purposes

Every charity must have purposes that are exclusively charitable in law. The purposes of a charity will usually be defined by what its governing document says about what it is set up to do and how its funds are to be used if it is wound up.

Section 275 allows trustees to change some or all of the purposes of their charity by resolution (in certain circumstances, see E2.1). Not only does it allow trustees to change the primary objects of the charity but also those that appear in the dissolution clause of a governing document.

To pass a section 275 resolution the trustees must be satisfied that:

• it is expedient in the interests of the charity for the purposes in question to be replaced; and
• so far as reasonably practical, the new purposes consist of or include purposes that are similar in character to those being replaced.

We accept that the trustees, with their knowledge of the situation in which the charity operates, are in the best position to decide what is 'reasonably practical'. Trustees also need to be flexible and imaginative in considering what is 'similar in character' to the existing purposes. They need to stay effective, useful and relevant to their beneficiaries' needs and adapt to changing circumstances as they arise. Section 275 allows charities to make changes that are needed. 

We do not approve resolutions made under section 275 but we can object to them because:

• proper process has not been followed; and/or
• we cannot see the merits of the proposals contained in the resolution; because:
  • the proposals are not charitable in law;
  • the case for being sufficiently similar has not been made or the purposes have changed completely;
  • the proposals exclude all or part of the existing beneficiary class. 

The trustees' resolution must be passed by a majority of not less than two thirds of the charity trustees who attended and voted on it. The meeting to discuss the resolution must have been properly constituted with a quorum present (if required by the governing document). 

We have 60 days from the date of receipt of the resolution to object - see section E6 below.

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E5 Making resolutions to modify procedures 

E5.1 Modifying procedures

Section 280 gives trustees the power to 'modify' the any provisions of the charity's trusts. This allows for amendment of existing provisions and also the introduction of new ones, providing that they relate:

• to the powers used by trustees in the administration of the charity, or
• to procedures to be followed in the charity's administration.

The power is limited by the general law and cannot be used to make changes to:

• the purposes of the charity;
• the purposes that charity property must be used for on dissolution;
• provisions for the land to be held by the Official Custodian for Charities (OCC); (where these are no longer required we will continue to discharge the OCC by Order); 
• include a provision which results in a benefit to any charity trustee, including any payment, except for reasonable out of pocket expenses;
• the status of any permanent endowment in order to make it expendable;
• extend an existing power of amendment so that it includes changes that cannot be made under section 280, for instance, allowing changes to purposes.   

Circumstances in which trustees may wish to apply to the Commission for a Scheme

There are some provisions which affect third party rights where trustees may be unsure whether they can use the statutory power of amendment. The Commission is prepared to make a Scheme in such circumstances provided it is satisfied that the proposed changes are expedient in the interests of the charity. The relevant provisions include the following:

• a power for a third party to appoint trustees (unless the third party has ceased to exist or has given consent to the change);
• a provision for appointment of ex-officio trustees (unless the office has ceased to exist or the current office holder agrees to the changes where they do not prejudice the rights of future office holders);
• the requirement for consent by third parties to powers exercised by trustees, for instance, where trustees require consent to make certain investments (unless the third party has ceased to exist or agrees to the change);
• custodian trustee provisions (unless there is agreement of the existing custodian trustee and the opinion of the charity is that section 268 can be used), this would apply to replacement of an existing custodian trustee with another or removal of the requirement to appoint a custodian trustee.    

We would expect to see the power being used to:

• make changes to the method of appointing trustees;
• create or change a power for a third party to appoint trustees (where that third party has ceased to exist or consented to the change);
• create or change provisions for appointing ex-officio trustees where the existing office holder consents to the change;
• make or change provisions for trustees to live in a particular parish, hold certain beliefs, or to be above or below a certain age;
• make provisions for holding trustees and/ or members' meetings;
• change quorum provisions for meetings;
• change the method for appointing the chair;
• introduce arrangements for a casting or second vote by the chair in the case of tied votes on resolutions;
• make provision to appoint officers such as a treasurer or secretary to the trustees;
• set out or change criteria for charity membership;
• change the charity's name;
• adopt clauses from one of our model governing documents, except where the clause will:
  • authorise benefits to trustees not previously authorised;
  • alter how the charity’s property can be distributed on dissolution;
  • allow permanent endowment to be spent; or
  • alter the conflict of interest provisions to the extent that authorises trustee benefits.

There may be other reasons for using section 280 that are not included in this list.

We need to be alert to any changes made to ensure that they comply with equality legislation. Examples might be where changes inadvertently disadvantage particular groups or a new name is discriminatory.  

 

The trustees' resolution must be passed:

• by the charity trustees in the usual way as set out by the charity's governing document. The meeting to discuss the resolution must have been properly constituted with a quorum present (if required by the governing document). 

Furthermore, where the unincorporated charity has a membership which is separate from the trustees a further resolution of the members is required. The further resolution must be passed at a general meeting by either:

• a majority of not less than two-thirds of the members entitled to attend and vote on the resolution: or
• a decision taken without a vote and without any disagreement to the resolution being expressed by those members present at the meeting.

The date for the changes to take effect should be contained within the resolution. No Charity Commission approval is required, however, the trustees must notify us of the changes, using the online form, so that we can update their Register entry.

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E6 Timelines for acceptance of resolutions and Charity Commission action

E6.1 Accepting resolutions made to transfer property and replace purposes (sections 268 and 275)

Section 270 provides that in straightforward cases a resolution takes effect at the end of a 60 day period beginning with the date on which we received a copy of the resolution. We will notify the trustees where we are satisfied that the requirements have been met and confirm the date on which the resolution will come into effect.

We may object to the resolution:

• on procedural grounds (where the trustees have failed to comply with the legal requirements, as set out in section E3 above); and/or
• on the merits of the proposal (see casework considerations in section B).

We must notify the trustees where we object to the resolution and provide reasons for the objection. Our objection prevents the resolution from coming into effect.

If we do not have sufficient information to decide if we should object to the resolution we may direct the trustees to:

• give public notice of the resolution; 
• provide us with an explanation or further information about the circumstances under which they have decided to act or the way in which the trustees have complied with the legal requirements for transfer of charity property;
• explain how the permanently endowed property has been divided under the resolution.

In particular, we will direct the trustees to make arrangements for public notice where we are unclear whether:

• the purposes of the receiving charity are sufficiently similar to the transferring charity and giving notice may provide a wider public view of the work of the charities involved;
• those more directly involved, such as members or beneficiaries, may not have been given an opportunity to present their views;
• procedural requirements have been followed.

Casework considerations for publication of notices can be found in section B2.2 (transfer of property) and B3.2 (replacing purposes). 

Where we direct the publication of notices or direct the trustees to provide further information the 60 day period is suspended from the date of the letter/ email giving the direction until:

• the publication period is over; or
• we have received the information requested; or
• 120 days have passed since the direction was given at which point we treat the resolution the resolution as having never been passed.

The trustees have 42 days (the publication period) from the date they give public notice of their intentions to deal with any representations they might receive and respond to us so that the 60 day period can begin again. Within the publication period those who wish to respond to the public notice have 28 days from the date the notice was published to make their comments to us. 

Where information required is supplied to us within the time limit for receipt we will restart the 60 day period and confirm the effective date for the resolution.  

If the 60 day period is suspended for more than 120 days because the trustees fail to meet the requirements for publication or fail to provide the information requested we must treat the resolution as if it had never been passed.  

In exceptional cases, where we make a direction for information and require notices to be published, we will not restart the 60 day period until both elements have been complied with.

Please see the examples at section C2 and C3 of how we might "stop the clock" on the 60 day period.

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