The third instalment of Charities Act 2022 reforms came into force on 7 March of this year, making significant technical changes in important areas of charity law.
The first and second phases were introduced in October 2022 and June 2023 respectively. We have included below summaries of the main changes:
Changes to governing documents
Trusts and unincorporated associations can now amend their governing documents using a new statutory power. The new power is particularly useful where unincorporated charities cannot rely on an express power of amendment. However, Charity Commission authority will be required when making certain 'regulated alterations' (for instance, amending the charity's objects, provisions on trustee benefits or permanent endowment restrictions).
This new reform should introduce more consistency in the approach that the Commission takes when authorising changes to the purposes of charitable companies, charitable incorporated organisations (CIOs) and unincorporated charities including charitable trusts.
Statutory powers for certain (small) unincorporated charities to change their governing document have now been repealed.
Selling, leasing or otherwise disposing of charity land
Receivers, mortgagees, liquidators and provisional liquidators will not be subject to the restrictions on charity land disposals and mortgages in the Charities Act 2011 (i.e., the requirement to obtain an order of the court or the Commission).
To ensure consistency at each stage of land transactions and to simplify compliance, charity trustees are no longer required to provide a statement confirming that restrictions on disposals were complied with. Instead, a statement will be included in the document effecting the disposal (e.g., a contract or conveyance) confirming that the rules have been complied with.
Trustee appointments and remuneration
The Charity Commission can now correct defective trustee appointments where for instance it was intended that a person would act as a charity trustee but the rules for appointment of new trustees were not followed by the charity. The Commission can also now authorise the remuneration of charity trustees for work carried out for the charity where the Commission considers that not doing so would be inequitable.
Charity mergers
The new rules will allow gifts to charities that then merge to take effect as gifts to the charity they have merged with/the new charity. The rules apply to all gifts made on or after 7 March 2024 regardless of when the relevant document which gives rise to the gift was executed or entered into.
Saving and transitional provisions
To help charities with the transition, several saving and transitional provisions are in place. For instance, if prior to 7 March 2024, your charity has applied to the Commission for consent to make a regulated alteration and the Charity Commission has not yet made a decision whether to give consent, the new provisions of the Charities Act 2022 will not apply in respect of the application for consent.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
