Current Changes to Charitable Companies
Trustees need to be aware that the ongoing implementation of the CA 2006 will also affect charitable companies. Many of the changes under the CA 2006 will impact charities in exactly the same way as other companies, such as the changed format of the memorandum and articles, the removal of the requirement to hold an AGM, the requirement of at least one director who is a natural person, and the new written resolution regime.
Other changes will impact all companies but have a modified effect on charitable companies. The latter group includes changes to directors’ duties, which necessarily apply somewhat differently to charities because directors are responsible for achieving the organisation’s charitable purposes rather than promoting the success of the company for the benefit of their members.
Changes to the right to inspect the register of members may also be particularly relevant to some charities because a ‘proper purpose’ test will now be applied when deciding whether to allow access to the register.
It is also worth noting that the Charities Act 2006, which is also being progressively implemented at the moment, introduced an alternative structure for charities called the charitable incorporated organisation (“CIO”) to avoid some of the overlap with the normal company regime. Existing charitable companies will be able to convert to the CIO structure, probably at the end of this year or the beginning of the next.
For further information please contact James Lamont or Rachael Taylor.
Please note: the contents of the Cumberland Ellis News Bulletin are designed for guidance only and is not intended to be a substitute for detailed legal advice. Consequently, whilst every care is taken to ensure that the information is accurate, we cannot accept responsibility for any liability to any person as a result of any errors or information which is found to be misleading.
