Figures from the Charity Commission state that around 100,000 individuals per year are appointed as new trustees of charities. Being a trustee can be a daunting task for individuals new to the position, given the duties required of trustees more generally. But what is the process for appointing a new trustee?
Michelle Lamberth of Herrington Carmichael LLP’s corporate and commercial team looks into this in greater detail in this article.
What information is needed at the outset?
Firstly, charities will need to know what legal structure it has. The process for appointing a new trustee will, in part, depend on the legal structure of the charity. This can usually be ascertained from the charity’s governing document (which I have explained in greater detail below) but this would usually take the form of a charitable trust, a charitable company or a charitable incorporated organisation (“CIO”).
Secondly, you will need to locate a copy of the charity’s governing document. Assuming the charity is registered, this can be found in the “Charity Framework” section of its relevant entry within the register of charities found at the Charities Commission and, on occasion, at Companies House.
Lastly, you will need to be aware of restrictions on who can and who cannot be a trustee. These can be contained within the charity’s governing document and could include matters, by way of example, such as individuals who wish to appointed as trustee having the necessary capacity to do so.
Appointing a trustee: Charitable Company
In the context of a charitable company, typically provisions for appointment of a new director will be contained within its constitutional documents – more particularly the Articles of Association. Under the Companies Act, charitable companies are required to have at least one director (who must be a natural person (i.e. not a corporate entity)).
Provisions for appointment and removal of a director to a charitable company are typically contained within the Articles of Association, although there are powers vesting with the members under the Companies Act, and with the Charity Commission and High Court in certain circumstances.
Appointing a trustee: CIO
A CIO is required to have at least one charity trustee and at least one member. As a slight difference to a charitable company, the charity trustee, in the context of a CIO, can be an individual or a corporate entity.
Under law, it is compulsory for CIO’s to set out procedures for appointing and removing charity trustees within its constitutional framework. Depending on the form of the CIO insofar as whether it takes the form of a Foundation model CIO or an Association model CIO, different options are available for the procedure of appointing a new charity trustee.
Beyond this, there are requirements on a CIO to specify how charity trustees can retire and provisions specifying how a charity trustee will be automatically removed from office.
Who can be a charity trustee?
There are a number of rules and eligibility requirements imposed on individuals who are to be appointed as charity trustees. These include requirements such as (and without limitation):-
i. Capacity – the individual must have the capacity and comprehension to manage their own affairs to be deemed eligible to be a charity trustee.
ii. Age limits – dependent on the structure of the charity, there are specific age requirements before becoming eligible to be a charity trustee.
iii. Background checks – whilst not a legal requirement, many charities will carry out their own background checks to ensure the proposed charity trustee is suitable to act in the position and have not been disqualified from doing so.
iv. ‘Fit and proper persons’ test – due to tax reliefs and exemptions that charities are eligible to take advantage of, managers (being the persons having the general control and management of the administration, thereby mirroring the definition of a charity trustee under the Charities act) are required to satisfy the ‘fit and proper persons’ test.
Guidance for charity trustees:-
The Charities Commission has released a guidance pack aimed at individuals new to the position of being a charity trustee. A link to the Charities Commission website is located here.
If this article raises any questions, or if you require any assistance in appointing a charity trustee, please get in touch with Michelle Lamberth of Herrington Carmichael LLP’s corporate and commercial team on 0118 977 4045 or at michelle.lamberth@herrington-carmichael.com.
