Another important deadline is imminent. Changes to the law on trustee automatic disqualifications will come into force on 1st August 2018.
Charities have less than two weeks until the disqualification provision of The Charities (Protection and Social Investments) Act 2016 takes effect. Since the Act received Royal Assent back in March 2016, various provisions have been implemented (raising standards in fundraising, for example). From 1 August, the one relating to automatic disqualification of Trustees and Senior Managers will also apply.
While the sector, via the Charity Commission, already had disqualification provisions, these new requirements are far more extensive in nature and could have significant potential ramifications for your organisation. These new rules extend the scope of those who are currently disqualified from running a charity and will also apply to some senior manager positions. A definition of ‘senior management’ is provided in the Act and outlines those employees who are management and/or have control over money. Almost definitely, your Chief Executive and Finance Director (or equivalent) will meet the definition.
So, for any organisations which are registered charities, there are several things you should do before the deadline. You must:
- Make sure you read the guidance for charities to help you understand what is changing. This guide also includes a handy disqualifying reasons table that you can download.
- Ask your current trustees to check that they won’t be affected by these changes.
- Ensure any incoming trustees are also aware of the new requirements.
- Senior managers (at Chief Executive or Finance Director level) should also check if the disqualification law will affect them from 1 August.
- Ensure that all trustees and senior managers state whether they will be affected / disqualified from acting in their positions after the 1st
- Ensure that each signs a declaration. Examples can be found and downloaded from the preparing for the rule changes section of the charity guidance.
- Update the checks that you will make before making any new appointments to these positions. See paragraph below.
- If someone is affected by the changes and is going to be disqualified then they may apply to get the disqualification waived. The organisation may not apply on their behalf. Otherwise, from 1st August they must resign as trustee or senior manager. Find out more about the waiver process in the guidance for individuals.
- If an individual applies for a waiver before 1st August, they won’t be disqualified until they get a decision from The Charity Commission or the tribunal if an appeal is made against the decision.
How to extend your checks for new appointees
The controls you have in place for checking whether Trustees are eligible (both current and new appointees) should be reviewed and updated. To simplify the process, organisations should use the official registers which record the names of people who have been disqualified from acting as trustees.
- The Individual Insolvency Register maintained by the Insolvency Service. https://www.gov.uk/search-bankruptcy-insolvency-register. Searches of the Register can be made on the Insolvency Service website, by visiting your local Official Receiver’s office, or by post or fax.
- The register of disqualified directors maintained by Companies House, https://www.gov.uk/government/organisations/companies-house. Searches of the register can be made on the Companies House website.
- The register of all persons who have been removed as a charity trustee. http://apps.charitycommission.gov.uk/trusteeregister/search.aspx either by the commission or by an Order of the High Court since 1 February 1993.
More information can be found at https://www.gov.uk/guidance/automatic-disqualification-rules-for-charity-trustees-and-charity-senior-positions
Susie Kay and The Professionalism Group specialise in providing Governance excellence for the membership and associations sector.