How to Amend the Constitution of a Charity
As a result of changes made by the Charities Act 2022 to the Charities Act 2011, there is now a clearer and simpler means of amending charity constitutions.
The previous rules regulating such changes varied according to whether the charity was in the form of a company, CIO, unincorporated association or trust. The new rules establish consistency, and, therefore, greater fairness for charities irrespective of the form of a charity.
New Trustees’ Resolutions templates
To assist trustees of charities wishing to amend their governing documents, ten new forms of trustees’ resolutions are now available. There are two templates for each of the five forms of charity: one provides for Charity Commission consent to be obtained, and the other omits that requirement where that consent is not needed.
The Form of a Charity
A charity may be set up in either:
1. corporate form, as a:
- Charitable Company Limited By Guarantee; or
- Foundation Charitable Incorporated Organization (“FCIO”); or
- Association Charitable Incorporated Organization (“ACIO”)
2. unincorporated form, as a:
- Charitable Trust (with trustees but no members); or
- Charitable Association (with both trustees and members).
Irrespective of which of these five legal forms have been adopted when setting up the charity, it will have a constitution document governing how it can operate.
If it is a Charitable Company Limited By Guarantee, it will be governed by its Articles of Association adopted when the company is incorporated. If it is an FCIO or ACIO, it will be governed by a constitution which will have been adopted when it was registered.
If it is a Charitable Association it will have a document entitled “constitution” which will have been adopted by its initial trustees. If it is a Charitable Trust, it will be governed by a constitution set out in its founding Trust Deed. In order to set up such an Association or Trust, the initial constitution document in each case will have been signed by its first trustees.
Alteration of Governing Document
If at any time subsequent to setting up a charity (whatever its form), its trustees wish to alter its governing document, they may do so in accordance with the Charities Act 2011 by passing a trustees’ resolution.
In addition, any amendment to the constitution of a FCIO, ACIO, Charitable Company Limited By Guarantee, or a Charitable Association – but not a Charitable Trust since it does not have members - requires the approval of its members for the amendments to take effect. The members can give their approval at a general meeting convened for that purpose.
Charity Commission Consent
Certain types of amendment proposed to a governing document only have legal effect if and when the trustees obtain the consent of the Charity Commission to those amendments. The Act sets out the types of amendment that require the Commission’s consent. (See Section 198(2) as to companies, Section 226(2) as to CIOs, and Section 280A(8) as to charitable trusts or associations.)
In relation to all forms of charity, the 2011 Act provides that in considering whether to consent to such types of amendments, the Commission must have regard to:
(a) the purposes of the charity when it was established, if and so far as they are reasonably ascertainable,
(b) the desirability of securing that the purposes of the charity are, so far as reasonably practicable, similar to the purposes being altered, and
(c) the need for the charity to have purposes which are suitable and effective in the light of current social and economic circumstances.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.