Charities Act 2022 – Updating Governing Documents

Guest blog by Fiona Miller, Charities Solicitors, Shakespeare Martineau

The Charities Act 2022 is a hot topic of conversation in the charity sector at the moment. The Act, which received Royal Assent on 24 February 2022, implements recommendations made by the Law Commission in its 2017 report – ‘Technical Issues in Charity Law’, and reforms the law in a number of areas, including the law on:

• Charity land and restrictions on dispositions and mortgages;
• The rules on paying a charity trustee for providing goods and/or services to their charity;
• Permanent endowment;
• Trust Corporation status;
• Charity Commission powers to require charities to change or stop using an inappropriate name, and to ratify the appointment of trustees; and
• Cy-près powers and the handling of proceeds of fundraising appeals.

The reforms to date have been implemented in three tranches, with the latest set of reforms implemented on the 07 March 2024.

Out of the reforms implemented in March, the most significant is the reforms to the rules on amending governing documents, including the rules for unincorporated charities (which make up 66% of registered charities).

The reforms repeal the current, limited powers of unincorporated charities and replace them with a wide statutory power to amend any provision in their governing document.

Any amendment must be in the best interests of the charity and must not result in the charity ceasing to be a charity.

It’s also important to note that Charity Commission consent is required for certain amendments, including (but not limited to):

• any amendment which alters a charity’s charitable purposes;
• any amendment which alters a charity’s dissolution provisions; and
• any amendment which alters a charity’s trustee benefit provisions.

Whilst care needs to be taken in exercising this power and in ensuring the correct process is followed, this is a momentous reform that significantly simplifies the process of amending governing documents for a large number of charities.

If you or your charity has any questions in relation to the reforms implemented under the Charities Act 2022, or if you have any questions in relation to reviewing or updating your charity’s governing document, please contact Shakespeare Martineau charity law specialists.

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For further information, visit the Shakespeare Martineau charity law specialists website here.