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Constitutional and organisational requirements

Constitutional and organisational requirements

The persons having the ultimate responsibility for management and control of a charity, whether trustees of a charitable company, committee members of a Community Benefit Society, members of the executive committee of an unincorporated association or the actual trustees of a charitable trust are “charity trustees” and have particular obligations under charity law.

  • There are common-law obligations on all charity trustees (whatever the nature of their organisation), for example the obligation to act in a prudent and businesslike manner continues to exist alongside statutory obligations.  This obligation is personal even for trustees of corporations with limited liability and in extreme cases could result in financial liability for individual trustees. [Common law duties of charity trustees].
  • There are some important specific obligations on charity trustees of registered and excepted charities with respect to valuation prior to land disposals which are set out in sections 117 to 120 of the Charities Act 2011. [Charities Act when valuation procedures apply]
  • There are additional requirements where land is held by a charity for specified purposes, either under a trust or by virtue of provisions in a corporate constitution. [Charities Act procedures property held for special purposes]
  • When acquiring land and carrying out many other functions in relation to land, trustees of trusts or unincorporated associations are required to exercise a duty of care set out in section 1 of the Trustee Act 2000. This involves trustees exercising such care and skill as is reasonable in the circumstances, having regard in particular to any special knowledge or experience that they have or hold themselves out as having.
  • In the case of a Charitable Incorporated Organisation, the members as well as the trustees have a duty to further the interests of the charity.
  • Under Section 171 of the Companies Act 2006 a director of a company must act in accordance with the company’s constitution, and only exercise powers for the purposes for which they are conferred.  Under Section 172 and 181 of the Companies Act 2006 a director of a company that is established otherwise than for the benefit of its members must act in the way he considers would be most likely to promote the success of the company in order to achieve the purpose of the company.
  • Directors of a community benefit society have duties not to use the assets for their own benefit and to act prudently and lawfully, in the best interests of the society, exercising the skills the person has and the skills reasonably required to perform the role.
  • Charities that are Registered Providers may be affected by the requirement of the Housing and Regeneration Act 2008 and regulatory standards set by the Homes and Communities Agency.