The Charities Act 2022

The Charities Act 2022 (“2022 Act”) was passed with the intention of providing more flexibility and to help trustees manage their charities.

The 2022 Act has been implemented in phases and the final provisions were originally due to come into force in Autumn 2023.  These sections are now expected to come into force early this year.

The final tranche of provisions includes:

• Sections 1-3: Charity constitutions
• Sections 18 and 23: Charity land
• Section 24 and Schedule 1: Amendments to the Universities and College Estates Act 1925
• Section 29: Appointment of trustees
• Section 31: Remuneration of trustees
• Sections 33-35(b): Charity mergers
• Sections 37, 40 and Schedule 2: For remaining purposes

We set out a brief explanation of some of these provisions below.

Governing documents

Sections 1-3 will reduce some of the administrative burdens for charities.  The changes will provide charities with more flexibility, as they will no longer need to seek the approval of the Charity Commission where a change to their objects does not alter the substance of the charitable purposes.

The new rules will align the process for CIOs making amendments to their constitution with other charitable structures, such as charitable companies.

The Act introduces broad powers for unincorporated charities, allowing them to amend any provision in their governing documents by resolution of the trustees, provided the amendments are in the best interests of the charity and that the change will not prevent the charity from being charitable at law.  Provisions are retained whereby the Charity Commission is required to give written consent to regulated changes.

Charity land

 The new provisions will amend some of the charity land disposal procedures in the Charities Act 2011, so that the general restriction on the disposition of, or mortgaging of charity land does not apply to:

• A liquidator
• A provisional liquidator
• A receiver
• A mortgagee, or
• An administrator.

Under the new provisions the statements included in the disposition of land document will be simplified.

Charity trustees

 The new provisions will enable the Charity Commission to make an order to ratify the appointment of a trustee where that trustee has consented, and where there is uncertainty as to whether they were properly appointed or there are any defects in the way they were appointed.

The Charity Commission will also have the power to order a charity to remunerate a trustee for work carried out on behalf of the charity, where the Commission would consider it inequitable for them to not be paid.

Mergers

The 2022 Act provides improved powers to deal with legacies to a merged charity, where details of the merger have been entered into the Register of Mergers.  The new provisions mean that merged charities can avoid the need to retain the transferring charity as a dormant charity, because any legacy income will be transferred following the merger.

If you would like to find out more about any of these provisions, please contact Gerry Morrison and Harriet Wheeldon.