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Gift Aid: The charitable donation that keeps on giving
A charity’s governing documents can be amended by its trustees if there is clear power allowing this. Certain powers are available in the Charities Act 1993 and the Companies Acts and many charities also have specific powers of amendment in their governing documents. However, different powers are available to unincorporated charities and to charitable companies. This article will look at the powers available to charitable companies.
Trustees of a charity are generally free to make any changes they wish to the charity’s memorandum and articles of association to ensure its continuing effectiveness. However, this freedom is limited by the requirements of section 64 of the Charities Act 1993 whereby approval by the Charity Commission to certain types of changes will be required.
Under section 64, a charity needs the written consent of the Charity Commission before passing a resolution that makes any “regulated alternations” to its memorandum and articles of association. These amendments are seen as fundamental changes that are of such importance as to require the consent of the Charity Commission. Regulated alterations fall in to three broad categories:
- any changes to the objects clause;
- any change to what happens to the charity’s property on winding up; and
- any alteration which authorises the charity’s funds or property to be used to benefit the trustees or members, or people or organisations connected with them.
An exception to this is where the effect of the alteration is to remove an express prohibition for paying a trustee so that the charity can use the statutory powers under section 73 of the 1993 Act. Although such a change is not a regulated alteration, it will in certain circumstances need separate authority from the Charity Commission.
Alterations generally require a special resolution in order to come into effect: that is 75% of members attending a general meeting in person or by proxy voting in favour of the changes. Where any change is approved, the charity must send a signed copy of the resolution giving effect to the change and a copy of the memorandum and/or articles as altered to the Registrar of Companies and the Charity Commission.
