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Understanding the Latest Changes to the Charities Act 2022

Charities| 17.04.2024

There have long been concerns regarding the legal compliance of thousands of charities in the UK because it has been complex and confusing.

Back in September 2017, the Law Commission published a report entitled ‘Technical Issues in Charity Law’ setting out the technical legal issues which “cause unnecessary expense and prevent charities dedicating their full resources to the public good”.

In particular, the Law Commission highlighted problems concerning the amendment of governing documents, land transactions, permanent endowments, and mergers faced by charities. Based on the recommendations made by the Law Commission, the Charities Bill 2021-22 (Charities Bill) received Royal Assent on 24th February 2022. Since the end of October 2022, the government has been introducing new provisions under the Charities Act 2022 in batches, with the latest coming into force on 7th March 2024. The last set of provisions in June 2023 brought in changes to the law on selling, leasing or otherwise disposing of charity land, using permanent endowment, and ‘working’ charity names. In this article, we will explain the implications of the highly anticipated April 2024 changes to the Charities Act 2022.

changes to governing documents

New legal provisions on making changes to governing documents

The latest set of changes contained within sections 1 – 3 of the Charities Act 2022 concerns the ability of charities to make changes to their governing document. The whole point of this change is to make it much easier and faster for charities to modify their structure and administration.

Before making a change to your charity’s governing document, it is important to check if permission is required first. Charities can make changes such as how they appoint trustees, admit members, communicate with members, and arrange and run meetings without the need to gain authorisation from the Charity Commission first. Other, more impactful changes require authorisation from the commission, including changing the purpose of the charity, allowing trustees, members, and people or organisations to benefit from the charity, and changing what happens to the charity’s money or property in the event of closure.

The changes also include:

• The requirement for unincorporated charities to pass trustee and member resolutions (if applicable) when using this new legal power
• The application of the same legal test when deciding whether to give authority to charitable companies, CIOs, and unincorporated charities changing their charitable purposes and
• Giving the Charity Commission the power to give public notice to, or to direct charities to give notice to, regulated alterations they make.

New provisions on selling, leasing, or otherwise disposing of charity land

New provisions within sections 18 and 23 of the Charities Act 2022 relate to the sale, lease, and disposal of charity land in England and Wales. The March 2024 charity land changes include:

• New provisions for disposals by liquidators, provisional liquidators, receivers, mortgagees or administrators. This includes a set of ‘key actions’ that must be undertaken when disposing of land, including checking that it is in the charity’s best interest to do so.
• The requirement to include certain statements and certificates in disposal documents, including how the land is held, by what sort of charity and how the disposal is allowed by law.
• New provisions for the taking out of mortgages by liquidators, provisional liquidators, receivers, mortgagees or administrators

Charity mergers

The Charities Act 2022 changes for March 2024 contain new rules for certain types of mergers. Mergers typically occur when two charities with the same or substantially the same purpose form a single charitable entity with one governing document and body of trustees. Under the changes, most gifts to charities that merge (and are entered in the Register of Mergers) will be treated as gifts to the new/merged charity. Importantly, the merged charity will still receive the gift even if the Will contains a provision preventing the gift if the named charity no longer exists. The benefit for merged charities is that they will no longer need to set up and maintain a shell charity to receive legacies in such situations.
Other new Charities Act 2022 for March 2024

Other new Charities Act 2022 for March 2024

The latest set of provisions also includes amendments enabling the Charity Commission to authorise trustees to receive or retain a payment for work completed for the charity. This authorisation will only be given if the Commission makes the decision that it would be inequitable for a trustee not to be paid.

Another change concerns the ability of the Charity Commission to confirm defective or potentially defective trustee appointments. According to the updated guidance on finding new trustees, the Commission can do this by making an order when the person concerned consents to their appointment as a trustee.

The guidance also confirms that when making the order, the Commission can also:
• Transfer property to, or vest property in, the person concerned and
• Validate a past act of the person concerned, meaning that the act is treated as being valid from the date it took place, not the date of the order.

Final words

The latest changes to the Charities Act 2022 are legally technical and require a robust understanding of their implications and application. If you need any assistance with interpreting the new law or learning how your charity can benefit from the changes, speak to a charity law specialist who can guide you.

has a dedicated team of charity law solicitors who provide practical and legal advice and support to charities across the UK. To make an appointment, please contact us on 0121 270 2700 or enquire through our contact form.

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