Law Commission proposals for charities

4 April, 2018

 

The Govkeyboard with time for change keyernment’s response to the Law Commission’s proposals for simplifying charity law is due.  Perhaps BREXIT is higher on their list of priorities but it would be good if time can be found to enact the Commission’s proposals. They should save nearly £3m a year for charities. They also have wide ranging support.  Below we discuss some highlights.

 

Charities governed by statute or royal charter

Currently, it can take as many as ten years for these charities to amend their governing documents.  The proposal is that all Royal Charter charities should have a statutory power to amend their purposes subject to approval by the Privy Council. Statutory charities should no longer have to obtain Parliament’s positive approval to a proposed Scheme but instead Parliament should have the opportunity to reject the proposal – a less onerous procedure.

 

Property transactions

There are lots of good ideas here:

For transactions other than the grant of leases for seven years or less, a report from a RICS Surveyor is currently required.  It has to cover quite a lot of ground whether relevant to the transaction or not.  In future, if enacted, the adviser will only have to deal with four issues:

  • the likely price which should be obtained on a disposal;
  • whether anything should be done to enhance the property first;
  • advice on marketing; and
  • anything else that should be done to ensure that the best price reasonably obtainable is obtained.

 

In addition, in the future, and where appropriate to the property concerned, it should be possible for estate agents who are members of the National Association of Estate Agents and fellows of the Central Association of Agricultural Valuers to give the report.  The Law Commission also recommends, perhaps controversially, that trustees, officers and employees of the charity who are qualified as above should also be able to give the report, provided they self-certify that they have the necessary expertise.

 

If the Report is accepted, it will also no longer be necessary to advertise a disposition.  Currently, advertising has to happen unless the RICS Surveyor advises it should not. 

 

The Commission recommends that the persons who are authorised to sign a contract or transfer or lease should also be entitled to give the certificate of compliance with the Charity Act requirements, rather than this having to be given by the charity trustees personally. That should save valuable time in many cases.

 

The Law Commission recommends that the Charity Commission should change its guidance on the acquisition of property by charities to reflect the above, if these proposals do become law.

 

Designated land/permanent endowment

The Charities Act 2011 requires public notice to be given of the proposed disposal of designated land.  This is to allow members of the public to object to its disposal.  Designated land or permanent endowment is land where the trust documents stipulate that it must be used for the purposes or any particular purposes of the charity. The Law Commission recommends that this requirement be repealed.

 

Connected persons

Here, the proposal is that short residential tenancies should be allowed to be granted to employees of the charity. Also, the Commission would like charities to be able to dispose of property to their wholly owned subsidiaries provided they notify the Charity Commission and get the best terms that can be reasonably obtained for the disposal.

 

Liquidators, administrators and receivers

If the worst happens, the Law Commission wants insolvency practitioners to be able to dispose of land free of Charities Act restrictions and procedures. 

 

Click here to read the Law Commission report: Technical Issues in Charity Law