New rules for disqualifying charity trustees and senior managers

16 March, 2018

Under the Charities Act 2011 persons are disqualified from acting as a trustee of a charity if they have an unspent conviction for dishonesty or deception offences, have been disqualified from acting as a company director or have been the subject of bankruptcy orders or insolvency arrangements.  Acting as a trustee whilst disqualified is a criminal offence.

 

New legislation comes into effect from 1st August 2018 which will substantially widen the scope of the automatic disqualification regime in two respects.

 

Firstly the regime will be extended to include those acting in the role of chief executive or finance director of a charity, or equivalent positions which carry the same senior management responsibilities.

 

Secondly the range of reasons for automatic disqualification will be increased.  The new reasons include being on the Sex Offenders’ Register and unspent convictions for bribery, money laundering offences, as well as particular offences under the Charities Act 2011 and offences of misconduct in a public office, perjury and perverting the course of justice.

 

The expansion of the automatic disqualification regime has attracted criticism from organisations working with ex-offenders as disproportionate and an ineffective way to protect charities.  For example someone convicted of a sexual offence remains on the Sex Offenders Register long after their conviction is spent under the Rehabilitation of Offenders Act 1974.

 

Preparing for the change

There are several steps which charities should take now to prepare for the new legislation:

 

  • Where someone would be disqualified under the new restrictions, they can apply to the Charity Commission for a waiver. They should do so promptly (the Commission advises by 1st June 2018) to allow time for their application to be decided.

 

  • The relevant charity will need to consider whether it will support the application for a waiver, and the views of its trustees will need to be provided as part of the application process.

 

  • Otherwise a current trustee who will become disqualified should formally resign before the legislation comes into effect.

 

  • Charities should obtain legal advice in order to manage situations where a current senior manager will become disqualified.

 

  • Recruitment procedures for senior manager roles should be modified, such as background checks and pre-appointment declarations.

 

  • Appropriate declarations should be completed by trustees and senior managers and these declarations periodically refreshed.

 

  • Charities should review employment contracts for senior managers so that they can readily deal with the eventuality of a senior manager becoming disqualified.

 

The Charity Commission has published guidance for charities and individuals on the new disqualification rules, including guidance about applying for waivers.

 

If you require any assistance in navigating the new legislation or reviewing your employment procedures and documentation to prepare for its introduction, please contact Patrick Glencross.