Village HallsTrustee Responsibilities/Governance

14/01/2014

Ed BakerTDP Training

Business and Social Enterprise Advisor

Agenda• Responsibilities.

• Structures.

• Options.

• Benefits.

• Issues.

• Practical Implication.

What are Trustee Responsibilities?

• What laws are Charity Trustees exempt from?

• What areas within the law are Trustees responsible for?

• Does Trustee Insurance ensure that you will not be held Liable?

• When do Trustee responsibility stop?

In Short.....

• You are responsible for everything that happens

Trustee Must

• Know your rules;

Constitution/ Mems and Arts

• Be clear on your Responsibilities

• Take professional advice where required

• Be involved in decisions -The LawGALS

• Understand being a volunteer

New Trustee

• All new Trustees must have an induction

• Read - The Essential Trustee

• Consider training and up skilling for individuals the board and staff

- consider TDP Training

CIO

Your governance is as important as companies with a turnover of £9Billion

Governance – Day to Day

• Will changing your legal structure improve the Day to Day?

• Will it improve the operation?

• Will the financials improve?

• Will staff or clients/customers see a difference?

• Why do it?

Governance / Structure

• Association

• Charity

• Charity + Company (Incorporated)

• NEW... CIO

(Charitable Incorporated Organisation)

• Trading Arm

Finding the facts about Incorporation can be difficult!

Why Incorporate Why Incorporate Why Incorporate

Why Incorporate?

• Discuss.....

Risk;

Contractual, Staff, Property, Contracts

When the risk increases,

incorporation is a safeguard

Governance Structure

Your Stories

What are the options?

• Stay Unincorporated

• Convert to a Company Limited By Guarantee and a Charity

• Convert to the new legal format CIO

a Charitable Incorporated Organisation

What Orgs will benefit

• CIO’s will be mostly be suitable for small to medium sized organisations which employ staff and/or enter into contracts. If your charity is likely to want to issue debentures, a company limited by guarantee will be a better option for you.

• Although establishing and running a CIO should be simpler than establishing a charitable company, it will not be as straightforward as running an unincorporated association/charitable trust.

What are the Benefits • The CIO structure has several benefits over

unincorporated structures, such as:

• Members and trustees are usually personally safeguarded from the financial liabilities the charity incurs, which is not normally the case for unincorporated charities

• The charity has a legal personality of its own, enabling it to conduct business in its own name, rather than the name of the trustees

The Advantages • Limited Liability: so trustees and members will normally be

protected from personal liability and would not be expected to make a contribution to any short fall if wound up, reducing the financial risk

• Separate legal personality, the CIO is the other party in any contracts

• Only need to file accounts and returns to CC. Up to £250,000 income only need simple receipts and payments accounts

Changes can seem far away• Making the change to an

incorporated body is not done lightly

• Planning is essential

• You must try to ensure that it does not hinder the Day to Day running

Model Constitution

• There are two standard models for CIOs;

Foundation model

Association model• The key difference is that the Foundation model has all its

members as Trustees and the Association model has voting

members in addition to Trustees • It is best to use the model constitution

The Process• The process you will need to follow, in this order, is:

• Register the new CIO with us.

• Transfer the assets and undertakings of the unincorporated charity to the CIO and settle any liabilities.

• Dissolve the unincorporated charity in accordance with the provisions contained in its governing document.

• Apply to us to have the unincorporated charity removed from the register of charities

CIO Incorporation! • The CIO will be a new legal entity and it will have a new

registered charity number, so you will need to inform all interested parties;

banks, funders, staff, HMRC, list of service providers, statutory bodies, auditors, registrar / licensing authorities and suppliers etc., of the transfer, ensuring that any existing contracts are assigned to the CIO.

• See CC information on incorporating a charity

• CC will not be registering debentures (as does companies house), it remains to be seen how banks view this.

Where to Find Help

Conclusion All trustees need to understand their responsibilitiesHave an induction process for new trusteesReview your risks carefully with staff / trustees, take appropriate action Ensure that your insurance is sufficient and includes – legal coverConsider your current governance, is it “fit for purpose”Understand the risks of being unincorporatedIf incorporation is considered, plan the change and use the process as an opportunity to update and become “fit for purpose” CIO is the simplest option unless there are debentures, using the model constitutionsBe involved with the decisions and their risks

Ed Baker ed@edwardbaker.org.uk

Questions