BWB has submitted its response to the Law Commission’s consultation paper on Technical Issues in Charity Law.

The consultation paper makes proposals for how the law could be reformed to remove unnecessary regulation while protecting public trust and confidence in charities.

BWB supports the aim of the Law Commission’s consultation paper and we welcome many of the very helpful proposals made.

In framing our submission, we have been mindful that any changes to charity law should aim to balance reducing cost, time and unnecessary bureaucracy in operating charities with ensuring that the legal and regulatory framework in which they operate promotes high levels of public trust and confidence in the sector. We have highlighted, in our submission, where we believe important safeguards which protect charities and the intentions of donors may be removed and made alternative suggestions.

Here are some of the highlights:

Amending governing documents.

  • The Law Commission makes proposals to simplify processes for Royal Charter, statutory and unincorporated charities to amend their governing documents.
  • We are very supportive of the general thrust of these proposals, but with some reservations including in relation to the significant relaxation to the amendment of purposes of charitable trusts.

Regulation of charity land transactions

  • The Law Commission makes significant proposals to replace the current complex regime, including removing the requirement to obtain a Qualified Surveyors’ Report, with a new requirement for trustees to obtain and consider advice on land transactions including sales, leases and mortgages, unless they reasonably believe that it is unnecessary.
  • We are not generally supportive of these proposals, which we think go too far. Although there are aspects of the current regime which could helpfully be changed, our view is that the current regime is generally effective and proportionate to the risks involved.

Permanent endowment

  • The Law Commission proposes extending the statutory powers under s281 and 282 Charities Act 2011 so that more charities can use these powers to release permanent endowment, which we support.
  • The Law Commission puts forward proposals for a new alternative regime, which it refers to as ‘preserved endowment’ with the aim of enabling charities to use permanent endowment more flexibly. We support the introduction of flexibility to enable permanent endowment to be applied in making social investments, but share some reservations about the breadth of the proposed power.

Ex gratia payments

  • We welcome the Law Commission’s recommendation for the introduction of a statutory power for trustees to make small ex gratia payments without having to obtain consent from the Charity Commission in line with the Commission’s current practice.
  • We support Lord Hodgson’s recommendation that trustees should be able to delegate the decision to make ex gratia payments to officers.

Charity incorporations and mergers

  • The Law Commission makes various recommendations to address technical difficulties relating to the transfer of assets and liabilities on incorporation and merger. The Law Commission also makes proposals to extend s311 so that, where a merger or incorporation is registered on the Register of Mergers, charities which have incorporated or merged are treated as still being in existence in order to protect legacies left to them and to avoid the need to retain the old charity as a shell charity.
  • We are broadly supportive of the recommendations made in this section of the paper and we also highlight some additional technical issues which we have experienced in relation to mergers.
  • In respect of protecting legacies on incorporation and merger, we share a number of reservations, such as the need to ensure testamentary freedom, and make suggestions as to how the proposals may work in practice.

Charity tribunals and courts 

  • The Law Commission examines the powers of the Charity Tribunal and courts and makes a number of helpful proposals to extend the powers of the Tribunal, particularly at the preliminary stages of charity proceedings, which we broadly support.

Follow this link to see the full list of consultation topics and to read the proposals in more detail.

The consultation is now closed and the Law Commission intends to publish a report containing its final recommendations and a draft Bill by the end of 2016.

If you would like to see a copy of BWB’s response, please contact Lucy Rhodes at l.rhodes@bwbllp.com.


Posted on 14/07/2015 in Legal Updates

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