Legalize / United Kingdom / Public General Act

Charities Act 2011

Type Public General Act

Publication 2011-12-14

Last updated 2025-11-27

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

Reform history JSON API

If any person fails to afford an auditor or an independent examiner or examiner any facility to which the auditor, independent examiner or examiner is entitled by virtue of section 154(1)(d) or (e), the Commission, for securing that the default is made good, may by order give such directions as it thinks appropriate—

(a) to that person,

(b) if the audit or examination is of individual accounts, to the charity trustees for the time being of the charity concerned, or

(c) if the audit or examination is of group accounts, to the charity trustees for the time being of such member of the group as the Commission thinks appropriate.

Duty of auditors etc. to report matters to Commission

156

(1) This section applies to a person (“P”) who—

(a) is acting as an auditor or independent examiner appointed by or in relation to a charity under sections 144 to 146 (audit or examination of individual accounts),

(b) is acting as an auditor or examiner appointed under section 149(2) or (3) (audit or examination of English NHS charity accounts), or

(c) is the Auditor General for Wales acting under section 150(2) or (3) (audit or examination of Welsh NHS charity accounts).

(2) If, in the course of acting in the capacity mentioned in subsection (1), P becomes aware of a matter—

(a) which relates to the activities or affairs of the charity or of any connected institution or body, and

(b) which P has reasonable cause to believe is likely to be of material significance for the purposes of the exercise by the Commission of its functions under the provisions mentioned in subsection (3),

P must immediately make a written report on the matter to the Commission.

(3) The provisions are—

(a) sections 46, 47 and 50 (inquiries by Commission);

(b) sections 76 and 79 to 82 (Commission's powers to act for protection of charities).

(4) If, in the course of acting in the capacity mentioned in subsection (1), P becomes aware of any matter—

(a) which does not appear to P to be one that P is required to report under subsection (2), but

(b) which P has reasonable cause to believe is likely to be relevant for the purposes of the exercise by the Commission of any of its functions,

P may make a report on the matter to the Commission.

(5) Where the duty or power under subsection (2) or (4) has arisen in relation to P when acting in the capacity mentioned in subsection (1), the duty or power is not affected by P's subsequently ceasing to act in that capacity.

(6) Where P makes a report as required or authorised by subsection (2) or (4), no duty to which P is subject is to be regarded as contravened merely because of any information or opinion contained in the report.

Meaning of “connected institution or body” in s.156(2)

157

(1) In section 156(2) “connected institution or body”, in relation to a charity, means—

(a) an institution which is controlled by, or

(b) a body corporate in which a substantial interest is held by,

the charity or any one or more of the charity trustees acting as such.

(2) Sections 351 and 352 (meaning of controlled institution and substantial interest) apply for the purposes of subsection (1).

Application of duty in relation to auditors etc. of group accounts

158

(1) Subsections (2) to (6) of section 156 (duty of auditors etc. of individual accounts to report matters to Commission) apply in relation to a person appointed to audit, or report on, any group accounts under sections 151 to 153 as they apply in relation to the person referred to in section 156 as “P”.

(2) In section 156(2)(a), as it applies in accordance with subsection (1), the reference to the charity or any connected institution or body is to be read as a reference to the parent charity or any of its subsidiary undertakings.

Application of duty in relation to Companies Act auditors

159

(1) Sections 156(2) to (6) and 157 (duty of auditors etc. of individual accounts to report matters to Commission) apply in relation to a person acting as a Companies Act auditor of a charitable company as they apply in relation to the person referred to in section 156 as “P”, but reading any reference to P's acting in the capacity mentioned in section 156(1) as a reference to the person acting as a Companies Act auditor.

(2) In subsection (1), “Companies Act auditor” means an auditor appointed under Chapter 2 of Part 16 of the Companies Act 2006 (appointment of auditors).

Exempt and excepted charities

Exempt charities

160

(1) Nothing in sections 144 to 155 (audit or examination of accounts) applies to an exempt charity.

(2) Sections 156(2) to (6) and 157 (duty of auditors etc. of individual accounts to report matters to Commission) apply in relation to a person appointed to audit, or report on, the accounts of an exempt charity which is not a company as they apply in relation to the person referred to in section 156 as “P”, but reading—

(a) any reference to P's acting in the capacity mentioned in section 156(1) as a reference to the person acting as a person so appointed, and

(b) any reference to the Commission or to any of its functions as a reference to the charity's principal regulator or to any of the latter's functions as principal regulator in relation to the charity.

(3) Nothing in section 158 (duty of auditors etc. in relation to group accounts) applies to an exempt charity.

Excepted charities

161

(1) Nothing in sections 144 to 146 (audit or examination of individual accounts) applies to any charity which—

(a) falls within section 30(2)(d) (whether or not it also falls within section 30(2)(b) or (c)), and

(b) is not registered.

(2) Except in accordance with subsections (3) and (4), nothing in—

(a) section 154 or 155 (regulations relating to audits and examinations), or

(b) section 156 or 157 (duty of auditors etc. to report matters to Commission),

applies to a charity mentioned in subsection (1).

(3) Sections 154 to 157 apply to a charity mentioned in subsection (1) which is also—

(a) an English NHS charity (as defined in section 149), or

(b) a Welsh NHS charity (as defined in section 150).

(4) Sections 156 and 157 apply in accordance with section 160(2) to a charity mentioned in subsection (1) which is also an exempt charity.

CHAPTER 4 — Annual reports and returns and public access to accounts etc.

Annual reports etc.

Charity trustees to prepare annual reports

162

(1) The charity trustees of a charity must prepare in respect of each financial year of the charity an annual report containing—

(a) such a report by the trustees on the activities of the charity during that year, and

(b) such other information relating to the charity or to its trustees or officers,

as may be prescribed by regulations made by the Secretary of State.

(2) Regulations under subsection (1) may in particular make provision—

(a) for any such report as is mentioned in subsection (1)(a) to be prepared in accordance with such principles as are specified or referred to in the regulations;

(b) enabling the Commission to dispense with any requirement prescribed by virtue of subsection (1)(b)—

(i) in the case of a particular charity or a particular class of charities, or

(ii) in the case of a particular financial year of a charity or of any class of charities.

Transmission of annual reports to Commission in certain cases

163

(1) Where a charity's gross income in any financial year exceeds £25,000, a copy of the annual report required to be prepared under section 162 in respect of that year must be transmitted to the Commission by the charity trustees within—

(a) 10 months from the end of that year, or

(b) such longer period as the Commission may for any special reason allow in the case of that report.

(2) Where a charity's gross income in any financial year does not exceed £25,000, a copy of the annual report required to be prepared under section 162 in respect of that year must, if the Commission so requests, be transmitted to it by the charity trustees—

(a) in the case of a request made before the end of 7 months from the end of the financial year to which the report relates, within 10 months from the end of that year, and

(b) in the case of a request not so made, within 3 months from the date of the request,

or, in either case, within such longer period as the Commission may for any special reason allow in the case of that report.

(3) In the case of a charity which is constituted as a CIO—

(a) the requirement imposed by subsection (1) applies whatever the charity's gross income is, and

(b) subsection (2) does not apply.

Documents to be transmitted with annual report

164

(1) Subject to subsection (3), any copy of an annual report transmitted to the Commission under section 163 must have attached to it—

(a) a copy of the statement of accounts prepared for the financial year in question under section 132(1), or

(b) (as the case may be) a copy of the account and statement so prepared under section 133,

and a copy of the relevant auditor's or examiner's report.

(2) In subsection (1), “the relevant auditor's or examiner's report” means—

(a) if the accounts of the charity for that year have been audited under section 144, 145, 146, 149 or 150, the report made by the auditor on that statement of accounts or (as the case may be) on that account and statement;

(b) if the accounts of the charity for that year have been examined under section 145, 149 or 150, the report made by the person carrying out the examination.

(3) Subsections (1) and (2) do not apply to a charitable company, and any copy of an annual report transmitted by the charity trustees of a charitable company under section 163 must have attached to it—

(a) a copy of the company's annual accounts prepared for the financial year in question under Part 15 of the Companies Act 2006, and

(b) a copy of the relevant auditor's or examiner's report.

(4) In subsection (3), “the relevant auditor's or examiner's report” means—

(a) if the accounts of the company for that year have been audited under Part 16 of the Companies Act 2006, the report made by the auditor on those accounts;

(b) if the accounts of the company for that year have been audited under section 144, 145 or 146, the report made by the auditor on those accounts;

(c) if the accounts of the company for that year have been examined under section 145, the report made by the person carrying out the examination.

Preservation of annual reports etc.

165

(1) Any copy of an annual report transmitted to the Commission under section 163, together with the documents attached to it, is to be kept by the Commission for such period as it thinks fit.

(2) The charity trustees of a charity must preserve for at least 6 years from the end of the financial year to which it relates an annual report prepared by them under section 162(1) if they have not been required to transmit a copy of it to the Commission.

(3) Subsection (4) applies if a charity ceases to exist within the period of 6 years mentioned in subsection (2) as it applies to any annual report.

(4) The obligation to preserve the annual report in accordance with subsection (2) must continue to be discharged by the last charity trustees of the charity, unless the Commission consents in writing to the annual report being destroyed or otherwise disposed of.

Annual reports and group accounts

166

(1) This section applies where group accounts are prepared for a financial year of a parent charity under section 138(2).

(2) The annual report prepared by the charity trustees of the parent charity in respect of that year under section 162 must include—

(a) such a report by the trustees on the activities of the charity's subsidiary undertakings during that year, and

(b) such other information relating to any of those undertakings,

as may be prescribed by regulations made by the Secretary of State.

(3) Regulations under subsection (2) may in particular make provision—

(a) for any such report as is mentioned in subsection (2)(a) to be prepared in accordance with such principles as are specified or referred to in the regulations;

(b) enabling the Commission to dispense with any requirement prescribed by virtue of subsection (2)(b) in the case of—

(i) a particular subsidiary undertaking, or

(ii) a particular class of subsidiary undertakings.

(4) Section 163 (transmission of annual report to Commission in certain cases) applies in relation to the annual report referred to in subsection (2) as if any reference to the charity's gross income in the financial year in question were a reference to the aggregate gross income of the group in that year.

(5) When transmitted to the Commission in accordance with subsection (4), the copy of the annual report must have attached to it both a copy of the group accounts prepared for that year under section 138(2) and—

(a) a copy of the report made by the auditor on those accounts, or

(b) if those accounts have been examined under section 152, a copy of the report made by the person carrying out the examination.

(6) The requirements in this section are in addition to those in sections 162 to 165.

Exempt charities

167

Nothing in sections 162 to 166 (annual reports etc.) applies to any exempt charity.

Excepted charities

168

(1) Nothing in sections 162 to 165 (annual reports etc.) applies to any charity which—

(a) falls within section 30(2)(d) (whether or not it also falls within section 30(2)(b) or (c)), and

(b) is not registered.

(2) Except in accordance with subsection (5), nothing in sections 162 to 165 applies to any charity which—

(a) falls within section 30(2)(b) or (c) but does not fall within section 30(2)(d), and

(b) is not registered.

(3) If requested to do so by the Commission, the charity trustees of any such charity as is mentioned in subsection (2) must prepare an annual report in respect of such financial year of the charity as is specified in the Commission's request.

(4) Any report prepared under subsection (3) must contain—

(a) such a report by the charity trustees on the activities of the charity during the year in question, and

(b) such other information relating to the charity or to its trustees or officers,

as may be prescribed by regulations made under section 162(1) in relation to annual reports prepared under section 162(1).

(5) The following provisions apply in relation to any report required to be prepared under subsection (3) as if it were an annual report required to be prepared under section 162(1)—

(a) section 163(1) (transmission of annual report in certain cases), with the omission of the words preceding “a copy of the annual report”, and

(b) sections 164 (documents to be transmitted with annual report) and 165(1) (preservation of annual reports etc.).

(6) Subsections (7) and (8) apply where—

(a) a charity is required to prepare an annual report in respect of a financial year by virtue of subsection (3),

(b) the charity is a parent charity at the end of the year, and

(7) When transmitted to the Commission in accordance with subsection (5), the copy of the annual report must have attached to it both a copy of the group accounts and—

(a) a copy of the report made by the auditor on those accounts, or

(b) if those accounts have been examined under section 152, a copy of the report made by the person carrying out the examination.

(8) The requirement in subsection (7) is in addition to that in subsection (4).

Annual returns

Annual returns by registered charities

169

(1) Subject to subsection (2), every registered charity must prepare in respect of each of its financial years an annual return in such form, and containing such information, as may be prescribed by regulations made by the Commission.

(2) Subsection (1) does not apply in relation to any financial year of a charity in which the charity's gross income does not exceed £10,000 (but this subsection does not apply if the charity is constituted as a CIO).

(3) Any such return must be transmitted to the Commission by the date by which the charity trustees are, by virtue of section 163(1), required to transmit to the Commission the annual report required to be prepared in respect of the financial year in question.

(4) The Commission may dispense with the requirements of subsection (1)—

(a) in the case of a particular charity or a particular class of charities, or

(b) in the case of a particular financial year of a charity or of any class of charities.

Availability of documents to public

Public inspection of annual reports etc. kept by Commission

170

Any document kept by the Commission in pursuance of section 165(1) (preservation of annual reports etc.) must be open to public inspection at all reasonable times—

(a) during the period for which it is so kept, or

(b) if the Commission so determines, during such lesser period as it may specify.

Supply by charity trustees of copy of most recent annual report

171

(1) This section applies if an annual report has been prepared in respect of any financial year of a charity in pursuance of section 162(1) or 168(3).

(2) If the charity trustees of a charity—

(a) are requested in writing by any person to provide that person with a copy of its most recent annual report, and

(b) are paid by that person such reasonable fee (if any) as they may require in respect of the costs of complying with the request,

they must comply with the request within the period of 2 months beginning with the date on which it is made.

(3) The reference in subsection (2) to a charity's most recent annual report is a reference to the annual report prepared in pursuance of section 162(1) or 168(3) in respect of the last financial year of the charity in respect of which an annual report has been so prepared.

Supply by charity trustees of copy of most recent accounts

172

(1) If the charity trustees of a charity—

(a) are requested in writing by any person to provide that person with a copy of the charity's most recent accounts, and

(b) are paid by that person such reasonable fee (if any) as they may require in respect of the costs of complying with the request,

they must comply with the request within the period of 2 months beginning with the date on which it is made.

(2) The reference in subsection (1) to a charity's most recent accounts is—

(a) in the case of a charity other than one falling within paragraph (b) or (c), a reference to—

(i) the statement of accounts prepared in pursuance of section 132(1), or

(ii) the account and statement prepared in pursuance of section 133,

in respect of the last financial year of the charity in respect of which a statement of accounts or account and statement has or have been so prepared;

(b) in the case of a charitable company, a reference to the most recent annual accounts of the company prepared under Part 16 of the Companies Act 2006 in relation to which any of the following conditions is satisfied—

(i) they have been audited,

(ii) they have been examined by an independent examiner under section 145(1)(a), or

(iii) they relate to a year in respect of which the company is exempt from audit under Part 16 of the Companies Act 2006 and neither section 144(2) nor section 145(1) applied to them, and

(c) in the case of an exempt charity, a reference to the accounts of the charity most recently audited in pursuance of any statutory or other requirement or, if its accounts are not required to be audited, the accounts most recently prepared in respect of the charity.

(3) In subsection (1), the reference to a charity's most recent accounts includes, in relation to a charity whose charity trustees have prepared any group accounts under section 138(2), the group accounts most recently prepared by them.

Offences

Offences of failing to supply certain documents

173

(1) If any requirement within subsection (2) is not complied with, each person who immediately before the specified date for compliance was a charity trustee of the charity is guilty of an offence.

(2) A requirement is within this subsection if it is imposed—

(a) by section 163 or by virtue of section 166(4) (requirements to transmit annual report to Commission), taken with sections 164, 166(5) and 168(7) (documents to be supplied with annual report), as applicable,

(b) by section 169(3) (requirement to transmit annual return to Commission),

(d) by section 172(1) or by virtue of section 172(3) (supply by charity trustees of copy of most recent accounts);

and in subsection (1) “the specified date for compliance” means the date for compliance specified in the section in question.

(3) It is a defence, where a person is charged with an offence under subsection (1), to prove that the person took all reasonable steps for securing that the requirement in question would be complied with in time.

(4) A person guilty of an offence under subsection (1) is liable on summary conviction to—

(a) a fine not exceeding level 4 on the standard scale, and

(b) for continued contravention, a daily default fine not exceeding 10% of level 4 on the standard scale for so long as the person in question remains a charity trustee of the charity.

CHAPTER 5 — Powers to set financial thresholds

Powers to alter certain sums specified in this Part

174

(1) The Secretary of State may by order amend any provision listed in subsection (2)—

(a) by substituting a different sum for the sum for the time being specified in that provision, or

(b) if the provision specifies more than one sum, by substituting a different sum for any sum specified in that provision.

(2) The provisions are—

section 133 (gross income in connection with option to prepare account and statement instead of statement of accounts);

section 144(1)(a) or (b) (gross income and value of assets in connection with requirements as to audit of larger charities);

section 145(1) (gross income in connection with option to have accounts examined instead of audited);

section 145(3) (gross income in connection with requirements as to qualifications of independent examiner);

section 163(1) or (2) (gross income in connection with requirements to transmit annual report to Commission);

section 169(2) (gross income in connection with requirement to prepare annual return).

Aggregate gross income of group

175

The Secretary of State may by regulations make provision for determining for the purposes of this Part the amount of the aggregate gross income for a financial year of a group consisting of a parent charity and its subsidiary undertaking or undertakings.

Larger groups: “relevant income threshold” and “relevant assets threshold”

176

(1) The reference to the relevant income threshold in paragraph (a) or (b) of section 151(1) is a reference to the sum prescribed as the relevant income threshold for the purposes of that paragraph.

(2) The reference to the relevant assets threshold in paragraph (b) of section 151(1) is a reference to the sum prescribed as the relevant assets threshold for the purposes of that paragraph.

(3) “Prescribed” means prescribed by regulations made by the Secretary of State.

Part 9 — Charity trustees, trustees and auditors etc.

Meaning of “charity trustees”

177

In this Act, except in so far as the context otherwise requires, “charity trustees” means the persons having the general control and management of the administration of a charity.

Disqualification of charity trustees and trustees

Persons disqualified from being charity trustees or trustees of a charity

178

(1) A person (“P”) is disqualified from being a charity trustee or trustee for a charity in the following cases—

Case AP has been convicted of—an offence specified in section 178A;an offence, not specified in section 178A, that involves dishonesty or deception.

Case BP has been made bankrupt or sequestration of P's estate has been awarded and (in either case)—P has not been discharged, orP is the subject of a bankruptcy restrictions order or an interim order.

Case CP has made a composition or arrangement with, or granted a trust deed for, creditors and has not been discharged in respect of it.

Case DP has been removed as a trustee, charity trustee, officer, agent or employee of a charity by an order made—by the Commission under section 79(4) or by the Commission or the Commissioners under a relevant earlier enactment (as defined by section 179(5)), orby the High Court,on the ground of any misconduct or mismanagement in the administration of the charity for which P was responsible or which P knew of and failed to take any reasonable step to oppose, or which P's conduct contributed to or facilitated.

Case EP has been removed, under section 34(5)(e) of the Charities and Trustee Investment (Scotland) Act 2005 (asp 10) (powers of the Court of Session) or the relevant earlier legislation (as defined by section 179(6)), from being concerned in the management or control of any body.

Case FP is subject to—a disqualification order or disqualification undertaking under the Company Directors Disqualification Act 1986 or the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I.4)), oran order made under section 429(2) of the Insolvency Act 1986 (disabilities on revocation of county court administration order).

Case GP is subject to—a moratorium period under a debt relief order under Part 7A of the Insolvency Act 1986; ora debt relief restrictions order or interim order under Schedule 4ZB to that Act

Case HP has been found to be in contempt of court under Civil Procedure Rules for—making a false disclosure statement, or causing one to be made, ormaking a false statement in a document verified by a statement of truth, or causing one to be made.

Case IP has been found guilty of disobedience to an order or direction of the Commission on an application to the High Court under section 336(1).

Case JP is a designated person for the purposes of—. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . regulations 8 to 12 of the ISIL (Da'esh) and Al-Qaida (United Nations Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/466), regulations 11 to 15 of the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/573), or regulations 11 to 15 of the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019 (S.I. 2019/577).

Case KP is subject to the notification requirements of Part 2 of the Sexual Offences Act 2003.

(2) Subsection (1) is subject to sections 179 to 181.

(3) While a person is disqualified under this section in relation to a charity, the person is also disqualified from holding an office or employment in the charity with senior management functions.

(4) A function of an office or employment held by a person “(A)” is a senior management function if—

(a) it relates to the management of the charity, and A is not responsible for it to another officer or employee (other than a charity trustee or trustee for the charity), or

(b) it involves control over money and the only officer or employee (other than a charity trustee or trustee for the charity) to whom A is responsible for it is a person with senior management functions other than ones involving control over money.

Disqualification: pre-commencement events etc.

179

(1) Case A—

(a) applies whether the conviction occurred before or after the commencement of section 178(1) or section 178A or any amendment of that section , but

(b) does not apply in relation to any conviction which is a spent conviction for the purposes of the Rehabilitation of Offenders Act 1974.

(2) Case B applies whether the making bankrupt or the sequestration or the making of a bankruptcy restrictions order or an interim order occurred before or after the commencement of section 178(1).

(3) Case C applies whether the composition or arrangement was made, or the trust deed was granted, before or after the commencement of section 178(1).

(4) Cases D to F apply in relation to orders made and removals effected before or after the commencement of section 178(1).

(5) In Case D—

(a) “the Commissioners” means the Charity Commissioners for England and Wales, and

(b) “relevant earlier enactment” means—

(i) section 18(2)(i) of the Charities Act 1993 (power to act for protection of charities),

(ii) section 20(1A)(i) of the Charities Act 1960, or

(iii) section 20(1)(i) of the 1960 Act (as in force before the commencement of section 8 of the Charities Act 1992).

(6) In Case E, “the relevant earlier legislation” means section 7 of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (powers of Court of Session to deal with management of charities).

(7) Case H does not apply in relation to a finding of contempt which, if it had been a conviction for which P was dealt with in the same way, would be a spent conviction for the purposes of the Rehabilitation of Offenders Act 1974.

Disqualification: exceptions in relation to charitable companies

180

(1) Where (apart from this subsection) a person (“P”) is disqualified under Case B or G from being a charity trustee or trustee for a charitable company or a CIO, P is not so disqualified if leave has been granted under section 11 of the Company Directors Disqualification Act 1986 (undischarged bankrupts) for P to act as director of the company or charity trustee of the CIO (as the case may be).

(2) Similarly, a person (“P”) is not disqualified under Case F from being a charity trustee or trustee for a charitable company or a CIO if, in a case set out in the first column of the table, leave has been granted as mentioned in the second column for P to act as director of the company or charity trustee of the CIO (as the case may be)—

P is subject to a disqualification order or disqualification undertaking under the Company Directors Disqualification Act 1986.	Leave has been granted for the purposes of section 1(1)(a) or 1A(1)(a) of the 1986 Act.
P is subject to a disqualification order or disqualification undertaking under the Company Directors Disqualification (Northern Ireland) Order 2002 (S.I. 2002/3150 (N.I.4)).	Leave has been granted by the High Court in Northern Ireland.
P is subject to an order under section 429(2) of the Insolvency Act 1986.	Leave has been granted by the court which made the order.

Power to waive disqualification

181

(1) This section applies where a person (“P') is disqualified under section 178(1).

(2) The Commission may, if P makes an application under this subsection, waive P's disqualification—

(a) generally, or

(b) in relation to a particular charity or a particular class of charities.

(2A) A waiver under subsection (2)—

(a) may relate to the whole of P's disqualification or only to disqualification under section 178(3);

(b) in relation to disqualification under section 178(3) may relate to a particular office or employment or to any office or employment of a particular description.

(3) If—

(a) P is disqualified under Case D , E or I and makes an application under subsection (2) 5 years or more after the date on which the disqualification took effect, and

(b) the Commission is not prevented from granting the application by subsection (5),

the Commission must grant the application unless satisfied that, because of any special circumstances, it should be refused.

(4) Any waiver under subsection (2) must be notified in writing to P.

(5) No waiver may be granted under subsection (2) in relation to any charitable company or CIO if—

(a) P is for the time being prohibited from acting as director of the company or charity trustee of the CIO (as the case may be), by virtue of—

(i) a disqualification order or disqualification undertaking under the Company Directors Disqualification Act 1986, or

(ii) a provision of the 1986 Act mentioned in subsection (6), and

(b) leave has not been granted for P to act as director of any company or charity trustee of any CIO.

(6) The provisions of the 1986 Act are—

section 11(1) (undischarged bankrupts);

section 12(2) (failure to pay under county court administration order);

section 12A (Northern Irish disqualification orders);

section 12B (Northern Irish disqualification undertakings).

Records of persons removed from office

182

(1) For the purposes of sections 178 to 181A the Commission must keep, in such manner as it thinks fit, a register of the following.

(1A) The register must include all persons who have been removed from office as mentioned in Case D—

(a) by an order of the Commission or the Commissioners made before or after the commencement of section 178(1), or

(b) by an order of the High Court made after the commencement of section 45(1) of the Charities Act 1992;

and, where any person is so removed from office by an order of the High Court, the court must notify the Commission of the person's removal.

(1B) The register must include all persons who have been disqualified by an order of the Commission under section 181A.

(1C) The register must include all persons who have been removed from office by an order of the Commission under section 79A (removal of disqualified trustee).

(2) The entries in the register kept under subsection (1) must be available for public inspection in legible form at all reasonable times.

(3) In this section “the Commissioners” means the Charity Commissioners for England and Wales.

Criminal consequences of acting while disqualified

183

(1) Subject to subsection (2), it is an offence for any person to act as a charity trustee or trustee for a charity or to hold an office or employment while disqualified from being such a trustee or from holding that office or employment by virtue of section 178 or an order under section 181A.

(2) Subsection (1) does not apply if—

(a) the charity concerned is a company or a CIO, and

(b) the disqualified person is disqualified by virtue only of Case B , F or G in section 178.

(3) A person guilty of an offence under subsection (1) is liable—

(a) on summary conviction, to imprisonment for a term not exceeding the general limit in a magistrates’ court or to a fine not exceeding the statutory maximum, or both;

(b) on conviction on indictment, to imprisonment for a term not exceeding 2 years or to a fine, or both.

Civil consequences of acting while disqualified

184

(1) Any acts done as charity trustee or trustee for a charity or as officer or employee of a charity by a person disqualified from being such a trustee or from holding that office or employment by virtue of section 178 or an order under section 181A are not invalid merely because of that disqualification.

(2) Subsection (3) applies if the Commission is satisfied that any person—

(a) has acted as charity trustee or trustee for a charity or as officer or employee of a charity while disqualified from being such a trustee or from holding that office or employment by virtue of section 178 or an order under section 181A, and

(b) while so acting, has received from the charity any sums by way of remuneration or expenses, or any benefit in kind, in connection with acting as charity trustee or trustee for the charity or holding the office or employment .

(3) The Commission may by order direct the person—

(a) to repay to the charity the whole or part of any such sums, or

(b) (as the case may be) to pay to the charity the whole or part of the monetary value (as determined by the Commission) of any such benefit.

(4) Subsection (3) does not apply to any sums received by way of remuneration or expenses in respect of any time when the person concerned was not disqualified from being a charity trustee or trustee for the charity.

Remuneration of charity trustees and trustees etc.

Remuneration of charity trustees or trustees etc. providing services to charity

185

(1) This section applies to remuneration for goods or services provided by a person (“P”) to or on behalf of a charity where—

(a) P is a charity trustee or trustee for the charity, or

(b) P is connected with a charity trustee or trustee for the charity and the remuneration might result in that trustee obtaining any benefit.

This is subject to subsection (3).

(2) If Conditions A to D are met in relation to remuneration within subsection (1), P is entitled to receive the remuneration out of the funds of the charity.

Condition ACondition A is that the amount or maximum amount of the remuneration—is set out in an agreement in writing between the charity or its charity trustees (as the case may be) and P under which P is to provide the goods or services, or goods and services, in question to or on behalf of the charity, anddoes not exceed what is reasonable in the circumstances for the provision by P of the goods or services, or goods and services, in question.

Condition BCondition B is that, before entering into that agreement, the charity trustees decided that they were satisfied that it would be in the best interests of the charity for the goods or services, or goods and services, to be provided by P to or on behalf of the charity for the amount or maximum amount of remuneration set out in the agreement.

Condition CCondition C is that if immediately after the agreement is entered into there is, in the case of the charity, more than one person who is a charity trustee and is—a person in respect of whom an agreement within Condition A is in force,a person who is entitled to receive remuneration out of the funds of the charity otherwise than by virtue of such an agreement, ora person connected with a person falling within paragraph (a) or (b),the total number of them constitute a minority of the persons for the time being holding office as charity trustees of the charity.

Condition DCondition D is that the trusts of the charity do not contain any express provision that prohibits P from receiving the remuneration.

(3) This section does not apply to any remuneration for services provided by a person in the person’s capacity as a charity trustee or trustee for a charity or under a contract of employment.

(3A) Any entitlement to receive remuneration under subsection (2) is in addition to and does not affect any entitlement to receive the remuneration by virtue of—

(a) any provision contained in the trusts of the charity;

(b) any order of the court or the Commission;

(4) Before entering into an agreement within Condition A the charity trustees must have regard to any guidance given by the Commission concerning the making of such agreements.

(5) The duty of care in section 1(1) of the Trustee Act 2000 applies to a charity trustee when making such a decision as is mentioned in Condition B.

(6) For the purposes of Condition C an agreement within Condition A is in force so long as any obligations under the agreement have not been fully discharged by a party to it.

(7) Sections 187 and 188 (interpretation) apply for the purposes of this section.

Disqualification of charity trustee or trustee receiving remuneration under s.185

186

(1) This section applies to any charity trustee or trustee for a charity—

(a) who is or would be entitled to remuneration under an agreement or proposed agreement within Condition A, or

(b) who is connected with a person who is or would be so entitled.

(2) The charity trustee or trustee for a charity is disqualified from acting as such in relation to any decision or other matter connected with the agreement.

(3) But if an act is done by a person who is disqualified from doing it by virtue of subsection (2), the act is not invalid merely because of that disqualification.

(4) If the Commission is satisfied—

(a) that a person (“P”) has done any act which P was disqualified from doing by virtue of subsection (2), and

(b) that P or a person connected with P has received or is to receive from the charity any remuneration under the agreement in question,

it may make an order under subsection (5) or (6) (as appropriate).

(5) An order under this subsection is one requiring P—

(a) to reimburse to the charity the whole or part of the remuneration received as mentioned in subsection (4)(b);

(b) to the extent that the remuneration consists of a benefit in kind, to reimburse to the charity the whole or part of the monetary value (as determined by the Commission) of the benefit in kind.

(6) An order under this subsection is one directing that P or (as the case may be) the connected person is not to be paid the whole or part of the remuneration mentioned in subsection (4)(b).

(7) If the Commission makes an order under subsection (5) or (6), P or (as the case may be) the connected person accordingly ceases to have any entitlement under the agreement to so much of the remuneration (or its monetary value) as the order requires P to reimburse to the charity or (as the case may be) as it directs is not to be paid to P.

(8) Sections 187 and 188 (interpretation) apply for the purposes of this section.

Meaning of “benefit”, “remuneration”, “services” etc.

187

In sections 185 to 186A —

“benefit” means a direct or indirect benefit of any nature;

“maximum amount”, in relation to remuneration, means the maximum amount of the remuneration whether specified in or ascertainable under the terms of the agreement in question;

“remuneration” includes any benefit in kind (and “amount” accordingly includes monetary value);

Meaning of “connected person”

188

(1) For the purposes of sections 185 and 186, the following persons are connected with a charity trustee or trustee for a charity—

(a) a child, parent, grandchild, grandparent, brother or sister of the trustee;

(b) the spouse or civil partner of the trustee or of any person falling within paragraph (a);

(c) a person carrying on business in partnership with the trustee or with any person falling within paragraph (a) or (b);

(d) an institution which is controlled—

(i) by the trustee or by any person falling within paragraph (a), (b) or (c), or

(ii) by two or more persons falling within sub-paragraph (i), when taken together.

(e) a body corporate in which—

(i) the trustee or any connected person falling within any of paragraphs (a) to (c) has a substantial interest, or

(ii) two or more persons falling within sub-paragraph (i), when taken together, have a substantial interest.

(2) Sections 350 to 352 (meaning of child, spouse and civil partner, controlled institution and substantial interest) apply for the purposes of subsection (1).

Indemnity insurance for charity trustees and trustees

189

(1) The charity trustees of a charity may arrange for the purchase, out of the funds of the charity, of insurance designed to indemnify the charity trustees or any trustees for the charity against any personal liability in respect of—

(a) any breach of trust or breach of duty committed by them in their capacity as charity trustees or trustees for the charity, or

(b) any negligence, default, breach of duty or breach of trust committed by them in their capacity as directors or officers of—

(i) the charity (if it is a body corporate), or

(ii) any body corporate carrying on any activities on behalf of the charity.

(2) But the terms of such insurance must be so framed as to exclude the provision of any indemnity for a person (“P”) in respect of—

(a) any liability incurred by P to pay—

(i) a fine imposed in criminal proceedings, or

(ii) a sum payable to a regulatory authority by way of a penalty in respect of non-compliance with any requirement of a regulatory nature (however arising),

(b) any liability incurred by P in defending any criminal proceedings in which P is convicted of an offence arising out of any fraud or dishonesty, or wilful or reckless misconduct, by P, or

(i) which P knew (or must reasonably be assumed to have known) was not in the interests of the charity, or

(ii) in the case of which P did not care whether it was in the best interests of the charity or not.

(3) For the purposes of subsection (2)(b)—

(a) the reference to any such conviction is a reference to one that has become final,

(b) a conviction becomes final—

(i) if not appealed against, at the end of the period for bringing an appeal, or

(ii) if appealed against, at the time when the appeal (or any further appeal) is disposed of, and

(i) if it is determined and the period for bringing any further appeal has ended, or

(ii) if it is abandoned or otherwise ceases to have effect.

(4) The charity trustees of a charity may not purchase insurance under this section unless they decide that they are satisfied that it is in the best interests of the charity for them to do so.

(5) The duty of care in section 1(1) of the Trustee Act 2000 applies to a charity trustee when making such a decision.

(6) This section—

(a) does not authorise the purchase of any insurance whose purchase is expressly prohibited by the trusts of the charity, but

(b) has effect despite any provision prohibiting the charity trustees or trustees for the charity receiving any personal benefit out of the funds of the charity.

Power to amend s.189

190

The Secretary of State may by order make such amendments of section 189(2) and (3) as the Secretary of State considers appropriate.

Powers to relieve trustees and auditors etc. from liability

Commission’s power to relieve trustees and auditors etc. from liability

191

(1) This section applies to a person (“P”) who is or has been—

(a) a charity trustee or trustee for a charity,

(b) a person appointed to audit a charity's accounts (whether appointed under an enactment or otherwise), or

(c) an independent examiner or other person appointed to examine or report on a charity's accounts (whether appointed under an enactment or otherwise).

(2) If the Commission considers—

(a) that P is or may be personally liable for a breach of trust or breach of duty committed in P's capacity as a person within subsection (1)(a), (b) or (c), but

(b) that P has acted honestly and reasonably and ought fairly to be excused for the breach of trust or duty,

the Commission may make an order relieving P wholly or partly from any such liability.

(3) An order under subsection (2) may grant the relief on such terms as the Commission thinks fit.

(4) Subsection (2) does not apply in relation to any personal contractual liability of a charity trustee or trustee for a charity.

(5) For the purposes of this section and section 192—

(a) subsection (1)(b) is to be read as including a reference to the Auditor General for Wales acting as auditor under Part 8, and

(b) subsection (1)(c) is to be read as including a reference to the Auditor General for Wales acting as examiner under Part 8;

and in subsection (1)(b) and (c) any reference to a charity's accounts is to be read as including any group accounts prepared by the charity trustees of a charity.

(6) This section does not affect the operation of—

(a) section 61 of the Trustee Act 1925 (power of court to grant relief to trustees),

(b) section 1157 of the Companies Act 2006 (power of court to grant relief to officers or auditors of companies), or

Court’s power to grant relief to apply to all auditors etc. of charities which are not companies

192

(1) Section 1157 of the Companies Act 2006 (power of court to grant relief to officers or auditors of companies) has effect in relation to a person to whom this section applies as it has effect in relation to a person employed as an auditor by a company.

(2) This section applies to—

(a) a person acting in a capacity within section 191(1)(b) or (c) in a case where, apart from this section, section 1157 of the 2006 Act would not apply in relation to that person as a person so acting, and

(b) a charity trustee of a CIO.

Part 10 — Charitable companies etc.

Introductory

Meaning of “charitable company”

193

In this Act “charitable company” means a charity which is a company.

Disclosure of charitable status by companies

Requirement to disclose charitable status

194

(1) Where a charitable company's name does not include the word “charity” or “charitable”, the fact that the company is a charity must be stated in legible characters—

(a) in every location, and in every description of document or communication, in which it is required by regulations under section 82 of the Companies Act 2006 to state its registered name, and

(b) in all conveyances purporting to be executed by the company.

(2) Where a company's name includes the word “elusen” or “elusennol” (the Welsh equivalents of “charity” and “charitable”), subsection (1) does not apply in relation to any document that is wholly in Welsh.

(3) The statement required by subsection (1) must be in English, except that, in the case of a document that is otherwise wholly in Welsh, the statement may be in Welsh if it consists of or includes the word “elusen” or “elusennol”.

(4) In subsection (1)(b) “conveyance” means any instrument creating, transferring, varying or extinguishing an interest in land.

Civil consequences of failure to make required disclosure

195

(1) This section applies to any legal proceedings brought by a charitable company to which section 194 applies to enforce a right arising out of a contract or conveyance in connection with which there was a failure to comply with that section.

(2) The proceedings must be dismissed if it is shown that the defendant to the proceedings—

(a) has a claim against the company arising out of the contract or conveyance that the defendant has been unable to pursue because of the company's failure to comply with section 194, or

(b) has suffered some financial loss in connection with the contract or conveyance because of the company's failure to comply with that section,

unless the court before which the proceedings are brought is satisfied that it is just and equitable to permit the proceedings to continue.

(3) This section does not affect the right of any person to enforce such rights as that person may have against another in any proceedings brought by the other.

Criminal consequences of failure to make required disclosure

196

(1) Where a charitable company fails, without reasonable excuse, to comply with section 194, an offence is committed by—

(a) the company, and

(b) every officer of the company who is in default.

(2) For this purpose a shadow director of the company is treated as an officer of the company if the failure is to comply with section 194(1)(a) and that person would be treated as an officer of the company for the purposes of the corresponding requirement of regulations under section 82 of the Companies Act 2006.

(3) A person guilty of such an offence is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding 10% of level 3 on the standard scale.

(4) Expressions used in this section have the same meaning as in section 84 of the Companies Act 2006 (criminal consequences of failure to disclose company's registered name).

Restrictions on alteration of objects

Alteration of objects by bodies corporate and charitable status

197

(1) Subsection (2) applies where a charity—

(a) is a company or other body corporate, and

(b) has power to alter the instruments establishing or regulating it as a body corporate.

(2) No exercise of the power which has the effect of the body ceasing to be a charity is valid so as to affect the application of—

(a) any property acquired under any disposition or agreement previously made otherwise than for full consideration in money or money's worth, or any property representing property so acquired,

(b) any property representing income which has accrued before the alteration is made, or

198

(1) Any regulated alteration by a charitable company—

(a) requires the prior written consent of the Commission, and

(b) is ineffective if such consent has not been obtained.

(2) The following are regulated alterations—

(a) an amendment of the company's articles of association which alters the charitable purposes of the company,

(b) any alteration of any provision of its articles of association directing the application of property of the company on its dissolution, and

(c) any alteration of any provision of its articles of association where the alteration would provide authorisation for any benefit to be obtained by directors or members of the company or persons connected with them.

(2A) In considering whether to consent to an alteration falling within subsection (2)(a) the Commission must have regard to—

(a) the purposes of the company when it was established, if and so far as they are reasonably ascertainable,

(b) the desirability of securing that the purposes of the company are, so far as reasonably practicable, similar to the purposes being altered, and

(c) the need for the company to have purposes which are suitable and effective in the light of current social and economic circumstances.

(3) Where a company that has made a regulated alteration in accordance with subsection (1) is required—

(a) by section 26 of the Companies Act 2006 to send to the registrar of companies a copy of its articles as amended,

(b) by section 30 of that Act to forward to the registrar a copy of the special resolution effecting the alteration, or

the copy or notice must be accompanied by a copy of the Commission's consent.

(4) If more than one of those provisions applies and they are complied with at different times, the company need not send a further copy of the Commission's consent if a copy was sent on an earlier occasion.

(5) Subsections (2) to (4) of section 30 of that Act (offence of failing to comply with section 30) apply in relation to a failure to comply with subsection (3) as in relation to a failure to comply with that section.

Meaning of “benefit” in s.198(2)

199

For the purposes of section 198(2)(c) “benefit” means a direct or indirect benefit of any nature, except that it does not include—

(a) any remuneration whose receipt may be authorised under section 185, or

(b) the purchase of any insurance which may be authorised under section 189.

Meaning of “connected person” in s.198(2)

200

(1) For the purposes of section 198(2)(c), the following persons are connected with a director or member of a charitable company—

(a) a child, parent, grandchild, grandparent, brother or sister of the director or member;

(b) the spouse or civil partner of the director or member or of any person falling within paragraph (a);

(c) a person carrying on business in partnership with the director or member or with any person falling within paragraph (a) or (b);

(d) an institution which is controlled—

(i) by the director or member or by any person falling within paragraph (a), (b) or (c), or

(ii) by two or more persons falling within sub-paragraph (i), when taken together.

(e) a body corporate in which—

(i) the director or member or any connected person falling within any of paragraphs (a) to (c) has a substantial interest, or

(ii) two or more persons falling within sub-paragraph (i), when taken together, have a substantial interest.

(2) Sections 350 to 352 (meaning of child, spouse, civil partner, controlled institution and substantial interest) apply for the purposes of subsection (1).

201

(1) In the case of a charitable company, each of the following is ineffective without the prior written consent of the Commission—

(a) any approval given by the members of the company under any provision of Chapter 4 of Part 10 of the Companies Act 2006 (transactions with directors requiring approval by members) listed in subsection (2), and

(b) any affirmation given by members of the company under section 196 or 214 of the 2006 Act (affirmation of unapproved property transactions and loans).

(2) The provisions of the 2006 Act are—

(a) section 188 (directors' long-term service contracts);

(b) section 190 (substantial property transactions with directors etc.);

(d) section 201 (credit transactions for benefit of directors etc.);

(e) section 203 (related arrangements);

(f) section 217 (payments to directors for loss of office);

(g) section 218 (payments to directors for loss of office: transfer of undertaking etc.).

202

(1) A charitable company may not do an act to which this section applies without the prior written consent of the Commission.

(2) This section applies to an act that—

(a) does not require approval under a listed provision of Chapter 4 of Part 10 of the Companies Act 2006 (transactions with directors) by the members of the company, but

(b) would require such approval but for an exemption in the provision in question that disapplies the need for approval on the part of the members of a body corporate which is a wholly-owned subsidiary of another body corporate.

(3) The reference to a listed provision is a reference to a provision listed in section 201(2).

(4) If a company acts in contravention of this section, the exemption referred to in subsection (2)(b) is to be treated as being of no effect in relation to the act.

Restoration of charitable company to register

Application for restoration of charitable company to register

203

(1) The Commission may make an application under section 1029 of the Companies Act 2006 (application to court for restoration to the register of companies) to restore a charitable company to the register of companies.

(2) The power exercisable by the Commission by virtue of this section is exercisable—

(a) by the Commission of its own motion, but

(b) only with the agreement of the Attorney General on each occasion.

Part 11 — Charitable incorporated organisations (CIOs)

CHAPTER 1 — General

Nature and constitution

Meaning of “CIO”

204

In this Act “CIO” means charitable incorporated organisation.

Nature

205

(1) A CIO is a body corporate.

(2) A CIO must have—

(a) a constitution;

(b) a principal office, which must be in England or in Wales;

(3) The members may be—

(a) not liable to contribute to the assets of the CIO if it is wound up, or

(b) liable to do so up to a maximum amount each.

Constitution

206

(1) A CIO's constitution must state—

(a) its name,

(b) its purposes,

(d) whether or not its members are liable to contribute to its assets if it is wound up, and (if they are) up to what amount.

(2) A CIO's constitution must make provision—

(a) about who is eligible for membership, and how a person becomes a member,

(b) about the appointment of one or more persons who are to be charity trustees of the CIO, and about any conditions of eligibility for appointment, and

(3) A CIO's constitution must also provide for such other matters, and comply with such requirements, as are specified in CIO regulations.

(4) A CIO's constitution—

(a) must be in English if its principal office is in England;

(b) may be in English or in Welsh if its principal office is in Wales.

(5) A CIO's constitution must be in the form specified in regulations made by the Commission, or as near to that form as the circumstances admit.

(6) Subject to anything in a CIO's constitution—

(a) a charity trustee of the CIO may, but need not, be a member of it,

(b) a member of the CIO may, but need not, be one of its charity trustees, and

Formation and registration of CIO

Application for CIO to be constituted and registered

207

(1) Any one or more persons (“the applicants”) may apply to the Commission for a CIO to be constituted and for its registration as a charity.

(2) The applicants must supply the Commission with—

(a) a copy of the proposed constitution of the CIO,

(b) such other documents or information as may be prescribed by CIO regulations, and

Cases where application must or may be refused

208

(1) The Commission must refuse an application under section 207 if—

(a) it is not satisfied that the CIO would be a charity at the time it would be registered, or

(b) the CIO's proposed constitution does not comply with one or more of the requirements of section 206 (constitution of CIOs) and any regulations made under that section.

(2) The Commission may refuse such an application if—

(a) the proposed name of the CIO—

(i) is the same as, or

(ii) is in the opinion of the Commission too like,

the name or a working name of any other charity (whether registered or not), or

(b) the Commission is of the opinion referred to in any of paragraphs (b) to (e) of section 42(2) (power to require charity's name or working name to be changed) in relation to the proposed name of the CIO (reading paragraph (b) as referring to the proposed purposes of the CIO and to the activities which it is proposed it should carry on).

Registration of CIO

209

(1) If the Commission grants an application under section 207 it must register the CIO to which the application relates as a charity in the register of charities.

(2) The entry relating to the charity's registration in the register of charities must include—

(a) the date of the charity's registration, and

(b) a note saying that it is constituted as a CIO.

(3) A copy of the entry in the register must be sent to the charity at the principal office of the CIO.

Effect of registration of CIO

210

(1) Upon the registration of the CIO in the register of charities, it becomes by virtue of the registration a body corporate—

(a) whose constitution is that proposed in the application,

(b) whose name is that specified in the constitution, and

(2) All property for the time being vested in the applicants (or, if more than one, any of them) on trust for the charitable purposes of the CIO (when incorporated) by virtue of this subsection becomes vested in the CIO upon its registration.

Name and status

Name

211

(1) The name of a CIO must appear in legible characters—

(a) in every location, and in every description of document or communication, in which a charitable company would be required by regulations under section 82 of the Companies Act 2006 to state its registered name, and

(b) in all conveyances purporting to be executed by the CIO.

(2) In subsection (1)(b), “conveyance” means any instrument creating, transferring, varying or extinguishing an interest in land.

Status

212

(1) Subsection (3) applies if the name of a CIO does not include—

(a) “charitable incorporated organisation”,

(b) “CIO”, with or without full stops after each letter, or

and it is irrelevant, in any such case, whether or not capital letters are used.

(2) The Welsh equivalents referred to in subsection (1)(c) are—

(a) “sefydliad elusennol corfforedig”, or

(b) “SEC”, with or without full stops after each letter.

(3) If this subsection applies, the fact that a CIO is a CIO must be stated in legible characters in all the locations, documents, communications and conveyances mentioned in section 211(1).

(4) The statement required by subsection (3) must be in English, except that in the case of a document which is otherwise wholly in Welsh, the statement may be in Welsh.

Civil consequences of failure to disclose name or status

213

(1) This section applies to any legal proceedings brought by a CIO to enforce a right arising out of a contract or conveyance in connection with which there was a failure to comply with section 211 or 212.

(2) The proceedings must be dismissed if it is shown that the defendant to the proceedings—

(a) has a claim against the CIO arising out of the contract or conveyance that the defendant has been unable to pursue because of the failure to comply with section 211 or 212, or

(b) has suffered some financial loss in connection with the contract or conveyance because of the failure to comply with section 211 or 212,

unless the court before which the proceedings are brought is satisfied that it is just and equitable to permit the proceedings to continue.

(3) This section does not affect the right of any person to enforce such rights as that person may have against another in any proceedings brought by the other.

Offence of failing to disclose name or status

214

(1) In the case of failure, without reasonable excuse, to comply with section 211 or 212 an offence is committed by—

(a) every charity trustee of the CIO who is in default, and

(b) any other person who on the CIO's behalf—

(i) signs or authorises the signing of the offending document, communication or conveyance, or

(ii) otherwise commits or authorises the offending act or omission.

(2) A person guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding 10% of level 3 on the standard scale.

(3) The reference in subsection (1) to a charity trustee being in default, and the reference in subsection (2) to a daily default fine, have the same meaning as in the Companies Acts (see sections 1121 to 1123 and 1125 of the Companies Act 2006).

Offence of holding out that a body is a CIO

215

(1) It is an offence for a person (in whatever way) to hold any body out as being a CIO when it is not.

(2) It is a defence where a person is charged with an offence under subsection (1) to prove that the person believed on reasonable grounds that the body was a CIO.

(3) A person guilty of an offence under subsection (1) is liable on summary conviction to a fine not exceeding level 3 on the standard scale.

CHAPTER 2 — Powers, capacity and procedure etc.

Powers of CIO

216

(1) Subject to anything in its constitution, a CIO may do anything which is calculated to further its purposes or is conducive or incidental to doing so.

(2) The CIO's charity trustees are to manage the affairs of the CIO and may for that purpose exercise all the powers of the CIO.

Constitutional requirements

217

(1) A CIO must use and apply its property in furtherance of its purposes and in accordance with its constitution.

(2) If the CIO is one whose members are liable to contribute to its assets if it is wound up, its constitution binds the CIO and its members for the time being to the same extent as if its provisions were contained in a contract—

(a) to which the CIO and each of its members was a party, and

(b) which contained obligations on the part of the CIO and each member to observe all the provisions of the constitution.

(3) Money payable by a member to the CIO under the constitution is a debt due from that member to the CIO, and is of the nature of an ordinary contract debt.

Third parties

218

(1) Subject to subsection (3), the validity of an act done (or purportedly done) by a CIO is not to be called into question on the ground that the CIO lacked constitutional capacity.

(2) Subject to subsection (3), the power of the charity trustees of a CIO to act so as to bind the CIO (or authorise others to do so) is not to be called into question on the ground of any constitutional limitations on their powers.

(3) Subsections (1) and (2) apply only in favour of a person who gives full consideration in money or money's worth in relation to the act in question, and does not know—

(a) in a subsection (1) case, that the act is beyond the CIO's constitutional capacity, or

(b) in a subsection (2) case, that the act is beyond the constitutional powers of its charity trustees,

and (in addition) subsection (2) applies only if the person dealt with the CIO in good faith (which the person is presumed to have done unless the contrary is proved).

(4) A party to an arrangement or transaction with a CIO is not bound to inquire—

(a) whether it is within the CIO's constitutional capacity, or

(b) as to any constitutional limitations on the powers of its charity trustees to bind the CIO or authorise others to do so.

(5) If a CIO purports to transfer or grant an interest in property, the fact—

(a) that the act was beyond its constitutional capacity, or

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