Charities (Protection and Social Investment) Act 2016

Official warnings by the Commission

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Before section 76 of the Charities Act 2011, after the heading “Powers of Commission to act for protection of charities etc” insert—

(75A) (1) The Commission may issue a warning— (a) to a charity trustee or trustee for a charity who it considers has committed a breach of trust or duty or other misconduct or mismanagement in that capacity, or (b) to a charity in connection with which it considers a breach of trust or duty or other misconduct or mismanagement has been committed. (2) The Commission— (a) may publish a warning it has issued; (b) may issue or publish a warning in any way it considers appropriate. (3) Before issuing a warning under this section, the Commission must give notice of its intention to do so to the charity, and each charity trustee or trustee for the charity, except any who cannot be found or who has no known address in the United Kingdom. (4) Any such notice— (a) may be given by post, and (b) if given by post, may be addressed to the recipient's last known address in the United Kingdom. (5) The notice must specify— (a) the power under subsection (1) to give the warning, and the grounds for the warning; (b) any action that the Commission considers should be taken, or that the Commission is considering taking, to rectify the misconduct or mismanagement referred to in subsection (1); (c) whether and, if so, how the Commission proposes to publish the warning; (d) a period within which representations may be made to the Commission about the content of the proposed warning. (6) Where the Commission gives notice under subsection (3) of its intention to issue a warning— (a) it must take into account any representations made to it within the period specified in the notice, and (b) it may (without further notice) issue the warning either without modifications or with such modifications as it thinks desirable. (7) The Commission may vary or withdraw a warning under this section. (8) Subsection (2) applies to the variation or withdrawal of a warning as it applies to a warning. (9) Subsections (3) to (6) apply to the variation of a warning as they apply to a warning, except that— (a) in subsection (5)(a) references to the warning are to be read as references to the warning as varied, and (b) the matter to be specified under subsection (5)(b) is any change as a result of the variation in the action previously proposed by the Commission.

Investigations and power to suspend

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• (1) Section 76 of the Charities Act 2011 (suspension of trustees etc and appointment of interim managers) is amended as follows.

• (2) In subsection (1)(a), for “any” substitute “ a failure to comply with an order or direction of the Commission, a failure to remedy any breach specified in a warning under section 75A, or any other ”.

• (3) In subsection (4), at the end insert “ , subject to any extension under subsection (7) ”.

• (4) At the end add—

(7) At any time before the expiry of an order under paragraph (a) of subsection (3) the Commission may extend or further extend the suspension by an order under that paragraph, provided that— (a) the order does not extend the suspension for a period of more than 12 months, and (b) the total period of suspension is not more than 2 years.

Range of conduct to be considered when exercising powers

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After section 76 of the Charities Act 2011 insert—

(76A) (1) This section applies to any power under this Part which is exercisable in cases where the Commission is satisfied as mentioned in section 76(1)(a) in relation to a charity (misconduct or mismanagement), with or without any other condition. (2) If in such a case the Commission is also satisfied— (a) that a particular person has been responsible for the misconduct or mismanagement, (b) that a particular person knew of the misconduct or mismanagement and failed to take any reasonable step to oppose it, or (c) that a particular person's conduct contributed to it or facilitated it, the Commission may take into account the matters mentioned in subsection (3) in deciding whether or how to exercise the power. (3) Those matters are— (a) the conduct of that person in relation to any other charity; (b) any other conduct of that person that appears to the Commission to be damaging or likely to be damaging to public trust and confidence in charities generally or particular charities or classes of charity.

Power to remove trustees etc following an inquiry

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• (1) The Charities Act 2011 is amended as follows.

• (2) For section 79 (Commission's power to remove trustees etc following an inquiry) substitute—

(79) (1) Subsection (2) applies where, at any time after it has instituted an inquiry under section 46 with respect to any charity, the Commission is satisfied either as mentioned in section 76(1)(a) (misconduct or mismanagement) or as mentioned in section 76(1)(b) (need to protect property etc). (2) The Commission may of its own motion by order establish a scheme for the administration of the charity. (3) Subsection (4) applies where, at any time after it has instituted an inquiry under section 46 with respect to any charity, the Commission is satisfied both as mentioned in section 76(1)(a) (misconduct or mismanagement) and as mentioned in section 76(1)(b) (need to protect property etc). (4) Whether or not it acts under subsection (2), the Commission may of its own motion by order remove any trustee, charity trustee, officer, agent or employee of the charity— (a) who has been responsible for the misconduct or mismanagement, (b) who knew of the misconduct or mismanagement and failed to take any reasonable step to oppose it, or (c) whose conduct contributed to it or facilitated it. (5) Where the Commission has given notice under section 82 of its intention to make an order under subsection (4) removing a person from an office or employment, the Commission may proceed to make the order even though the person has ceased to hold the office or employment. (6) Where an order is made relying on subsection (5)— (a) section 81(1) (power to make supplementary provision) and Case D in section 178(1) (disqualification) apply as if the person was removed by the order, but (b) the order does not affect the time when the person ceased to hold the office or employment.

• (3) In section 83(3) (power to suspend or remove trustees etc from membership of charity)—

• (a) for “79(2)” substitute “ 79(4) ”;

• (b) for “an officer,” substitute “ a trustee, charity trustee, officer, ”.

• (4) In section 87(1) (supervision by Commission of certain Scottish charities), for “79(2)(b)” substitute “ 79(1) and (2) ”.

• (5) In section 178(1) (automatic disqualification of charity trustees), in Case D for “79(2)(a)” substitute “ 79(4) ”.

• (6) In Schedule 6 (appeals to tribunals), in the entry relating to an order made by the Commission under section 79(2) in relation to a charity—

• (a) in column 1, after “79(2)” insert “ or (4) ”;

• (b) in column 2, for “79(2)(a)” substitute “ 79(4) ”.

Power to remove disqualified trustee

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• (1) The Charities Act 2011 is amended as follows.

• (2) After section 79 insert—

(79A) The Commission may remove a charity trustee or trustee for a charity by order made of its own motion if the person is disqualified from being a charity trustee or trustee for a charity (generally or in relation to the charity concerned)— (a) by virtue of section 178, or (b) by an order under section 181A.

• (3) In section 82(1) (removal of trustees etc: notice), after “79” insert “ , 79A ”.

• (4) In section 89(1) (orders relating to trustees etc: exceptions to publicity requirement), after paragraph (b) insert,

or (c) an order under section 79A (removal of disqualified trustee),

.

• (5) In section 89(5) (notice inviting representations on order to remove), after “an order under this Act” insert “ , other than an order under section 79A, ”.

Power to direct specified action not to be taken

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• (1) The Charities Act 2011 is amended as follows.

• (2) After section 84 insert—

(84A) (1) This section applies where, at any time after the Commission has instituted an inquiry under section 46 with respect to any charity, the Commission considers that any action, if taken or continued by a person listed in section 84(2), would constitute misconduct or mismanagement in the administration of the charity. (2) The Commission may make an order specifying the action and directing the person not to take it or continue it. (3) While an order under this section is in force, the Commission must review it at intervals of not more than 6 months.

• (3) In section 20 (incidental powers), in subsection (3) after “84” insert “ , 84A ”.

• (4) In section 86(2) (copy of certain orders, and reasons, to be sent to charity) and section 336(2)(a) (enforcement of orders of Commission) insert in the appropriate place— “ section 84A (power to direct specified action not to be taken), ”.

• (5) In Schedule 6 (appeals and applications to Tribunal), insert in the appropriate place—

Order made by the Commission under section 84A(2) which directs a person not to take action specified in the order.	The persons are any person who is directed by the order not to take the specified action.	Power to quash the order and (if appropriate) remit the matter to the Commission.

Power to direct winding up

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• (1) The Charities Act 2011 is amended as follows.

• (2) Before section 85 insert—

(84B) (1) This section applies where the conditions in section 84(1) are met for that section to apply, but the Commission is satisfied— (a) that the charity does not operate, or (b) that its purposes can be promoted more effectively if it ceases to operate, and that exercising the power in subsection (2) is expedient in the public interest. (2) The Commission may by order direct— (a) the charity trustees, (b) any trustee for the charity, (c) any officer or employee of the charity, or (d) (if a body corporate) the charity itself, to take any action specified in the order for the purpose of having the charity wound up and dissolved, and any remaining property transferred to a charity with the same purposes. (3) An order under this section— (a) may require action to be taken whether or not it would otherwise be within the powers exercisable by the person or persons concerned, or by the charity, in relation to the winding up and dissolution of the charity or to its property, and (b) in particular, may require the person or persons concerned to do anything for the purpose of having the charity wound up and dissolved and its property transferred that could otherwise only be done by the members of the charity or any of them, but may not require any action to be taken which is prohibited by any Act. (4) Before making an order under this section the Commission must give public notice of its intention to make the order, inviting representations to be made to it within a period specified in the notice. (5) The Commission— (a) must take into account any representations made to it within the period specified in the notice, and (b) may make the order (without further notice) either without modifications or with such modifications as it thinks desirable. (6) An order under this section may not be made less than 60 days after the first day on which public notice under subsection (4) is given, unless the Commission is satisfied after complying with subsections (4) and (5) that it is necessary to make the order to prevent or reduce misconduct or mismanagement in the administration of the charity or to protect the property of the charity or property that may come to the charity. (7) Anything done by a person or body under the authority of an order under this section is to be treated as properly done in the exercise of the powers mentioned in subsection (3)(a). (8) Subsection (7) does not affect any contractual or other rights arising in connection with anything which has been done under the authority of such an order.

• (3) In section 20 (incidental powers), in subsection (3) before “or 85” insert “ , 84B ”.

• (4) In section 86(2) (copy of certain orders, and reasons, to be sent to charity) and section 336(2)(a) (enforcement of orders of Commission) insert in the appropriate place— “ section 84B (power to direct winding up), ”.

• (5) In Schedule 6 (appeals and applications to Tribunal), insert in the appropriate place—

Order made by the Commission under section 84B(2) which directs a person to take action specified in the order.	The persons are any person who is directed by the order to take the specified action.	Power to quash the order and (if appropriate) remit the matter to the Commission.
Order made by the Commission under section 84B(2) which directs a person to do anything that could otherwise only be done by the members of the charity or any of them.	The persons are the member or members concerned.	Power to quash the order and (if appropriate) remit the matter to the Commission.

Power to direct property to be applied to another charity

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• (1) Section 85 of the Charities Act 2011 (power to direct application of charity property where person is unwilling) is amended as follows.

• (2) In subsection (1)(a), after “unwilling” insert “ or unable ”.

• (3) After subsection (5) insert—

(6) Subsection (5) does not apply to rights of the charity or of a charity trustee or trustee for the charity in that capacity.

Automatic disqualification from being a trustee

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• (1) The Charities Act 2011 is amended as follows.

• (2) Section 178 (persons disqualified from being charity trustees or trustees for a charity) is amended as follows.

• (3) In subsection (1), in Case A, for “of any offence involving dishonesty or deception.” substitute

of— (a) an offence specified in section 178A; (b) an offence, not specified in section 178A, that involves dishonesty or deception.

• (4) In Case D—

• (a) for “from the office of charity trustee or trustee for a charity” substitute “ as a trustee, charity trustee, officer, agent or employee of a charity ”;

• (b) for “to which P was privy,” substitute “ which P knew of and failed to take any reasonable step to oppose, ”.

• (5) At the end of subsection (1) insert—

Case H P has been found to be in contempt of court under Civil Procedure Rules for— (a) making a false disclosure statement, or causing one to be made, or (b) making a false statement in a document verified by a statement of truth, or causing one to be made. Case I P 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 J P is a designated person for the purposes of— (a) Part 1 of the Terrorist Asset-Freezing etc Act 2010, or (b) the Al-Qaida (Asset-Freezing) Regulations 2011. Case K P is subject to the notification requirements of Part 2 of the Sexual Offences Act 2003.

• (6) After subsection (2) insert—

(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.

• (7) After section 178 insert—

(178A) (1) The following offences are specified for the purposes of Case A—

1	An offence to which Part 4 of the Counter-Terrorism Act 2008 applies (see sections 41 to 43 of that Act).
2	An offence under section 13 or 19 of the Terrorism Act 2000 (wearing of uniform etc, and failure to disclose information).
3	A money laundering offence within the meaning of section 415 of the Proceeds of Crime Act 2002.
4	An offence under any of the following provisions of the Bribery Act 2010—section 1 (bribing another person),section 2 (offences relating to being bribed),section 6 (bribery of foreign public officials),section 7 (failure of commercial organisations to prevent bribery).
5	An offence under section 77 of this Act.
6	An offence of—misconduct in public office,perjury,perverting the course of justice.

(2) An offence which has been superseded (directly or indirectly) by an offence specified in subsection (1) is also specified for the purposes of Case A. (3) In relation to an offence specified in subsection (1) or (2), the following offences are also specified for the purposes of Case A— (a) an offence of attempt, conspiracy or incitement to commit the offence; (b) an offence of aiding, abetting, counselling or procuring the commission of the offence; (c) an offence under Part 2 of the Serious Crime Act 2007 (encouraging or assisting) in relation to the offence. (4) The Minister may amend this section by regulations to add or remove an offence.

• (8) Section 179 (disqualification: pre-commencement events etc) is amended as follows.

• (9) In subsection (1), after “178(1)” insert “ or section 178A or any amendment of that section ”.

• (10) At the end add—

(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.

• (11) Section 181 (waiver of disqualification) is amended as follows.

• (12) After subsection (2) insert—