The Regulator for Charities in England and Wales
(Version 07/02)
1. This guidance provides information about the incorporation of charity trustees under Part VII of the Charities Act 1993. This is not the same thing as the charity itself becoming incorporated as a company limited by guarantee, which is not covered here. We recommend that trustees considering that option contact us for information and advice.
2. In this guidance:
The 1993 Act means the Charities Act 1993.
Governing document means any document setting out the charity’s purposes and, usually, how it is to be administered. It may be a trust deed, constitution, will, conveyance, Royal Charter or Scheme of the Commissioners.
Property means land and buildings, cash, stocks, and other investments.
Sealing is the term used to describe the means by which we make an Order effective. A red paper seal is applied to one copy of the Order. The date of sealing is the date on which the Order becomes effective.
Trustees means charity trustees. Charity trustees are the people who, under the charity’s governing document, are responsible for the general control and management of the administration of a charity. In the charity’s governing document they may be called trustees, managing trustees, committee members or governors, or they may be referred to by some other title. Sometimes a charity also has custodian or holding trustees, whose function is restricted to holding its property. Custodian or holding trustees have no power to make management decisions and must act on the lawful instructions of the charity trustees. In this publication it is the charity trustees who are being referred to unless stated otherwise.
Must is used to refer to actions that trustees or their agent or employees, are obliged to take by law.
Recommend or advise are used where we are suggesting to the trustees actions which we consider to be good practice, but which do not represent a legal requirement.
3. The 1993 Act contains provisions about trustee incorporation which:
4. The main advantages of incorporation are:
5. No, incorporation of the trustees (unlike incorporation of the charity as a company) does not confer any limited liability on the trustees. They retain the same powers and remain subject to the same restrictions and liabilities as before.
6. Trustees of both registered charities and charities which are exempt or excepted from registration with us can apply for a certificate of incorporation. Where an applicant charity is not registered, but we consider that it should be, the charity must be registered before the application can proceed. Further details on registration requirements and procedures can be found in our guidance Registering as a Charity (CC21).
7. When considering whether or not to grant a certificate our main concern will be that it is in the interests of the charity. For example, where the property of a charity consists only of land, the main advantage of trustee incorporation can be achieved more simply by making an Order vesting the land in the Official Custodian.
8. We have produced an Application Pack CHY-1093: How to apply to the Charity Commission for a Certificate of Incorporation, which is available from our charity support staff at any of our offices. You are required to complete and return to us the application form together with the questionnaire contained in the pack.
9. We have to be satisfied that the trustees have been validly appointed (in legal terms) - if we are not, then we may need to ask for more information. Trustees therefore need to make sure that all documentation or information asked for in the pack is sent in with the application. If there are any irregularities in the appointment of the trustees, these will need to be corrected before the certificate can be granted. This can be done by the trustees themselves if they have the necessary powers, or, if not, by a Scheme or Order of the Commissioners.
10. It is a requirement that the name of the incorporated body be stated in the wording of the certificate, and will need to contain either the word "Trustees" or, where appropriate, "Governors". We strongly recommend that the word "Registered" not be used as this may suggest to members of the general public that the charity is registered under the Companies Act. We recommend wording such as:
11. The certificate automatically operates to vest all property of the charity in the incorporated body (other than any property which is vested in the Official Custodian). Any person (such as a holding trustee) who holds any stocks, funds, or securities in trust for the charity must transfer them into the name of the incorporated body.
12. Any land vested in the Official Custodian before the granting of the certificate can remain so. It may, upon request be transferred to the incorporated body, by an Order made by us. Any land not vested in the Official Custodian is automatically transferred to the incorporated body, but please note that for any registered land trustees will need to apply to the Land Registry so that the registered details can be amended.
13. Incorporation of the trustee body does not affect the governing document of the charity. It does not, therefore, change:
These should be followed in detail as before.
14. In the case of a registered charity, the certificate of incorporation, along with the application for it and the documentation which supported the application, will be placed on the charity’s file. This is open to inspection by members of the public. A note that the trustee body has been incorporated will also be made on the Register of Charities computer database and the Register of Charities on our website.
15. A document may be executed by an incorporated body of trustees:
16. There is no longer a requirement for an incorporated body of trustees to have a common seal, but it may have one if it wishes. However, trustees need to be aware that this will involve costs. If the trustees want to have a common seal, then they should ensure that:
17. The arrangements as to the safe custody and use are required to be included in the certificate of incorporation.
18. An authority may, unless the governing document of the charity disallows it, be granted by the trustees to two or more of their number to execute documents in the name of, and on behalf of, the incorporated body. This must be either in writing or by resolution of the trustees. It may be a general authority, or may be limited as the trustees think fit.
19. The trustees cannot amend the certificate of incorporation, but we can, either on the application of the incorporated body or of our own motion.
20. If the trustees believe that an amendment is necessary, then they need to send in an application, in writing and signed or sealed, with their reasons for wanting the amendment. If we agree that the amendment is desirable, then we may amend the certificate either:
21. We can also amend the certificate of our own motion, but this is rare and is likely to occur only where an amendment to the conditions we have inserted in the certificate is necessary, but the trustees are unwilling to make an application. The amendment would be made in one of the ways described in the previous paragraph.
22. We can make an Order (under section 61 of the 1993 Act for the dissolution of an incorporated body either:
23. An application from the trustees for dissolution of an incorporated body needs to be in writing and signed or sealed. It should include a statement by the trustees of the reasons why they consider dissolution to be in the best interests of the charity. We can only make an Order dissolving the incorporated body if we are satisfied that this is the case.
24. We may dissolve an incorporated body of our own motion where:
25. In all cases, the effects of an Order under section 61 are:
26. Where the institution has been dissolved because it has ceased to be, or never was, a charity, we may nevertheless be able to make supplemental Orders under section 89 of the 1993 Act in relation to the vesting of property if these are necessary to carry out the dissolution.
Minor and consequential amendments have been made to keep the text as up to date as possible.