The Regulator for Charities in England and Wales

OPERATIONAL GUIDANCE

ORDERS AND SCHEMES

PUBLICATION OF OUR INTENTION TO MAKE A SCHEME OR TRUSTEE ORDER

OG 1 B4 – 27 February 2007


Purpose This guidance explains what notice, both public and personal, must be given of our intention to make a scheme or trustee order.

Functional responsibility

For action Advice and Orders, Quick Response Unit
Large Charities Unit
Welsh Unit
Intensive casework unit
Mainstream and Inquiry Cases Unit

Contents

1. Introduction
2. Public Notice and Representations
3. Personal Notices for Schemes and Orders made under s16 of the 1993 Act
4. Posting the proposed scheme on the website
5. Consultation – local charities
6. Confirmation of position by trustees
7. Representations and objections
Glossary of Terms used in this Guidance

Index to further related information

 

Legal requirement Legal advice Accountancy advice
The Law Refer to a lawyer Refer to an accountant

Top of Page Glossary

1. Introduction

  This section of guidance covers the legal requirements for giving public notice of our intentions to make schemes and orders, and for giving personal notice to trustees, as well as any trustee or other person who is being removed from office.
  Section 2 below covers the requirements for public notice in detail, while section 3 covers the requirements for personal notice.
  The guidance also covers the issues we have to consider before deciding whether or not to give public notice of our intention to make schemes and orders.
  The aim of giving public notice of our intentions is to attract relevant and useful comments from interested parties, which may have a bearing on the provisions of the scheme or order.
  The new provisions of section 20 of the 1993 Act (as amended by the 2006 Act) speed up the formal procedure for making schemes and orders, and reduce the cost to charities, by making advertising the changes, and publishing them after sealing, a matter of Commission discretion. These changes are described in detail at 2.1.1 below.
  As a result the requirement to give public notice will be disapplied where the scheme is likely to be non-controversial. The circumstances in which schemes are likely to be controversial are discussed below at:-
 
  • 2.1.2 (for schemes); and
     
  • 2.2.2 (for orders relating to trustees or other individuals).
      The guidance also discusses, where it is decided that publicity will be given, how long the period of notice should be at:-
     
  • 2.1.3 (for schemes); and
     
  • 2.2.3 (for orders relating to trustees or other individuals).

     

    2. Public Notice and Representations

    2.1 Publicity Requirements for Schemes

      2.1.1 Overview of the law
      Section 20 of the 1993 Act (as inserted by the 2006 Act) covers the requirements for publicity when schemes are established, and effectively gives control of the publicity process to the Commission.
      It provides that we may dispense with publicity altogether if we are satisfied that it is unnecessary, because of the nature of the scheme or for any other reason. Our general stance is that where the scheme is likely to be non-controversial, taking into account our statutory objectives, publicity will not be required . The purpose of publication is to ensure that those who may have a legitimate reason to be consulted are notified. Section 2.1.2 below gives guidance on the limited circumstances when publicity might be necessary.
      In the cases where we do determine that publicity is necessary, we will need to comply with the provisions of section 20.
      We should inquire, at the outset of any scheme case, whether the trustees consider that the scheme is likely to be controversial or whether they are aware of any opposition. When we do this we should make clear the criteria we would use ourselves to decide this (see bullet points below) so that they can assess the question properly.
      We should also stress the consequences if they are not frank with us about this, for instance if we are told there is no opposition to the proposals when in fact there is.
      Not only is there significant potential for embarrassment both to the Commission and to the charity if a scheme is implemented without taking account of what might be legitimate views in opposition to it, but in an extreme case we would have to consider invoking our powers under section 89(3) of the 1993 Act to discharge the order in full or in part because it was made on misrepresentation or by mistake.
      These mean that the Commission must:
     
  • give public notice of the proposals, and invite representations about them to be made within a period specified in the notice. The Commission is then obliged to consider any representations it receives within the period stated. The Commission may then proceed with the proposals, either with or without modifications, but no further notice is required; and
     
  • make a draft of the scheme available to the parish or community council if the scheme relates to a local charity in a parish, or in Wales a community (but not if it is an ecclesiastical charity).
      The Commission will decide how long the period of notice should be. See 2.1.3 below for what criteria should be used to decide this.
      2.1.2 When is publicity necessary?
      The vast majority of schemes will not be contentious and there will be no strong reasons for publicity and we need not consider giving publicity in those cases.
      In potentially contentious cases, our expectation will be that the trustees, in deciding that to apply for a scheme is in the best interests of the charity, will have carried out a consultation of their own before they apply to us for a scheme. This consultation is likely to be with the charity’s stakeholders and beneficiaries. This in most cases will avoid the need for us to give further publicity at a later stage, except where it is likely to be controversial with the general public .
      We cannot require them to carry out a consultation, but we should ask for evidence that they have done so – copies of notices & details of responses to help assess whether the scheme will be controversial for instance.
      If the level of potential controversy is significant we should then go on to consider whether or not to require publicity. This will involve an assessment of the potential risks to the charity in the light of our statutory functions. The following questions are relevant to this consideration, but are not an exclusive list . Each case needs to be looked at on its merits in light of the Commission’s risk criteria:-
     
  • Is there a significant level of public interest in the aspects of the charity which the scheme will affect?;
     
  • Does the scheme materially affect functional or purpose property in a way that is likely to be controversial?;
     
  • Does it change the objects of the charity in a way that is likely to be controversial?;
     
  • Are we aware of any opposition to the proposed scheme, which has not already been addressed by the trustees in their own consultation?
      If the answer to any of the above questions is "yes", and the trustees’ consultation would not be sufficient to ensure we can make a proper decision, then we should consider giving public notice of the scheme.
      It is possible that other factors may come into play when deciding whether or not public notice is necessary or desirable.
      These may include issues of urgency where any delay in implementing the scheme could impact on the charity’s ability to operate, or where the proposals have already received publicity.
    Legal advice If in doubt as to whether a period of public notice is necessary, caseworkers should consult a senior officer and take legal advice as appropriate. As this is a new provision, and whilst a consistent approach is developed, case officers should err in favour of discussion of borderline cases.
       
      2.1.3 How long should the period of notice be?
    In most cases where publicity is given, the period during which the notice is displayed should be no more than one month. As a matter of administrative practice it is likely that any scheme will take at least a further week to seal. If in exceptional circumstances we receive material representations after the notice period has expired, but before we have sealed the scheme, we should take these into account and can consider extending the notice period (and whether or not we need to advise others that we have done so in order to give them an opportunity to put in representations).
    We may choose to reduce the notice period to less than one month, for instance, where the notices are being published in a newspaper or periodical which is published more frequently than once a month. In such cases, it is reasonable to assume that if someone does not act on the notice within, say, 2 weeks, it is unlikely that they will do so.
      In exceptional cases, the period of notice might be extended to 6 weeks if for instance this would help public confidence. It would be extremely unlikely that any longer period would be appropriate as this would frustrate the intention of simplifying and speeding up the process.
      Reasons for extending the period of notice to 6 weeks might include where the period covers a holiday period or religious festival, eg Christmas or Ramadan, or where the notices go up in places like parks and open spaces during the winter when there are potentially fewer visitors.
      With the aim of giving shorter notice periods, yet still achieving a useful outcome, consideration should be given to asking for outline comments or objections to be submitted within 2 weeks of the notice being given. If we receive none, caseworkers can consider proceeding to seal the scheme, but should do this cautiously having discussed the matter with a senior officer. If we do receive any relevant representations, we can defer the sealing until they have been properly dealt with.
      For publicity requirements for Schemes once they have been made, see B5.
       

    2.2 Publicity for Orders Relating to Trustees or Other Individuals

      2.2.1 Overview of the Law
      Before making a scheme under section 16 or 18, we need to consider what personal notice we have to give to trustees. This is discussed in detail at section 3 below.
      Section 20(A)(5)of the 1993 Act requires that we must always give at least one month’s personal notice to any individual who we propose to remove from office, unless that person cannot be found or they have no known address in the UK. Full details of personal notice requirements and procedures are given at paragraph 3 below.
      Section 20A of the 1993 Act (as inserted by the 2006 Act) covers the additional requirements for public notice when orders are made to appoint, discharge or remove a charity trustee or holding trustee, and effectively gives control of the publicity process to the Commission.
      It provides that we may dispense with public notice altogether if we are satisfied for any reason that it is unnecessary. Our general stance will be that this additional publicity is not required unless absolutely necessary. Section 2.2.3 below gives guidance on the limited circumstances when publicity might be necessary.
      OG51 B3 and B4 give much more information on the whole question of appointing and removing trustees. You will also need to consider OG 117 if a s.8 inquiry is open.
      2.2.2 When do the publicity requirements not apply?
      Orders relating to the Official Custodian, and orders appointing additional charity trustees as we consider necessary for the proper administration of the charity under s.18(1) are excluded from any requirement for publicity.
      2.2.3 When should we give public notice of trustee appointments or removals?
      We should only give public notice in cases where we are satisfied it is necessary to do so in furtherance of our statutory objectives in the interests of the charity. Public notice may be interference with a right protected by the Human Rights Act 1998 and legal advice should be sought.
      In determining when we might wish to give publicity, we need to make a risk assessment of the consequences of not giving public notice. We will need to consider things like:-
     
  • The likely level of public interest in the case;
     
  • The profile of the charity;
     
  • The acquiescence (or not) of the individual if he or she is being removed by the order; and
     
  • The risk of our being (or perceived as being) less than transparent..
      If in doubt about whether public notice should be given, the caseworker should consult a senior officer.
      2.2.4 How long should the period of notice be?
      The Commission decides how long the period of personal notice will be, although if the order is to remove, without his consent, a trustee, or officer, agent or employee of a charity, it must give him at least one month’s notice, and invite representations to be made during that period.
      The Commission may also give public notice of these proposals, giving a specified period for representations to be made. The period of public notice may run concurrently with the period of personal notice, although if this is the case, it must be a month also where the order is to remove a trustee etc.
      In most cases where publicity is given, the period of notice should be no more than one month.
      We may choose to reduce the notice period to less than one month, for instance, where the notices are being published in a newspaper or periodical. In such cases, it is reasonable to assume that if someone does not act on the notice within, say, 2 weeks, it is unlikely that they will do so.
      In exceptional cases, the period of notice might be extended to 6 weeks if for instance this would help public confidence. It would be extremely unlikely that any longer period would be appropriate as this would frustrate the intention of simplifying of and speeding up the process.
      Reasons for extending the period of notice to 6 weeks might include where the period covers a holiday period or religious festival, eg Christmas or Ramadan, or where the notices go up in places like parks and open spaces during the winter when there are potentially fewer visitors.
      Section 20A provides that when the Commission does give public notice of the proposals, it must invite representations to be made to it within the period stated.
      If the charity is a local charity, a copy should also be made available at some appropriate place in the charity’s area, unless the Commission is satisfied for any reason that this is unnecessary.
      Section 18(12) also requires us to give notice of removal to the other trustees. The purpose of this is to put them on notice that removal is imminent (and hence to give them the opportunity to make whatever arrangements consequential on the removal.) Such notice will usually be given at the same time as a s.20a(5) notice.

    2.3 Description of Scheme or Order

      The form of notice will depend upon the type of charity involved and, to some extent, upon the provisions to be included. It should be kept brief but highlight the principal points of the Scheme. At most, the purpose of the scheme should be described in outline, for example, "scheme appointing trustees". The level of publicity will vary as set out below.
       

    2.4 Local charity

      How we publish notices for a local scheme is no longer prescribed. We will only publicise in the circumstances as set out above. In such circumstances we need to think carefully how best to publicise the scheme or order. The purpose of publication is to ensure that all those who may have a legitimate reason to be consulted are aware of the scheme. Very often this will mean ensuring that a notice is given to the local parish or community council for display in a public place on the affected land or buildings. But it may be that publishing on a local website or in a local or sector newsletter or putting a notice in a well used post office is more appropriate. The case officer may want to discuss with the charity and/or local administrative authority the best way to publicise.
       

    2.5 National Charity

      If we decide that publicity is necessary for a scheme or order for a charity which operates nationally again we have discretion about how best to do this. We should not think only about publicising in national newspapers (particularly as this can be expensive) but should also think about appropriate websites or e-newsletters.
      If the case officer is not sure what level of publication is appropriate, he or she should ask a senior officer or the Commission’s Communications team for advice. The notice need appear only once.
      Some charities have an unrestricted area of benefit in their governing document, but in practice operate in an identifiable geographical area. In such cases, public notice should be given in an area in which the charity is actually operating.
       

    2.6 Reverter of Sites Act 1987

      There are special provisions for notice for schemes established under s.2 of the Reverter of Sites Act 1987. See OG27 B2
       

    2.7 Pooling/CIF/CDF Schemes

      None of the personal or public notice requirements mentioned in this section apply to pooling schemes or schemes establishing common investment funds or common deposit funds (although we can give directions for publication).

     

    3. Personal Notices for Schemes and Orders made under s16 of the 1993 Act

    3.1 The law

    Legal requirement Section 16(9) requires us to notify each charity trustee (not including holding trustees) of our intention to make a Scheme or Order made under section 16 of the 1993 Act (sections 16(9)). This does not include trustees who:
    Legal requirement
  • cannot be found, or have no known address in the UK; or
  • Legal requirement
  • are "party" or "privy" to the application. (This second condition does not apply if the Scheme is being made under s.18(2) following the opening of a s.8 inquiry where we do have to notify trustees – see OG117 B7)
  •   In order to avoid the need for issuing these personal notices, we should encourage all trustees to be party or privy to the application.

    3.2 Meaning of "party", "privy" or "non privy" trustees

      Party and privy trustees
      A trustee is "party" to an application for a Scheme if he or she is involved in the decision to apply for it. He or she is "privy" to the application if he or she has prior knowledge that the application is being made. In general:
     
  • a trustee who attended a meeting at which the application was decided on would be a "party" to the decision;
  •  
  • a trustee who received notice of the meeting, provided that this stated clearly that amongst the purposes of the meeting would be the passing of a resolution authorising application to us for the Scheme, would be "privy" to the application; or
  •  
  • a trustee who received a copy of the resolution for consideration in accordance with a provision of the governing document of the charity would be "privy" to the application, as would one who received a copy of the minutes after the meeting. (This will apply where the governing document allows trustees to take decisions without having to attend a meeting.)
  •   Non privy trustees
      Any trustee who cannot be regarded as party or privy to an application for a Scheme is "non-privy".
      Use of terms
      We should refer to being involved in the decision, or having or not having, prior knowledge of the decision when corresponding externally rather than using the terms "party", "privy" and "non privy". We should not use the terms "privy" and "non privy" in letters to correspondents without explanation (unless an explanation is clearly unnecessary).

    3.3 Identification of non-privy trustees

      All cases
      The following issues will be relevant in deciding whether or not there are non-privy trustees:
     
  • the circumstances in which a scheme is being made;
  •  
  • the method of application;
  •  
  • the constitution of the charity and of the trustee body; and
  •  
  • the purpose of the scheme.
  •   When we issue an application, we should ask for the names(s) and address(es) of any trustees who were not party or privy to the decision to apply for the scheme. The list should include any trustees appointed since that decision was taken.
      Small Charities
      Where we accept an application under the special arrangements for small charities, any trustee who does not sign the application will be non-privy.
      Application not by the charity
      Where we accept an application from one or more trustees, where there are insufficient duly appointed trustees to transact the business of the charity, all the last known trustees (if any) should be sent a non-privy notice. Where we accept an application from the Attorney General, or proceed on the basis of unreasonable refusal to apply for a Scheme (s.16(6), all the trustees should be sent non-privy notices.
      Scheme of "our own motion"
      Where we make a scheme "of our own motion" (s.18(2)(ii) of the 1993 act), we must give formal notice of our intention to make a scheme to all trustees (s.18(12)).
      We should obtain their names and addresses from the correspondent at the earliest opportunity, and when notices of the Scheme are sent for publication, we should confirm that there have been no changes.

    3.4 Period of personal notice under s.16(9) of the 1993 Act

      The Act does not specify any period for notifying non privy trustees of our intention to make a scheme. For trustees who know nothing about the scheme (not privy), our policy is to regard the notice period as one month as this is considered to be a reasonable length of time.
      We should give notice in writing and the letter should include a brief description of the scheme provisions. It should be addressed to the trustee’s last known address in the UK and we need not attempt to obtain a later address if the letter does not reach him or her. (we do not have a duty to notify trustees who cannot be found or have no address in the UK). If we do not receive a reply, we need take no further action.

    3.5 Personal notice – s.20A of the 1993 Act

      S.20A of the 1993 Act provides that a charity trustee, trustee for a charity, officer, agent or employee of the charity who is to be removed from office by order without their consent must be given at least one month’s notice of the making of the order unless he or she cannot be found or has no known address in the UK. The notice must invite representations on the proposal from the person concerned within a specified time limit.
      It may often be convenient to ask the person being removed from office to give consent. However, in the case of a charity trustee, consent cannot be inferred simply from the fact that he or she may have been involved in making the application for the order. That involvement does not necessarily mean that he or she consents to everything which the scheme will do. If there is no evidence of consent, the person concerned has to be given notice. We should do this in writing. The letter should:-
     
  • include a brief description of the Order’s provisions;
  •  
  • make it clear that the scheme will appoint, discharge or remove a trustee
  •  
  • contain a specific invitation to send representations to us within a stated time limit. (The time limit does not have to be one month – it cannot be less - but this is the period which should usually be stated)
  •   The notice should be addressed to the individual’s last known address in the UK. We need not attempt to obtain a later address if the letter does not reach him. If we do not receive a reply, we need take no further action.
      Schemes that abolish the office of trustee are not caught by this section. Abolishing the office of trustee is not removal or discharge of a trustee even if the practical effect is that the person who holds the office that is abolished is no longer a trustee as a result. If a trustee has not been privy to the application for a scheme abolishing his office(s), he is entitled to be given personal notice of our intention to make the scheme under s.16(9). He is also entitled to make representations to us about it like any other member of the public.
      Where someone stops being a trustee because a scheme is made to transfer the title to charity land to the Official Custodian, they are not thereby removed from office.

    Top of Page Glossary

     

    4. Posting the proposed scheme on the website

      If we have taken a decision to give public notice of our intention to make a scheme or order, unless there are good reasons not to do so, we should post the draft on our website at the same time.
      Before doing this, the case officer should check that:
     
  • there are no trustee addresses in the draft scheme;
  •  
  • if trustees are named in the scheme, there is a separate list of names and addresses on the case file to take account of our data protection responsibilities; and
  •  
  • there are no case officers’ names in the document history.
  •   An application is available on Connect which enables caseworkers to publish their own draft schemes. A caseworker needs to apply to the IS service Desk for initial permission, which, once given, does not lapse. The system allows the user to enter the details of the draft scheme into the database which then automatically converts the draft scheme to a .pdf document, which is available to the public on the website the following day. The caseworker should provide the following information:
      (a) the charity name;
      (b) the charity number.
      (c) the location of the charity, ie county;
      (d) the purpose of the draft scheme, is whether the scheme will;
     
  • modernise or broaden the objects;
     
  • merge or amalgamate charities;
     
  • enhance governance; or
     
  • confer powers.
        (These are the descriptions that will appear on the website. Choose one of them. A scheme varying administrative provisions will, for instance, enhance governance.)
      (e) confirmation that this is a draft scheme;
      (f) the case number;
      (g) the office handling the case.
      The scheme will automatically be altered from "draft" to "limbo" status after the one month period has expired. However, the publication period will not expire until one month after the trustees publish their notices.
      Note: If any amendments are made to the draft scheme the case officer must amend the web version accordingly.
      Draft schemes should not be published on the website if we have decided not to give public notice.

     

    5. Consultation – local charities

    5.1 Local charities

      In the case of local charities which are not ecclesiastical charities, we will very often want to send a copy to:
     
  • the parish or town council or (in Wales) the community council; or, if there is no such council,
  •  
  • the chairman of the parish meeting;
  •   If none of these bodies exist, if we think the district council is likely to be interested we should consider sending it a copy.

    5.2 Registered Social Landlords

      When a Registered Social Landlord (RSL) approaches us for a change of objects we are under a legal obligation to inform the Housing Corporation of this fact. This requirement also covers almshouse charities which are RSLs..
      Paragraph 10 of Schedule 1 to the Housing Act 1996 states: "No power contained in the provisions establishing the registered social landlord as a charity, or regulating its purposes or administration, to vary or add to its objects may be exercised without the consent of the Charity Commissioners. Before giving their consent, the Charity Commissioners shall consult the Corporation."
    Legal requirement Failure to inform the Housing Corporation before we make a scheme for an RSL, could invalidate the scheme.
      We should allow a minimum of one month to consult the Housing Corporation.
      The term "Corporation" in the context of the Housing Act 1996 means the Housing Corporation for English RSLs and the Welsh assembly for Welsh RSLs.

    5.3 Charities with Umbrella bodies such as Almshouse charities

      Where we are aware that the charity is a member of a well known umbrella body we may have a memorandum of understanding with the umbrella body.
      One organisation we have an agreement with is the National Association of Almshouses (also known as the Almshouse Association),

    For almshouses we should send the Association a copy of the scheme if it alters the objects of the almshouse charity or authorises the sale and replacement of almshouses.

      We should allow a minimum of one month to consult the Almshouse Association.
      See OG65 for more details on almshouse charities.
      We have no definitive list of organisations with whom we have agreements or memorandums of association. If the caseworker thinks there may be such an agreement involving a body of which the charity in question is a member, he should check with Compliance and Support and/or Policy who are currently developing a number of them.

    6. Confirmation of position by trustees

      Once the necessary notices have been displayed for the relevant period and/or published, the trustees must confirm the position by sending us:
     
  • a copy of the agreed draft scheme; and, as appropriate,
  •  
  • a declaration of the notices displayed in the area; and/or,
  •  
  • evidence such as a copy of the newspaper or website link showing the published notice.
  • 7. Representations and objections

    7.1 Dealing with requests for copies of draft scheme or order

      Copies of the draft scheme should be sent or emailed without charge to anyone who requests one.

    7.2 Statutory obligation to consider representations

      Before sealing a scheme, we are obliged by law, where we have given public notice of our proposals, to consider and deal with all representations and objections received during the stated period of public notice (sections 20(5) and 20A(6) of the 1993 Act as amended by the 2006 Act).
      This is vital. Under section 89 of the 1993 Act, we can only discharge schemes or orders under limited circumstances. Having to make a new scheme or order to deal with our mistake is a waste of resources and impacts on the reputation of the Commission.

    7.3 Dealing with objections

      Representations made in response to public notice of our intention to make a scheme or order (under s.20 or 20A of the 1993 Act). If the representations appear to be based on some misunderstanding of what is being proposed, we should write to the objector explaining the true position. If the objections appear to have some validity, we should ask the trustees for their views. If necessary, the proposed scheme or order should be modified. The person who considers the objections and representations will need to form a view as to whether the scheme or order should go ahead taking advice from senior colleagues and a lawyer as appropriate.
      Otherwise the objections should be dealt with as part of the decision review process. Caseworkers should refer to OG4 – Dealing with Representations in Response to Public Notices.

    7.4 Action to take once objections and representations have been dealt with

      Once all objections and representations have been dealt with satisfactorily (and assuming the agreed publicity period (if any) has past and any personal notices dispatched at least one month earlier) we can prepare the scheme or order for sealing. Even if changes have been made as a result of representations received, we do not have to give further notice before the scheme is sealed. However, there may be cases (especially where the amendments are significant) where this will be desirable.

    Top of Page Glossary

    Glossary of Terms used in this Guidance

      1993 Act
      ecclesiastical charity
      Housing Corporation
      local charity
      trustees
      trustee for a charity
       

    Index to further related information

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