OPERATIONAL GUIDANCE

DISQUALIFICATION FOR ACTING AS A CHARITY TRUSTEE

VACATION OF OFFICE OF TRUSTEE

OG 41 B1 – 27 February 2007

Purpose

This guidance details the methods by which a trustee may vacate, or be removed from his or her office in the event of disqualification for acting as a trustee.

 

Contents

1. Terms of governing document
2. Automatic vacation when disqualified or prohibited by law
3. Determination of trusteeship in particular circumstances
4. No provision for automatic termination of office circumstances
5. Removal by the Commission of trustees disqualified under s.72 of 1993 Act
6. Removals under s.18 of 1993 Act because of other convictions
Glossary of Terms used in this Guidance

Index to further related information

 

The Law	Refer to a lawyer	Refer to an accountant

1. Terms of governing document
	S.72 of the 1993 Act does not provide for the automatic vacation of office of a disqualified trustee. Although a disqualified trustee may not act in the administration of the charity, whether or not he or she is immediately removed from the office of trustee will depend on the terms of the governing document of the particular charity.
	Governing documents of charities do not, in themselves, disqualify persons for acting as trustees. They either terminate trusteeship automatically in the circumstances defined by s.72, or they confer a power of removal in such circumstances.

2. Automatic vacation when disqualified or prohibited by law
	If the governing document of the charity itself expressly provides that a disqualified trustee or a trustee prohibited by law from being a trustee shall cease to be a trustee, then that provision will have effect and the trustee will immediately be removed from office. This will normally be the position with charitable companies but may also apply to other types of charity.
	If the disqualified trustee is later given a waiver it will not have a retrospective effect and he or she will have to be reappointed as a trustee (see OG 42 A1).

3. Determination of trusteeship in particular circumstances
	A specific provision in the charity’s governing document determining trusteeship in any of the circumstances set out in s.72(1) will also end trusteeship independently of any disqualification under s.72 itself.
	In such an event, any waiver granted by us would be ineffective, as the trustee would no longer be in office. A waiver under s.72 would not remove the disqualification under the trusts. For instance, if the governing document provided that a bankrupt should cease to be a trustee on being adjudged bankrupt, then a waiver in respect of disqualification under s.72(1)(b) would not enable him or her to continue to be a trustee while a bankrupt.

4. No provision for automatic termination of office circumstances
	If the governing document contains no provision for automatic termination of office, the trustee will remain a trustee but be incapable of acting by virtue of disqualification under s.72(1). This means that he or she will be counted as part of the trustee body for the purpose of, for example, calculating the quorum for a meeting, even though he or she cannot act. If it is the case that a charity becomes unable to operate because of this then, in these circumstances, he or she can be replaced either:
	by the trustees appointing a trustee in his place under s.36(1) of the Trustee Act 1925 (replacement of a trustee who is incapable of acting); or
	if the charity’s governing document contains express provision dealing with the removal and/or appointment of a trustee who is incapable of acting, by the exercise of that power.
	If the disqualified trustee applies for and obtains a waiver before he or she is replaced, the legal impediment to his or her acting will have been removed and he or she will continue in office and will be able to act.
	If he or she is replaced by the trustees (whether under s.36 of the Trustee Act 1925 or under the charity’s express trusts) before a waiver is obtained, he or she will not resume office as the trusteeship will have been determined by acts of the trustees and not under s.72. In this case, if a waiver is obtained, he or she could be appointed afresh subject to the general procedures and rules laid down in the charity’s governing document.

 

5. Removal by the Commission of trustees disqualified under s.72 of 1993 Act

In all cases we have the power under s.18(4) of the 1993 Act (removal of a trustee where he or she does not act and his or her failure to act impedes the proper administration of the charity) to remove a disqualified trustee if it is administratively necessary to fill the post by another trustee. In this case again the trustees may be in a position to appoint a further trustee to fill the post. Alternatively we have the power to appoint another trustee under s.18(5) of the 1993 Act. Removal of trustees can only be sanctioned at Head of Division level or above.

6. Removals under s.18 of 1993 Act because of other convictions
	Disqualification arises only under s.72(1) (a) in the case of convictions for offences of dishonesty or deception. This means that convictions for other offences do not automatically entail the convicted person being disqualified for being a charity trustee. An exception to this arises in the critical area of child protection - see OG41 A1 which considers the legislation which disqualifies for trusteeship of children’s charities those who have been convicted for paedophile offences.
	Additionally, convictions for other types of offence may justify the Commission conducting an evaluation of the charity, and where appropriate opening an inquiry. The inquiry might find misconduct in the administration of a charity, for instance, or that the property of the charity has been put at risk (or both). The critical factor to bear in mind here is not necessarily the type of offence alone, but the type of charity, and how its association with such an offender might affect it. Subject to the findings of the inquiry, it might be appropriate for us to exercise our powers under s.18 to suspend or remove the person concerned from being a charity trustee. S.18(1) empowers us to suspend an individual from being a trustee if:
	there is or has been any misconduct or mismanagement in the administration of the charity; OR
	it is necessary or desirable to act for the purpose of protecting the property of the charity (in this context goodwill or the charity’s good name can represent property of the charity).
	For removal of a trustee to take place under our powers in s.18(2), BOTH these elements must exist.
	One example where misconduct might be easily demonstrated would be a trustee of an animal charity being convicted of cruelty to the animals in the care of the charity. In such a case the offence and the charity are closely related, and both the elements can be justifiably said to be present.
	However, the same principle may apply even where the link between the offence and the charity is not as close, but we would need to look at the interests of the charity objectively and be mindful of the human rights of the individual concerned.
	An example of this might be in the context of a convicted paedophile who is disqualified for being a trustee of a children’s charity by virtue of the Criminal Justice and Court Services Act 2000 (see OG41 A1). If a convicted paedophile is a trustee of another type of charity, an inquiry may conclude that the property of the charity was in need of protection in terms of s18(1)(b) because the trustee concerned was adversely affecting the good name or goodwill of the charity. This would justify our taking action to suspend, but not remove the individual from being a trustee.
	However, in some circumstances it may be possible to demonstrate that there is misconduct or mismanagement as well. Again using the example of a convicted paedophile who is a trustee of a charity that is not a children’s charity, we may feel it is appropriate to maintain that:
	a trustee owes a continuing duty voluntarily to disclose to his or her beneficiaries any circumstances which may materially affect his or her fitness for office;
	a paedophile conviction (or any other conviction likely to attract widespread public abhorrence) can be such a circumstance;
	a failure to discharge this duty of disclosure is capable of being misconduct or mismanagement in the administration of a charity in the terms of section 18(1)(a);
	therefore we could be justified in removing the trustee.
	If such a case is encountered, it should be referred to Legal Division before action is taken on either of these bases.

Glossary of Terms used in this Guidance
	The following words and phrases are defined in the Glossary of Terms:
•	the 1993 Act
•	governing document
•	trustees

Index to further related information