OPERATIONAL GUIDANCE
DISQUALIFICATION FOR ACTING AS A CHARITY TRUSTEE
ACTING WHILST DISQUALIFIED
OG 41 B2 – 27 February 2007
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This guidance describes the consequences arising from persons continuing to act as trustees whilst disqualified |
Contents
1. Penalties and consequences
2. Validity of actions
3. Repayment of benefits
Glossary of Terms used in this Guidance
Index to further related information
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| The Law |
Refer to a lawyer |
Refer to an accountant |
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1. Penalties and consequences |
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Acting as a trustee whilst disqualified is a criminal offence by virtue either of s.73(1) of the 1993 Act or of ss.11-13 of the Company Directors Disqualification Act 1986. Conviction may lead to a fine, imprisonment or both. |
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If it comes to our attention that a disqualified trustee has continued to act in the administration of a charity despite disqualification, we should inform both the trustee concerned and the other members of the trustee body that this is the case and that it must cease immediately. There is no specific statutory duty for us to do so, but it falls within our general duty under s.1(3) of the 1993 Act. A criminal offence may have been committed. |
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Legal advice should be sought as to whether |
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the matter should be referred to the police with a view to a possible prosecution and/or |
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consideration given as to whether an Order should be made either directing repayment of any sums received by the trustee in question by way of remuneration or expenses during the period of disqualification, or directing the payment to the charity of the value of any benefit in kind received by the trustee during such period. |
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We must, of course, be absolutely sure of our facts before informing the other trustees that one of their number is disqualified. Incorrect statements about a person being disqualified may be considered to be defamatory, if we failed to take adequate steps to ensure their accuracy before we made them. In suitable cases we would need to ensure that leave to act had not been granted under the Company Directors Disqualification Act 1986 or the Insolvency Act 1986 or the Companies (Northern Ireland) Order 1989. Another obvious area of risk here is a failure to identify accurately the date on which: |
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a relevant conviction becomes spent; |
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a disqualification order under the 1986 Act ceases to have effect; or |
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a discharge from bankruptcy is obtained. |
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2. Validity of actions |
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As described above, any person who acts as a trustee for a charity whilst disqualified is guilty of a criminal offence, unless specifically excluded by s.73(2). However, any acts done as a trustee by a person who is disqualified by virtue of s.72 are not invalidated by reason only of that disqualification. They may, however, be invalid if the person continues to act as a trustee even though he has been removed from office under the trusts of the charity. The charity’s governing document(s) must always be considered before any view is expressed about the validity of any acts done by a disqualified trustee |
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3. Repayment of benefits |
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Where a trustee is discovered to be acting whilst disqualified, the circumstances in which the situation came about should be inquired into. It should be ascertained whether the disqualified trustee received any payment in cash or kind by way of remuneration or expenses during the time he or she was acting whilst disqualified. |
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Where a person has acted as a trustee whilst disqualified and has received from the charity any benefits in kind or any payments by way of remuneration or expenses in connection with his or her acting as trustee, we may, under s.73(4), direct that person by Order to repay the whole or part of the sums involved. |
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Where the benefit was in kind, we may determine its monetary value. |
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The power to require repayment does not extend to sums which may have been received in respect of any time when the trustee was acting whilst not disqualified. S.73(4) does not apply to exempt charities. |
Index to further related information