OG47 C1 - ALTERATIONS TO GOVERNING DOCUMENTS: CHARITABLE COMPANIES

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OPERATIONAL GUIDANCE

ALTERATIONS TO GOVERNING DOCUMENTS: CHARITABLE COMPANIES

HOW CONSENT IS GIVEN AND THE REGISTER UPDATED

OG 47 C1 – 18 March 2008

Purpose

This guidance sets out the way in which we will give our consent to amendments under section 64 of the Charities Act 1993 and what steps are to be followed to update the Central Register.

Functional responsibility

For action

Charity Services

For information

All operational divisions

Contents

1. Level of authority
2. Options for giving our consent
3. What charitable companies need to do to pass resolutions validly
4. Our follow-up action

Index to further related information


The Law	Refer to a lawyer	Refer to an accountant

1. Level of authority
	Authority for most amendments under section 64 of the Charities Act 1993 is given at Pay Band 3 level. For further detail see OG 24 on Authorised Officer powers.

2. Options for giving our consent
	2.1 No stipulation on the form of notice 2.2 Consent by letter or email or form 2.3 Endorsement of the resolution 2.4 Consent to multiple amendments submitted in governing document form

	2.1 No stipulation on the form of consent
	When notifying Companies House of alterations to the memorandum and articles of association a charitable company must provide a copy of our prior written consent. The form of this consent is not stipulated by either the Charities Act 1993 or the Companies Act 1985.
	By this stage we will have already considered the legal requirements and reasons for change and the level at which they are authorised. We are then left to agree the form of words and satisfy ourselves that the wording we agree will be the same as that approved by the trustees and submitted to the members of the company for adoption as a special resolution.
	In doing this we will need to look at what is practical in the circumstances when deciding what form our consent should take. The options are set out in sections 2.2 and 2.3 below.

	2.2 Consent by letter or email or form
	The most appropriate way of giving our consent is by letter, email or form. The letter or e-mail itself needs to be clear what we are approving. The actual wording can be included in the letter or e-mail to the charity or, where there is a mix of regulated amendments and those that do not require authority, it will be sufficient to refer to the date of the draft resolution and accompanying documents, confirm that these have been considered by the Commission and confer authority generally to all amendments for which our consent is necessary. If we give consent in the latter form, we need to be sure that we have correctly identified all the amendments which require our consent and are content to give it.
	Charities should in all but the most straightforward or single issue amendment proposals be sent the [insert reference to form here]. This form contains space for the trustees to record only those amendments that require our consent. The consent can then be provided directly onto the form by stamp, and issued to the charity.

	2.3 Endorsement of the resolution
	Where the amendments all require our consent but are too lengthy to include in a letter, it may be more appropriate to endorse our consent on a draft of the special resolution, on which the members of the company will vote, or, where the resolution is to adopt amendments set out in a revised copy of the memorandum and/or articles, on the copy of the revised memorandum and/or articles themselves. In addition to the information to support the proposed changes (see OG47 B1), the trustees should be asked to provide a copy of the resolution (this may be done via e-mail but must be in draft form unless it contains a condition that it will only come into effect if it has been approved by us – see B1 section 4). Alternatively trustees can provide additional sheets to the application pack to describe the changes.
	Where we are in agreement with the proposed changes we will endorse our consent on the copy resolution submitted or on the completed Form, returning it to the charity and retaining a photocopy for our key documents file. The charity will then be able to forward one of the copies to Companies House once the resolution has been passed. This will satisfy both charities and companies legislation and makes it clear what amendments are being made.
	The wording of the endorsement should be as follows: "On behalf of the Charity Commission for England and Wales, consent is hereby given under section 64 of the Charities Act 1993 to these proposed amendments".
	In the case of a submission that includes a mix of regulated and non-regulated amendments the following can be used: "On behalf of the Charity Commission for England and Wales, consent is hereby given under section 64 of the Charities Act 1993 to these proposed amendments in so far as they require the consent of the Commission".
	Section 2.4 below provides guidance on endorsing our consent on special resolutions where some amendments require our consent and other do not.

	2.4 Consent to multiple amendments submitted in governing document form
	A problem often experienced and that causes difficulty is where we are given a draft special resolution affecting the memorandum and articles of association which contains many changes. Some of the changes will need our consent, others not.
	It is time consuming to type every individual change into a letter but equally difficult to endorse each change on the draft document. We will in these cases either return the documentation and request the completion of the application pack or provide consent as follows: "On behalf of the Charity Commission for England and Wales, consent is hereby given under section 64 of the Charities Act 1993 to these proposed amendments in so far as they are require the consent of the Commission".

3. What charitable companies need to do to pass resolutions validly
	3.1 Special resolutions 3.2 Failure to obtain our consent 3.3 Prior consultation with the Charity Commission

	3.1 Special resolutions
	A special resolution effecting a change to the memorandum and/or articles of association of a company will need to be passed by the members of the company. That may be done:
	at a meeting of the members of the company; or
	in writing, in accordance with the provisions of section 288 of the Companies Act 2006.
	There are special statutory procedural requirements relating to the passage of special resolutions at meetings of the company, one of which is that the notice of the meeting needs to specify the substance of the resolution which is in fact passed (so if the members want to change the substance of the resolution, a new meeting must be called giving notice of the revised resolution, and a new form of consent must be given by us, where required).

	3.2 Failure to obtain our consent
	Changes purportedly made to the memorandum and/or articles of association where our prior written consent is required, and has not been given, are invalid and ought to be rejected by the Registrar of Companies.

	3.3 Prior consultation with the Charity Commission
	Where our consent is required (see B1 of this series), the directors will normally need to agree the proposed changes with us before they are incorporated into a special resolution to be passed by the members of the company. A resolution can be passed by the members, without agreeing the form with us first, provided that this effect is expressed to be conditional on our giving the required consent. But the risk is that we will decide not to give consent or will require changes, in which case the process will have to start all over again.

4. Our follow-up action
	We have a legal obligation to keep our Register up-to-date, and trustees in turn, must keep us informed of any changes. We will therefore need to check that any changes to governing documents submitted to us are the same as those previously agreed.
	We will already have on file a copy of the resolution or letter agreeing to the amendments which should be scanned onto the charity’s Key Documents file.
	In order to update our records we need:
	A copy of the minute of the passing of the special resolution signed by one of the trustees or the company secretary; and
	A copy of the revised Memorandum and Articles of Association which is required to be produced under Company Law.
	One frequently encountered problem for case workers is that notification of amendments being passed is sent many months after the original consent has been given. This requires the caseworker to obtain the original paperwork which can delay the time required to update the register. The solution is to direct the trustees to use the form CSD-1388B. The turnaround time following receipt of one of these forms can be counted in days.
	There is no standard form for a special resolution to take. If the document submitted is not in a stand alone form suitable to go on the charity’s CR file it will be returned to the charity and a suitable version requested.
	Our computerised record of the Register will need to be amended to reflect the date on which an alteration was made and where objects have changed the new wording should replace existing text. The responsibility for ensuring changes are made lies with the case worker concerned, although, depending on practice within the Division, the changes to the Register may be carried out by another person.

Index to further related information