Amending governing documents

Clauses one to three set out changes in the way that different legal forms of a charity will be able to amend their governing documents, and broadly brings into line the way the Charity Commission will consider amendments to the charitable purposes of charitable companies, charitable incorporated organisations and unincorporated charities.

Under the changes made in the bill, alterations to governing documents will only be considered as regulated alterations, and as such subject to Charity Commission approval, where they alter the substance of charitable purposes.

Clause three also increases the threshold for unincorporated charities to pass a resolution making a change to their governing document from two-thirds of trustees to three-quarters, or the same proportion of members if they have members who are entitled to vote. This will bring unincorporated charities broadly into line with the requirements of charitable companies and charitable incorporated organisations, though in different contexts.

Many charities are looking at whether their governing documents need to be updated, particularly in light of the pandemic, so it is welcome that the bill will make it easier for charities to do so, while maintaining the important oversight of the Charity Commission for when a charity seeks to change its purpose.

We acknowledge that the proposal to increase the proportion of trustees required to approve a resolution to change governing documents was part of the recommendations made by the Law Commission. However, we are concerned about the potential uncertainty for charities with long-established procedures, given the relatively minor difference between a requirement for approval by two-thirds and three-quarters. We would encourage the government to think carefully about this provision and its desirability, particularly given the overall deregulatory approach of the bill.