Third time’s the charm: the latest Charities Act 2022 changes

The third tranche of legal changes brought in by the Charities Act 2022 (Act) came into effect today (7 March 2024).

These updates are part of a phased introduction of changes brought in by the Act that aim to simplify and modernise charity law.

We have previously published a summary of the first stage of changes that came into effect on 31 October 2022 and the second stage of changes that came into effect on 14 June 2023.

In this article, Samantha Pritchard, partner, and Carla Boaks, solicitor, both in our charities team, look at the most recent changes brought in by the Act.

Amending Governing documents

The Act changes the rules that apply when a charity wants to change its charitable purposes or amend its governing document.

The Charity Commission will now have power to give public notice, or direct a charity to give notice, of any regulated alteration to its governing document.

Charitable purposes

The Charity Commission must now consider specific matters when deciding whether to authorise a change to charitable purposes for charitable companies, CIOs and unincorporated charities.  

This seeks to harmonise the Commission’s approach to providing its consent, regardless of a charity’s legal structure. We anticipate that this will enable the Commission to take a consistent approach to regulation.  

Amendments to a CIO constitution 

Under the previous regime, amendments to a CIO’s constitution only came into effect when registered with the Commission. This procedure was described by the Charity Commission as being ‘unhelpful, unduly limiting and confusing’.  

In general, amendments to a CIO’s constitution will now take effect on the date the members’ resolution is passed (or a later date that is specified in the resolution).

But where the resolution alters a CIO’s objects, the amendments will continue to only take effect on the date the change is registered by the Charity Commission.  

And where the resolution alters any other provision in the CIO’s constitution which requires the prior consent of the Charity Commission, it can only take effect after that consent is received.

This provides closer alignment to the regime for charitable companies, creating further consistency of regulation across the sector.

Amendments to unincorporated charities’ governing documents

The Act introduces a new broad statutory power which allows unincorporated charities to amend any provision in their governing document by resolution of the trustees (and resolution of their members where the charity has a separate membership).  

Certain amendments will still require the consent of the Charity Commission before they can be made, such as any amendments to provisions relating to charitable purposes, dissolution, authorising trustee benefit, altering restrictions on permanent endowment, and certain third-party rights.

Charity land 

These previously delayed changes have now come into effect and make further alterations to the restrictions on disposing of or mortgaging charity land.

The changes brought in by the Act mean that:

• Liquidators, provisional liquidators, receivers, mortgagees and administrators will no longer be subject to the general restrictions on disposing or mortgaging charity land; and
• Charities will not be subject to the general restrictions on disposing or mortgaging charity land to another charity unless the disposal is made with a view to achieving the best price they can reasonably obtain or the disposal is a social investment.

The Act will change the wording that must be included in certain property legal documents that dispose of or mortgage land to confirm that the charity has complied with its obligations.  

Trustees will no longer be required to provide certificates to this effect.

Other changes now in force 

The other changes effective from 7 March 2024 include:

Powers relating to appointments of trustees

The Act will enable the Commission to make an order ratifying the appointment/election of a trustee where there is a potential defect in their appointment/election. The Commission will only be able to make an order with the consent of the person who is the subject of the order.

Remuneration of trustees

The Act will give the Commission the power to authorise a trustee to receive or retain a payment for work completed for the charity where the Commission decides it would be inequitable for a trustee not to be paid.

Charity mergers

The Act clarifies provisions dealing with legacies to merged charities where details of the merger have been entered into the register of mergers. This should reduce the need to keep charities on the register post-merger for the sole purpose of receiving legacies.

Deferred changes 

• Amendments to the Universities and College Estates Act 1925 have been deferred and are now due to come into force in spring 2025.
• Reforms to the ex-gratia payment rules have been delayed pending investigation of the implications for national museums and other charities. These changes are due to come into effect later in 2024.

If you have any questions or need legal advice in relation to the Charities Act 2022, please contact Samantha Pritchard on 0191 211 7905 or email [email protected].