Guidance on automatic disqualification rules

Guidance on automatic disqualification rules

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Guidance for automatic disqualification rules

Guidance for automatic disqualification rules One of the significant changes introduced by the Charities (Protection and Social Investment) Act 2016 was the extension of the current automatic disqualification rules to a broader range of individuals and circumstances.

The law comes into force on 1 August 2018 and charities and trustees should ensure they understand the changes and have systems in place to place to identify trustees or senior managers that have become disqualified after their appointment.

Simrun Garcha Solicitor simrun.garcha@laytons.com +44 (0)20 7842 8090

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Guidance for automatic disqualification rules

What are the changes?

Waivers

Under the current rules, an individual cannot act as a charity

An individual who will become disqualified under the new

trustee if certain legal disqualifications apply, primarily if they

rules or who is already disqualified from acting as a trustee

have certain unspent convictions relating to bankruptcy and

under the current rules, but who is a senior manager of a

crimes involving dishonesty and deception.

charity will only be able to continue to act after 1 August 2018 if they obtain a waiver.

The new automatic disqualification rules: The trustees can decide to support a waiver application for 1. increase the number of reasons that disqualify an

a disqualified individual which, if successful, would bring a

individual from acting as a trustee including being on the

person’s disqualification to an end, either in relation to a

sex offenders register and certain unspent convictions

named charity, a class of charities (ie a group of charities that

including convictions for terrorism and money

share a common characteristic) or all charities operating in the

laundering, particular bribery offences and offences for

same area.

perjury and perverting the course of justice.

If the waiver is granted, an individual can take up trustee 2. Extend the range of individuals who can be automatically

or senior management positions at the charity or charities

disqualified from acting - individuals who are disqualified

covered by the waiver. If the person only applies for waiver to

from acting as trustees are also disqualified from holding

cover senior manager positions, they cannot act a trustee of

senior management positions at a charity.

the charity without applying for a further waiver.

The relevant senior manager positions include the Chief

Individuals who will become disqualified from 1 August 2018

Executive, Chief Finance Officer and equivalent positions. The

can apply for a waiver between 1 February 2018 and 1 August

Commission has emphasised that it is the function and not

2018. Their disqualification under the new rules will not take

the title of the position that is taken into account and charities

effect until they have received a decision and any appeal has

should take steps to check if any of their posts qualify as

been decided.

senior management positions under the new rules.

The Commission will only grant waivers in circumstances Acting whilst disqualified will continue to be a criminal offence

where it is in the best interests of the charity and is not likely

under the new rules, although disqualified individuals will still

to damage public trust and confidence in a charity.

have the right to apply for a waiver.

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Guidance for automatic disqualification rules

What should you be doing to prepare for the new rules A failure to comply with the new rules and to allow a

•

In respect of relevant senior managers, charities should

disqualified person to continue to act as either a trustee or a

review their employment and consultancy contract

senior manager is both an offence and a reportable serious

terms. They may need to obtain legal advice about

incident. It is therefore imperative that charities review their

whether they are protected if a particular individual

current appointments and ensure that appropriate action is

becomes disqualified and will need to leave their post.

taken prior to 1 August 2018 to ensure they are compliant with the new rules.

•

Any trustees who will become disqualified from 1 August 2018 should resign formally in accordance with the

We have set out below the Commission’s key

procedures set out in the charity’s governing document.

recommendations for charities to prepare for the new rule

The charity should check its governing document

changes:

to determine whether the provisions regarding the minimum number of trustees that must attend meetings

•

Charities should ensure that they have systems in place

(ie the quorum) will be affected by resignations.

so that they can check prior to the appointment of a trustee or senior manager, that that person is not

•

Charities should check official registers which record the

disqualified under the automatic disqualification rules.

names of individuals who are disqualified from acting as

This can be done by asking the individual to sign a

charity trustees. These include the Individual Insolvency

declaration (prior to the appointment being made) to

Register, the register of disqualified directors and the

confirm they are not disqualified and the Commission

register of all persons who have been removed as a

has produced sample declaration for use.

charity trustee either by the Commission or by an Order of the High Court since 1 February 1993.

•

All charities should request their current senior managers and trustees sign up to date declaration

The Commission’s guidance on how charities and individuals

prior to 1 August 2018 requesting confirmation they are

should prepare can be found here:

not disqualified under the current or new automatic disqualification rules. These declarations should be

https://www.gov.uk/guidance/automatic-

requested at regular intervals thereafter. It is up to

disqualification-rule-changes-guidance-for-charities

charities to decide when to first ask for declaration from current trustees and senior managers and how often

https://www.gov.uk/guidance/automatic-

individuals are then asked to refresh their declarations.

disqualification-rules-for-charity-trustees-and-charity-

The Commission recommends the latest date the

senior-positions

charity asks for the declaration is on 1 August 2018.

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Guidance for automatic disqualification rules

Charities We understand the need to balance the increasing pressure of regulation with the everyday challenges of providing a public service, and we recognise the need to provide clients running not-for-profit organisations with a balanced combination of specialist charity law advice, and sectorinformed general advice relating to everyday business issues.

Our Team Ian Burman

Simrun Garcha

Partner ian.burman@laytons.com +44 (0)20 7842 8006

Solicitor simrun.garcha@laytons.com +44 (0)20 7842 8090

Tim Harrison

Nicola Khan

Associate Partner tim.harrison@laytons.com +44 (0)20 7842 8039

Solicitor nicola.khan@laytons.com +44 (0)20 7842 8028

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This information is offered on the basis that it is a general guide only and not a substitute for legal advice.

We cannot accept any responsibility for any liabilities of any kind incurred in reliance on this information.

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