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Spotlight Working with the Not-for-Profit Sector Spring 2010

The Charitable Incorporated Organisation - “Are we nearly there?”


Revising the Intestacy Rules


Client Focus - ShelterBox


Making it easier for charities to sell and make other disposals of land


Did you Know?


Digest - Stone King Sewell News


Conference Dates

The Charitable Incorporated Organisation - “Are we nearly there?” The implementation of the CIO has yet again been delayed, with the new timetable for availability being stretched to the end of 2010/beginning of 2011. This has been caused in part by the volume and detail of responses that were received to last year’s consultation on the draft documents; and the resulting changes that need to be made to the model governing documents and the legislation which implements the CIO. Amongst the issues being addressed are: u the public right of access to the information on the register of

members – this is likely to be removed in favour of a more restrictive approach; u the number of criminal sanctions for breaches – this is likely

to be reduced and an assessment made of where such sanctions are proportionate, rather than simply following existing company law; u how a company limited by guarantee converts to a CIO - this

“Conflicts of interest, arising from trustee benefits allowed under the constitution, will be authorised providing the trustee in question follows the basic procedures laid out in the constitution…” to the general prohibition on trustee benefits, for example

procedure will be simplified to ensure that conversion is a viable

allowing trustees to purchase trustee indemnity insurance, and

option for those charities that wish to take advantage of it;

be paid reasonable expenses etc. It will be possible to extend

u the ability of trustees to agree to a lower standard of care in

this list, if reasonable in the circumstances of the charity, with

the administration of a charity than would be expected in a

Commission consent. Any benefits not authorised by the

company limited by guarantee is to be removed, so that trustees

constitution will (as now) have to be authorised by the

of either vehicle will be subject to the same duty.

Commission or the court. Conflicts of interest, arising from trustee benefits allowed under

provision in the regulations governing personal benefits, and

the constitution, will be authorised providing the trustee in

the model constitutions will contain a clause echoing that

question follows the basic procedures laid out in the constitution

provision. The current drafts provide a list of standard exceptions

(i.e. declares the conflict, does not vote on any connected issue and


At the time of writing it is intended that there will be an express

The Charitable Incorporated Organisation “Are we nearly there?” (continued)


is not counted in the quorum for any decisions made.) Any

Third Sector and the Commission have taken the comments from

conflicts arising from matters not authorised by the constitution

the consultation seriously and intend to make necessary changes

will, like the matters, need to be specifically approved by the

to ensure that the CIO is useable for charities. If this further

Commission or the court. At present it doesn’t seem as if this

delay means that the CIO is a robust, practical and workable

will make it easier to deal with unforeseen benefits/conflicts,

model for charities the delay will have been worth it, but as we

but we await the final version of the model documents.

have said before… watch this space!

Although the delay is frustrating, it is clear that the Office of the

Vicki Bowles

Revising the Intestacy Rules How this may be good news for individuals but bad news for charities The statutory intestacy rules determine how an estate passes on death when a person dies without leaving a valid will. Contrary to popular belief surviving spouses and civil partners do not necessarily get all of their deceased partner’s estate, but usually receive a fixed sum legacy. The value of this legacy varies depending on whether the deceased is survived by any children or parents or siblings. Because of the potential inadequacies of this system most people are currently driven to make a will in favour of their loved ones. Reform of the current rules is perceived by many as long overdue, not least in giving recognition to the status of co-habitants, a

These proposals can be seen as an attempt to bring the law in line with modern society and relationships.

term which did not exist to any great extent 85 years ago when

Whilst this will undoubtedly be fairer on those who fail to make

the current rules were originally drawn up.

a will, it is perhaps inevitable that should these changes be

The Law Commission has therefore recently produced a consultation paper in which they propose various revisions to the law. Two of the most significant proposals are to give:

enacted, fewer people will feel compelled to make wills and will simply be more complacent, allowing the intestacy rules to take care of their estates on death. As Wills are the only way of benefiting charities on death and legacies provide a steady source of income for many charities,

u co-habitants similar rights to those already enjoyed by married

couples and civil partners; which would mean that an

fewer people making wills could mean fewer legacies to charities and a reduction in legacy income.

unmarried partner would automatically inherit at least part of there loved one’s estate if they died without leaving a will; and

There are of course those people who will continue to want to make a will to avoid the intestacy rules and instead leave their estates to friends or charities. This number could remain high if

u surviving spouses, civil partners or co-habitants the right to

the revision to the rules leads to unsatisfactory results, particularly

all of their deceased partner’s estate which they may not

if your great Aunty Enid who you have not seen for over 40 years

necessarily be entitled to under the current rules.

is in line to inherit your estate through their operation!

In addition there are also life long supporters of charities who are

3. record any funeral wishes;

motivated to make wills to ensure their estates pass to the causes

4. create a trust for specific purposes; or

they have supported all their lives. Again, the reforms will not deter these types of individuals from continuing to make wills. It is rather those people whose main purpose for making a will is to ensure their loved ones receive their estate on death, and only after taking care of them decide that they want to leave, perhaps a cash legacy, to their favourite charity.

5. provide clarity and certainty. Reform of the present intestacy rules is perhaps inevitable and should not be discouraged in light of our changing society. However the fact that this may cause legacy income for charities to decline is something which charities need to be aware of, and actively encourage their potential donors to make wills by making

So what can charities do to safeguard their legacy income?

them aware of all the benefits of doing so.

Charities need to encourage people to make Wills, not least as this is the only way to leave a legacy, but also the intestacy rules cannot cover all the issues which a Will can. For example the intestacy rules will not -

The Law Commission consultation paper in which these proposals are contained is part of a wider review of the intestacy rules and family provision claims on death. The consultation period closed on 28th February this year and it remains to be seen what form

1. appoint executors;

the final proposals will take.

2. appoint guardians for children under the age of 18;

Matthew Braithwaite

Client Focus - ShelterBox ShelterBox delivers emergency aid in iconic, green ShelterBoxes containing shelter provision and life saving equipment for a family of up to 10 people. The boxes are dispatched immediately after disasters, wherever in the world they are needed. ShelterBox delivers aid to the people in most need and works with a range of partners to ensure the effective distribution of ShelterBoxes. In 2009, ShelterBox sent out more than 9,500 ShelterBoxes with deployments in Africa, Asia, Oceana, South America, Central America and Europe. These deployments included the bush fires in Australia, the armed conflicts in Gaza and Pakistan,

They were joined by the first ShelterBoxes just days later.

the Italian earthquake and the string of three disasters that

ShelterBox has sent close to 15,000 boxes to Haiti with

struck the Pacific region in just one week.

thousands more to follow in the coming weeks.

2010 marks ShelterBox’s 10th Anniversary and has already

The global response from the public in supporting ShelterBox’s

presented ShelterBox with one of its greatest challenges. On

work has been tremendous. It has received vital donations

January 12th, the Caribbean island of Haiti was rocked by a

from around the world that allow the charity to provide people

7.0 magnitude earthquake. An estimated 1.5 million people

with emergency shelter, not only in Haiti, but to people around

lost their homes in the disaster.

the world who are affected by natural or manmade disasters.

The first ShelterBox Response Team arrived in Port au Prince,

If you can help, ring 0300 0300 500 or go to

Haiti’s capital, less than 48 hours after the earthquake struck.

“There has been a feeling among charities for some time that the administrative burdens imposed by section 36 were disproportionate for many property transactions.”

Making it easier for charities to sell and make other disposals of land The Government issues a Consultation If a charity wants to dispose of (generally meaning sell or lease, but including other transactions) any of its land then the trustees are under a fiduciary duty to do so for full market value, unless the disposal is in direct furtherance of the charity’s objects. For most registered charities this duty has been incorporated into statute, specifically section 36 of the Charities Act 1993 (“section 36”). Section 36 requires charity trustees, prior to disposing or agreeing to dispose of their land, to obtain what is known as a Qualified Surveyor’s Report (“QSR”) from a Qualified Surveyor (“QS”). The QSR must contain a description of the

being any quicker or cheaper to produce. A great deal of training

property, advice on marketing and any works that need to be

for Estate Agents will be required to ensure they understand the

done, and an opinion as to value. The trustees must be satisfied

purpose of section 36, when they should and shouldn’t agree to

from the QSR that they are disposing of the property “on the best

act for a charity, and what needs to go into a QSR.

terms that can reasonably be obtained”.

In our view more useful reforms of section 36 would be to increase

There has been a feeling among charities for some time that the

the range of low value transactions for which a full QSR is not

administrative burdens imposed by section 36 were

needed, or to have a menu of different QSR types for different

disproportionate for many property transactions and added

types of transaction, so that where advertising or repair works

unduly to time and costs. Proposals to remove some of this burden

are clearly not applicable it doesn’t have to be addressed.

have been promised for some time and the Office of the Third

In any event we are skeptical about going too far in reducing the

Sector is currently consulting on the first of these.

burden of section 36 compliance, as it is an important reminder

What is proposed is to extend the definition of Qualified Surveyor.

to charity trustees of their duties when disposing of property,

Currently a QS must be a fellow or professional associate of the

and the fact that the regime is policed by a rigorous set of

Royal Institution of Chartered Surveyors. It is proposed to extend

professional standards helps to ensure public confidence in the

that definition to include Fellows of the National Association of

sector. Indeed there would arguably be a case for imposing a

Estate Agents (NAEA) with relevant experience and qualifications.

similar regime requiring professional advice to be taken when

This change can be made by regulation and doesn’t need an

charities acquire property, which currently is not contained within

alteration to section 36 itself. The hope is that this will increase

Charities legislation.

the choice of property advisers available to charity trustees and

The consultation is available at

therefore make QSRs easier and cheaper to obtain.


Whilst not opposing this change, we are doubtful that it would

The deadline for responses is 7th June. We will be putting in a

have a significant impact. A QS will still need to have knowledge

response and are happy to incorporate comments. If you wish to

and experience of the type of land in question, so realistically

discuss any aspect of this please contact Andrew Small or Hugh

Estate Agents will only be able to act on relatively straightforward


disposals of residential property. The amount of work involved in producing a QSR will still be the same, so we do not see them

Andrew Small

Did you Know? News in Brief

Digest Stone King Sewell News It's a Girl!

“Our Services are better than your services!” Comparative Advertising is about to hit the Charity Sector The Committee of Advertising Practice will issue its new Codes from the 1st September 2010. These will for the first time allow charities to use comparative advertising in the same way as businesses.

Congratulations to Sarah White and her husband on the birth of their baby daughter. We wish them all well!

Another New Arrival! Sophie Pughe joins us as a paralegal in the London office to assist with Academy projects. She grew up in Dorset, went to school in Bath and studied psychology at Reading University before turning to law

Commission’s General Guidance to Trustees goes Green

as a career; she hopes to obtain a training contract and qualify

The Charity Commission has updated “Hallmarks of an

as a solicitor. Sophie is an aficionado of snowboarding and skiing,

Effective Charity” and the “Essential Trustee” (CC10 and CC3)

and a keen craftslady, who enjoys knitting, sewing, screen-printing

to provide advice on environmental responsibility and

or putting together all kinds of creations - her rhubarb chutney

sustainability. We would suggest that Trustees who have

is a popular favourite amongst preserves experts! Sophie lived

not recently reviewed these stalwarts of Commission

in Amsterdam for 4 years during which time she renovated a

guidance download a fresh copy from the Commission’s

house and learned to cycle without using her hands!

website for The Commission have also produced new guidance on statutory enquiries and regulatory compliance (CC45 and CC46); and Charities and Elections and Charities and Political Donations (See under CC9).

Conference Dates Stone King Sewell has a full programme for 2010 which will include Charity, Education and Employment Law Update Workshops. We are also involved in joint events with third-

Rain Tax - Concessionary charges for Community Groups become law

party charity professionals from time to time. Please contact

The Flood and Water Management Bill has now become

(01225 326746; e-mail for further

law. This will allow water companies to operate

information, or check Events on our website at:

concessionary schemes to reduce surface water drainage


charges payable by community groups.

19 May

Annette (01225 324413; e-mail or Charlotte

Northern Ireland Gears Up for Registration! The Charity Commission for Northern Ireland has

20th Catholic Charity Conference Church House Conference Centre London

on their website at:

23-24 Sept Charity Accountants' Conference 2010 Marriott Hotel Bristol

4-7 Oct

announced its timeline for registration, see press release


Association of Provincial Bursars High Leigh Conference Centre Hertfordshire

Your Contacts

Charity: Michael King Partner Jonathan Burchfield Partner Robert Meakin Partner Richard Mullings Partner Ann Phillips Partner Stephen Ravenscroft Partner Alexandra Whittaker Associate Vicki Bowles Barrister at Law Fraser Simpson Solicitor Sarah White Solicitor Victoria Guest Trainee Tom Murdoch Trainee Darren Hooker Trainee Sophie Pughe Paralegal Charity Legacy Team: Jonathan Burchfield Partner Robert Meakin Partner Paul Sutton Partner Matthew Braithwaite Solicitor

Commercial Property: Hugh Pearce Partner Stephanie Howarth Partner Catherine Sanderson Senior Associate Sally McFadden Associate Tamsin Simmonds Solicitor Andrew Small Solicitor Sarah Lawson Paralegal

Employment: Nick Watson Partner Erica Burrows Partner Peter Woodhouse Partner Rachel Wooddisse Associate Jean Boyle Solicitor Tamsin Wilkinson Solicitor Harriet Keogh HR Advisor

Corporate & Commercial: Roy Butler Partner Rachel Wooddisse Associate Caroline Leviss Solicitor

Housing: Geraldine Winkler Legal Executive Emma Haley Solicitor

Dispute Resolution: Paul Sutton Partner Alice Wood Solicitor Antony Pidgeon Solicitor Education: Roger Inman Partner Richard Gold Consultant Michael Brotherton Senior Associate

Trust and Taxation: Andrew Mortimer Partner Alison Allen Partner David Ainslie Partner Charles Hayward Partner Carol Morris Partner Richard Mullings Partner Nicholas Parsons Partner

Child Protection: Steven Greenwood Partner Civil and Personal Litigation: John Bartholomew Partner Erica Burrows Partner Rachel Wooddisse Associate

Stone King Sewell LLP 13 Queen Square Bath BA1 2HJ Tel. 01225 337599 Fax. 01225 335437 16 St John’s Lane London EC1M 4BS Tel. 020 7796 1007 Fax. 020 7796 1017 7 Dollar Street Cirencester Gloucestershire GL7 2AS Tel: 01285 650000 Fax: 01285 649888 Wellington House East Road Cambridge CB1 1BH Tel. 01223 451070 Fax. 01223 451100 email:

Š Stone King Sewell LLP 2010

The Spotlight deals with some current legal topics. It should not be used as an alternative to specific legal advice on the individual circumstances of a particular problem. Stone King Sewell LLP - registered limited liability partnership no OC315280, registered office 13 Queen Square, Bath BA1 2HJ


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