what follows isn't immediately apparent from the information set out on the CTC website. I leave it to you to decide whether or not it should be made clear at this stage.....the underlining is mine
Charities Commission to CTC 28th Feb
Article 11 – Poll of the whole Club
I notice that there is a provision in Article 11 whereby the whole Club may be polled on any question. Any decision arrived at by a poll of the whole Club shall bind the Club and the Council (i.e. the charity trustees) for six months.
Although this Article doesn’t affect charitable status, it isn’t really appropriate for a charity.
By way of explanation, the term “charity trustees” has a legal definition, set out in section 97 of the Charities Act 1993. This states that ‘”charity trustees” means the persons having the general control and management of the administration of a charity”.
What this means is that trustees are the persons who are ultimately responsible for the management of their charity. They are under a legal duty to act as trustees only in the best interests of their charity in furthering its charitable purposes. They can be held jointly and personally liable for the consequences of their actions and decisions.
Trustees therefore have to be free to exercise their discretion, otherwise they would be unable to fulfil their duties and responsibilities to their charity. It is not appropriate for a charity’s governing document to limit the exercise of the trustees’ discretion, or to make it exercisable only on the approval of someone else, or to vest powers and duties that rightly sit with the trustee body in someone else.
In the case of a charity with a membership, the members’ role in its administration is normally to elect the trustees. The members can make recommendations to the trustees if they wish – either individually or as a body – and we would recommend it as good practice that the trustees give consideration to those recommendations (though they are not obliged to). But it would not be appropriate for charity trustees to be obliged to act on the recommendations of the membership, for the reasons explained above.
This particular Article could bind the trustees into taking an action, or refraining from taking an action, contrary to what they might otherwise decide would be in the charity’s best interests if they were free to exercise their discretion. For all of the above reasons it is not an appropriate provision for a charity and we would strongly recommend that it is deleted. Ultimately, the decision whether or not to do so is one for the members of the company.
CTC to CC 29th Feb
Poll of the whole Club
This is the first time this has been mentioned to us in three years of working on this subject and we have limited possibility to consult and address the alternatives open to us. The poll of the whole club was used for the first time in many years during the campaign by a small CTC faction to try and stop this charitable proposal. To suggest its removal at this point could antagonize this group again and jeopardize the prospects of getting the new objects approved which we understand is the most important issue in front of us.
I would be grateful for your further thoughts as this is a very new concern for us.
CC to CTC 2nd March
Turning to Article 11, I appreciate that this could be a delicate area. As I said in my previous e-mail, this doesn’t affect charitable status but it can affect the governance of a charity so we would strongly recommend its deletion.
Whether or not this is actually proposed by the trustees at the AGM is entirely up to them. If they think it wouldn’t be in the charity’s best interests to propose it at the AGM – for example, because a faction of the membership might then vote against the adoption of the charitable objects - then that is their decision, and we would not criticise them for it. They may decide to propose it at a later AGM, or possibly at a General Meeting called for that specific purpose, after charity registration has been secured, or possibly not at all. That is a matter for the trustees to decide.
This Article illustrates the difference between a non-charitable organisation that is established for the benefit of its members, and a charitable organisation that may well benefit its members in many ways, but is established for the benefit of the public as a whole.
In the former case, the organisation is inward-looking and it would be reasonable for the members to be able to direct those running the organisation as to what actions they should take or refrain from taking for their own benefit. But a charity is established for the benefit of the public, not its members (though those members may benefit), and is outward focussing. The trustees are legally defined in charity law as the persons responsible for administering the charity. As such, charity trustees have a duty to act in the best interests of their charity. It is therefore they – not the members – who should decide what the charity does in its best interests in furtherance of its objects. Any member who has a different vision for the charity is of course entitled to put their views to the trustees for their consideration (though the trustees may decline to do so), and stand for election themselves. Ultimately, the trustees are liable for their actions and for any losses that may be incurred as a result.
The danger in retaining this provision indefinitely is that its exercise by the members could bind the trustees into taking an action, or refraining from taking an action, contrary to what they might otherwise decide would be in the charity’s best interests. It is the trustees who are ultimately liable for their actions, so if a loss to the charity arises as a result of the trustees being so bound the question arises as to who would be liable to make good that loss – would it be the trustees, who have acted (or not acted) contrary to what they consider to be in the best interests of the charity as a result of Article 11, or would it be the actual members who voted to so bind them?
We can’t advise you where the liability would fall – ultimately that would be a decision for the courts, taking into account all the circumstances in that particular case, and we cannot predict or speculate on what decision the courts would take in any particular instance. If it is clear to the court that the trustees would have acted differently if they had not been bound by the members so that a loss would not have occurred, then the court may possibly decide that, by binding the trustees on this matter, the members who bound them were de facto trustees for this particular matter and so the liability should rightly fall on them.
All we can advise is that, should the trustees be bound in this way contrary to what they would otherwise have done, they ensure the minutes of their next meeting after the Poll has been taken clearly record what they would have decided to do if not bound in this way together with any concerns they may have about what they have been bound to do by the members. Similarly, if concerns arise later or it becomes clear that problems are occurring as a result of the binding, the trustees should ensure this is clearly recorded in their minutes, together with details of what they would have done if not bound by the members.
If the exercise of a Poll on any matter causes the trustees any concerns about being bound in this way, then we would suggest they immediately take legal advice regarding their position and their options. The cost of that advice would be a legitimate expense for the charity. Similarly, if a loss to the charity is incurred as a result of the trustees being bound into taking, or not taking, an action contrary to what they would have done (hence the importance of recording their disagreement and concerns in the minutes soon after the Poll has been taken), they again immediately take legal advice regarding their position and where the liability might fall. Again, the cost of that advice to the trustees would be a legitimate expense for the charity. The cost of any legal advice to the members who bound the trustees would not be a legitimate expense for the charity however, because it is not appropriate for the members of a charity to bind trustees in this way. Those members would have to meet their own costs.
If you do decide to propose deleting Article 11 either now or in the future then you may wish to consider putting these arguments to the members at that time. Similarly, if you retain the Article and any members seek to bind the trustees in future contrary to what the trustees would otherwise have done, again you may wish to put these arguments to the membership before the Poll is conducted.
I hope this will be of some assistance to the trustees in deciding what action to take.
CTC to CC 5th March
Once again our thanks for your useful clarification, especially in respect of Article 11.
I have consulted with the Executive Committee about the item and they found the feedback useful. They too recognise that the wording of Article 11 may be problematic in a wider sense, the Trustees have to assure themselves that any action in respect of a pool must be both legal and charitable, clearly the membership cannot bind the Trustees to any action that fails either of these tests. Your suggestions on practical ways of dealing with this are most helpful.
The availability of a poll pre-dates recent changes to the Companies Acts with introduced mandatory proxy voting which has in effect replaced the need for such a facility and we think it would be less likely to be used in the future.
As such the Executive Committee has asked me to tell you that they have already planned to conduct a further review of the articles for a future AGM or General Meeting and as part of that process your guidance will be taken on board.
Next steps.
Your original email contained next steps for us which I will put in process.
With your agreement what we would very much like to do is present to our members for our AGM your main advice and some of the guidance given by ……………….. summarised in a single document, preferably originating from the Commission. We recognise that all other correspondence will be available but for our magazine and AGM papers we have limited space in which to sum up.
I have brought together what I believe to be the summary of your advice and what the Trustees must do.
If at all possible could you confirm that the summary is acceptable, or preferably return it to me as a summing up document, with any amendments you feel are necessary. If I have this by the end of this week it can go in our magazine.
Thank you
Charities Commission to CTC 28th Feb
Article 11 – Poll of the whole Club
I notice that there is a provision in Article 11 whereby the whole Club may be polled on any question. Any decision arrived at by a poll of the whole Club shall bind the Club and the Council (i.e. the charity trustees) for six months.
Although this Article doesn’t affect charitable status, it isn’t really appropriate for a charity.
By way of explanation, the term “charity trustees” has a legal definition, set out in section 97 of the Charities Act 1993. This states that ‘”charity trustees” means the persons having the general control and management of the administration of a charity”.
What this means is that trustees are the persons who are ultimately responsible for the management of their charity. They are under a legal duty to act as trustees only in the best interests of their charity in furthering its charitable purposes. They can be held jointly and personally liable for the consequences of their actions and decisions.
Trustees therefore have to be free to exercise their discretion, otherwise they would be unable to fulfil their duties and responsibilities to their charity. It is not appropriate for a charity’s governing document to limit the exercise of the trustees’ discretion, or to make it exercisable only on the approval of someone else, or to vest powers and duties that rightly sit with the trustee body in someone else.
In the case of a charity with a membership, the members’ role in its administration is normally to elect the trustees. The members can make recommendations to the trustees if they wish – either individually or as a body – and we would recommend it as good practice that the trustees give consideration to those recommendations (though they are not obliged to). But it would not be appropriate for charity trustees to be obliged to act on the recommendations of the membership, for the reasons explained above.
This particular Article could bind the trustees into taking an action, or refraining from taking an action, contrary to what they might otherwise decide would be in the charity’s best interests if they were free to exercise their discretion. For all of the above reasons it is not an appropriate provision for a charity and we would strongly recommend that it is deleted. Ultimately, the decision whether or not to do so is one for the members of the company.
CTC to CC 29th Feb
Poll of the whole Club
This is the first time this has been mentioned to us in three years of working on this subject and we have limited possibility to consult and address the alternatives open to us. The poll of the whole club was used for the first time in many years during the campaign by a small CTC faction to try and stop this charitable proposal. To suggest its removal at this point could antagonize this group again and jeopardize the prospects of getting the new objects approved which we understand is the most important issue in front of us.
I would be grateful for your further thoughts as this is a very new concern for us.
CC to CTC 2nd March
Turning to Article 11, I appreciate that this could be a delicate area. As I said in my previous e-mail, this doesn’t affect charitable status but it can affect the governance of a charity so we would strongly recommend its deletion.
Whether or not this is actually proposed by the trustees at the AGM is entirely up to them. If they think it wouldn’t be in the charity’s best interests to propose it at the AGM – for example, because a faction of the membership might then vote against the adoption of the charitable objects - then that is their decision, and we would not criticise them for it. They may decide to propose it at a later AGM, or possibly at a General Meeting called for that specific purpose, after charity registration has been secured, or possibly not at all. That is a matter for the trustees to decide.
This Article illustrates the difference between a non-charitable organisation that is established for the benefit of its members, and a charitable organisation that may well benefit its members in many ways, but is established for the benefit of the public as a whole.
In the former case, the organisation is inward-looking and it would be reasonable for the members to be able to direct those running the organisation as to what actions they should take or refrain from taking for their own benefit. But a charity is established for the benefit of the public, not its members (though those members may benefit), and is outward focussing. The trustees are legally defined in charity law as the persons responsible for administering the charity. As such, charity trustees have a duty to act in the best interests of their charity. It is therefore they – not the members – who should decide what the charity does in its best interests in furtherance of its objects. Any member who has a different vision for the charity is of course entitled to put their views to the trustees for their consideration (though the trustees may decline to do so), and stand for election themselves. Ultimately, the trustees are liable for their actions and for any losses that may be incurred as a result.
The danger in retaining this provision indefinitely is that its exercise by the members could bind the trustees into taking an action, or refraining from taking an action, contrary to what they might otherwise decide would be in the charity’s best interests. It is the trustees who are ultimately liable for their actions, so if a loss to the charity arises as a result of the trustees being so bound the question arises as to who would be liable to make good that loss – would it be the trustees, who have acted (or not acted) contrary to what they consider to be in the best interests of the charity as a result of Article 11, or would it be the actual members who voted to so bind them?
We can’t advise you where the liability would fall – ultimately that would be a decision for the courts, taking into account all the circumstances in that particular case, and we cannot predict or speculate on what decision the courts would take in any particular instance. If it is clear to the court that the trustees would have acted differently if they had not been bound by the members so that a loss would not have occurred, then the court may possibly decide that, by binding the trustees on this matter, the members who bound them were de facto trustees for this particular matter and so the liability should rightly fall on them.
All we can advise is that, should the trustees be bound in this way contrary to what they would otherwise have done, they ensure the minutes of their next meeting after the Poll has been taken clearly record what they would have decided to do if not bound in this way together with any concerns they may have about what they have been bound to do by the members. Similarly, if concerns arise later or it becomes clear that problems are occurring as a result of the binding, the trustees should ensure this is clearly recorded in their minutes, together with details of what they would have done if not bound by the members.
If the exercise of a Poll on any matter causes the trustees any concerns about being bound in this way, then we would suggest they immediately take legal advice regarding their position and their options. The cost of that advice would be a legitimate expense for the charity. Similarly, if a loss to the charity is incurred as a result of the trustees being bound into taking, or not taking, an action contrary to what they would have done (hence the importance of recording their disagreement and concerns in the minutes soon after the Poll has been taken), they again immediately take legal advice regarding their position and where the liability might fall. Again, the cost of that advice to the trustees would be a legitimate expense for the charity. The cost of any legal advice to the members who bound the trustees would not be a legitimate expense for the charity however, because it is not appropriate for the members of a charity to bind trustees in this way. Those members would have to meet their own costs.
If you do decide to propose deleting Article 11 either now or in the future then you may wish to consider putting these arguments to the members at that time. Similarly, if you retain the Article and any members seek to bind the trustees in future contrary to what the trustees would otherwise have done, again you may wish to put these arguments to the membership before the Poll is conducted.
I hope this will be of some assistance to the trustees in deciding what action to take.
CTC to CC 5th March
Once again our thanks for your useful clarification, especially in respect of Article 11.
I have consulted with the Executive Committee about the item and they found the feedback useful. They too recognise that the wording of Article 11 may be problematic in a wider sense, the Trustees have to assure themselves that any action in respect of a pool must be both legal and charitable, clearly the membership cannot bind the Trustees to any action that fails either of these tests. Your suggestions on practical ways of dealing with this are most helpful.
The availability of a poll pre-dates recent changes to the Companies Acts with introduced mandatory proxy voting which has in effect replaced the need for such a facility and we think it would be less likely to be used in the future.
As such the Executive Committee has asked me to tell you that they have already planned to conduct a further review of the articles for a future AGM or General Meeting and as part of that process your guidance will be taken on board.
Next steps.
Your original email contained next steps for us which I will put in process.
With your agreement what we would very much like to do is present to our members for our AGM your main advice and some of the guidance given by ……………….. summarised in a single document, preferably originating from the Commission. We recognise that all other correspondence will be available but for our magazine and AGM papers we have limited space in which to sum up.
I have brought together what I believe to be the summary of your advice and what the Trustees must do.
If at all possible could you confirm that the summary is acceptable, or preferably return it to me as a summing up document, with any amendments you feel are necessary. If I have this by the end of this week it can go in our magazine.
Thank you
