Law Commission consultation Technical issues in charity law: supplementary consultation The Law Society's response October 2016

Introduction This response has been prepared by the Law Society of England and Wales ("the Society"). The Society is the professional body for the solicitors' profession in England and Wales, representing over 170,000 registered legal practitioners. The Society represents the profession to parliament, government and regulatory bodies and has a public interest in the reform of the law. The Society welcomes the opportunity to respond to the Law Commission's supplementary questions on technical issues in charity law.

Responses to Consultation Questions

CHANGING A CHARITY’S PURPOSES We provisionally propose that, if powers of amendment are aligned: trustees of an unincorporated charity should have a power – with the consent of the Charity Commission – to change the charity’s purposes without having to establish a section 62 cy-près occasion; and the section 67 similarity considerations should apply when the Charity Commission decides whether or not to give its consent. Do consultees agree? Chapter 2, paragraph 2.31 We agree that trustees of an unincorporated charity should have the power to change the charity's purposes without having to establish a cy-près occasion. We agree that the section 67 similarity considerations should remain fundamental to the Charity Commission’s decisionmaking process when deciding whether or not to give its consent to a charity changing objects. The considerations in section 67 provide clarity which we wish to continue in a new regime.

We invite the views of consultees as to whether the section 67 similarity considerations are appropriate in their application to a new amendment power for unincorporated charities.

Chapter 2, paragraph 2.35

We believe that it is appropriate that the section 67 similarity considerations are considered in the context of a new amendment power for unincorporated charities.

We invite the views of consultees as to whether the Charity Commission should be required to have regard to the section 67 similarity considerations when it decides whether to consent to a company or CIO changing its purposes (as well as when it decides whether to consent to an unincorporated charity changing its purposes under a new aligned amendment power).

Chapter 2, paragraph 2.41

We believe that the Charity Commission should be required to have regard to the section 67 similarity considerations when deciding whether to give or withhold consent from a company or CIO wishing to change its purpose; we agree that the Charity Commission's approach to consenting to a change of purposes should be the same whether a charity is incorporated or unincorporated. It is on occasion difficult to understand the basis on which the Charity Commission makes its decisions; this would makes things clearer and more transparent. It also makes sense for the Charity Commission to extend these considerations to unincorporated charities, as it already has to have regard to these considerations for CIOs and companies.

We provisionally propose that the section 62 cy-près occasions should be retained as preconditions to the Charity Commission making a cy-près scheme. Do consultees agree? Chapter 2, paragraph 2.49 We agree that the s.62 cy-près occasions should be retained as gateways to the Charity Commission making a cy-près scheme. Trustees should have the flexibility to change their charity’s objects when it is in the best interests of the charity to do so.

TRUST CORPORATION STATUS

We provisionally propose that: any charitable company and CIO should have a power, by resolution of its directors or charity trustees, to acquire trust corporation status in relation to any charitable trust of which the corporate charity is trustee; and the conferral of trust corporation status on CIOs by regulation 61 should be repealed. Do consultees agree? Chapter 3, paragraph 3.46 The Law Society agrees with the Law Commission that any charitable company and CIO should have a power by resolution of its directors or charity trustees to acquire trust corporation status. We believe that this will reduce the time and money spent by a charity when attempting to acquire trust corporation status, provided that an alternative mechanism is given to charities to obtain trust corporation status that does not involve applying to the Charity Commission or to the Ministry of Justice. We also agree that the conferral of trust corporation status on CIOs by regulation 61 should be repealed, as long as CIOs have the new ability to acquire trust corporation status via resolution of its directors or charity trustees. Transitional provisions will be required to protect CIOs which have already made use of regulation 61. However, the area of trust corporations is not clearly defined in relation to the legislation governing the obtaining of trust corporation status. The Law Society would welcome the Law Commission reviewing the area of trust corporations; it may be beneficial to have one consolidating act that deals with all types of trust corporations rather than having many different pieces of legislation which can sometimes interact in an unclear and inconsistent manner.

We invite the views of consultees as to whether trust corporation status: should be made available to non-charitable corporations; should be conferred automatically, rather than being available by resolution. Chapter 3, paragraph 3.47 We do not believe that the status should be made available to non-charitable corporations and agree with the Law Commission that the power should only be available to charitable corporations (except for where non-charitable trust corporations are acting as trustee in relation to charitable trusts). Making the trust corporation status more widely available to non-charitable corporations would be

unnecessary; it is rare that non-charitable corporations seek to obtain trust corporation status but in those cases, under the proposals set out in the Law Commission’s consultation, existing routes will remain available. There are significant advantages to making the process automatic. The automatic conferral of trust corporation status would be the most convenient for charitable organisations, and would also reduce the risk of charities falling foul of the requirements by accident when they do not realise that they need trust corporation status. The Law Society would be in favour of automatic conferral of trust corporation status for all corporate bodies which are charities and all corporate bodies which are trustees of charities (which hold charity land as custodian trustee or which act as personal representative in estates holding funds for the benefit of charities) presuming that such status would not be conferred retrospectively. It would also be useful if the Charity Commission had power to confer trust corporation status on any charity or trustee of a charity at any time, and not only on appointment as a trustee. For example, this would be useful when a charity receives a legacy from an estate and wishes to take out a grant of representation but there are no employees or trustees who are willing to take out a grant on behalf of the charity.

Contact details Hannah Feiner Policy Adviser- Private Client [email protected] 020 7320 5658