The Law Commission is consulting on proposals to make it easier for incorporated charities to achieve ‘trust corporation’ status which allows them to sell land they hold in trust.
It is one of two new technical points the Commission has released for consultation, after they were raised by respondents to an earlier consultation on aspects of charity law.
In the first consultation last year, the Law Commission suggested ways of overcoming certain legal barriers to charities that wished to change from an unincorporated legal structure to an incorporated one and to merge with other charities.
In response, some charities explained that difficulties arise when charities need to be given the legal status of a ‘trust corporation’ following incorporation or merger. Incorporated charities which hold land on charitable trust must become trust corporations before they are able to sell this land, but the various ways of achieving trust corporation status are all complex, time-consuming and expensive.
As a result, the Law Commission has proposed that incorporated charities should be able to obtain trust corporation status more easily, and is now inviting submissions on these proposals.
The other issue arising from last year’s charity law consultation relates to changing a charity’s purposes. The law gives incorporated charities the power to change their charitable purposes by a resolution of their members at a general meeting, as long as the Charity Commission gives its permission.
But unincorporated charities have no such power; if they wish to change their purposes the trustees must seek a ‘cy-près scheme’ from the Charity Commission, and these can only be made in limited circumstances prescribed by section 62 of the Charities Act.
So the Law Commission is now proposing that unincorporated charities should have a power to change their purposes, with the consent of the Charity Commission, without having to establish a cy-près scheme.
People wishing to respond to either of the consultation points can click here to find out more; under ‘Find a Project’ search “charity law”. The deadline for responses is 31 October 2016.
The Law Commission is currently considering the responses to the earlier consultation and aims to publish its final report in December.
