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02nd August 2018

Charities: Disqualification of trustees and senior managers – new rules now apply (from 1 August 2018)

An individual has for some time been liable to be automatically disqualified from acting as a charity trustee if certain reasons apply to them, such as an unspent conviction for an offence involving dishonesty or deception.
From 1 August 2018, the grounds for disqualification have been expanded and anybody so disqualified will also be banned from holding senior management positions in charities (such as chief executive, chief finance officer).

Grounds for disqualification

The expanded list of reasons for disqualification now includes:

  • unspent convictions for an offence involving: dishonesty or deception;
  • unspent convictions for certain offences such as terrorism, money laundering, bribery;
  • being on the sex offenders register;
  • director disqualification; and
  • undischarged bankruptcy and other insolvency circumstances.
Senior management positions

From 1 August 2018, anybody who is disqualified from acting as a trustee will also be disqualified from holding senior management positions in charities. NB  it is the function of the position that matters and not the job title which determines whether a particular role is a senior management position.  It is not possible to hide behind a misleading job title!

In broad terms, the following roles are senior management positions that a disqualified person will be restricted from holding:

1. The most senior management position below the trustees which involves authority and responsibility for the day to day control and operation of the charity, or a significant part of it.

If responsibility for management of the charity, below the trustees, is shared equally between a number of positions, all of these positions qualify as senior management positions.

2. A role involving responsibility for controlling the charity’s finances.

The responsibilities of this position are likely to include overall responsibility for the charity’s financial:

  • performance and strategy;
  • policies;
  • controls;
  • compliance with accounting and reporting requirements.
Waiver

In some circumstances, the Charity Commission may grant a waiver which brings a person’s disqualification to an end.  An individual must apply online using the Commission’s waiver application form.  This is a very detailed form requiring details both of the disqualifying offence itself and of the individual’s conduct since conviction, together with supporting documentation from the other trustees.

If given, a waiver means that the person can take up trustee and senior manager positions at the charity or charities covered by the waiver (unless the person applied for a waiver to cover only senior manager positions). A person cannot apply for a waiver which only covers trusteeship and not senior management positions.

Action points

We recommend charities:

  • consider whether an existing or proposed trustee or senior manager will become disqualified under the new rules;
  • decide whether an application for a waiver should be made to the Charity Commission in respect of any individual;
  • assess if any changes are required to the charity’s recruitment procedures;
  • update procedures to monitor whether trustees and senior managers in post are, or have become, disqualified; and consider making use of the “automatic disqualification declaration” templates which the Commission has released, that charities can use to satisfy themselves that their current (or future) trustees and senior managers are not disqualified.
If you require any assistance in relation to the new disqualification rules, please contact a member of our charities team.
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