Public Services Reform (Scotland) Act 2010

The Public Services Reform (Scotland) Act 2010 (the “Act”) makes a number of changes which affect charities in Scotland.

Part 9 of the Act specifically applies to charities. It makes a number of key amendments Charities & Trustee Investment (Scotland) Act 2005 (the “2005 Act”).

Trustee Indemnity Insurance

Trustee Indemnity Insurance is designed to protect charity trustees from liability in relation to any claims made against them in their position as a trustee.

The 2005 Act contained restrictions regarding the remuneration of charity trustees. These restrictions meant that in obtaining Trustee Indemnity Insurance for a trustee, a charity was in fact breaching the terms of the 2005 Act regarding the remuneration of charity trustees.

Whilst The Office of the Scottish Charity Regulator (OSCR) had previously confirmed that they would not challenge any charity that obtained Trustee Indemnity Insurance for their charity trustees, the new provision under the Act is a welcome clarification from OSCR. It provides peace of mind to charities and may make it easier for charities to attract new trustees.

OSCR’s Power to appoint Charity Trustees

The Act provides charity trustees with the ability to apply to OSCR to appoint additional trustees where they have an insufficient number of trustees to form a quorum.

This new provision will assist, for example, in a situation where a trustee is disqualified prior to another trustee being appointed. In this situation, the charity would have had insufficient trustees to form a quorum to appoint the new trustee.

Removal of Charity Trustees

Under the Act, the Court of Session will be able to make an Order declaring that a trustee involved or previously involved in the management or control of a charity is to be removed.

This power can be used not only to remove existing trustees but also to prevent persons previously involved in the management or control of charities being charity trustees in the future.

This is likely to have significant implications for an individual against whom the Court makes such an Order, as they will be disqualified from acting as a charity trustee in the future.

Reorganisation of restricted funds

Restricted funds are grants, donations or other funding that is required to be used in a specific way or for a specific purpose.

Under the Act, OSCR will be able to authorise the reorganisation of such funds in a number of situations, including, for example, where the purpose for which the restricted funds had been allocated is no longer charitable, or it is impossible to give effect to the purposes for which the restricted funds were provided.

This provision is a positive change as it enables the funding to be used in the most efficient way.

Information to appear on Charity Websites

The Act introduces requirements for charities to display certain information on their website. These include confirmation that the body is a charity, the charity’s registered number, the charity’s name as it appears on the Scottish Charity Register and any other name by which the charity is commonly known.

Although many charities will already provide this information on their websites, the Act confirms this as a legal requirement which all charities are required to meet.

For further information on how the Public Services Reform (Scotland) Act 2010 affects your charity please contact Andrew Arnott.

Disclaimer: This information in this publication is based on our current understanding of the law. It has been produced for information purposes only. Professional advice should always be sought before taking any action.

Macleod & MacCallum cannot take any responsibility for loss incurred through acting or failing to act on the basis of anything contained in this publication.