The New Charity Act 2023: What do the changes mean for Charity Trustees?

The Charities (Regulation and Administration) (Scotland) Act 2023: What do the changes mean for Charity Trustees?

It has been 18 years since the last substantive change to Scottish Charity law. In June 2023 the Charities (Regulation and Administration) (Scotland) Bill was passed by the Scottish Parliament and became an Act on 9 August 2023. The policy intention behind the Charities (Regulation and Administration) (Scotland) Act 2023 (the “Act”) is to strengthen and update the current framework for charities registered in Scotland by introducing:

• New requirements for OSCR to include charity trustee names in the Scottish Charity Register, to keep an internal schedule of charity trustees’ details and to create a publicly searchable record of removed charity trustees;
• New criteria for disqualification of charity trustees and extending it to individuals with senior management roles;
• A new power for OSCR to appoint interim trustees;
• A new requirement for OSCR to publish the statements of account for all charities in the Scottish Charity Register;
• New power to remove, from the Register, unresponsive charities that fail to submit statements of account;
• The creation of a record of charity mergers providing for the transfer of legacies;
• An extended power for OSCR to conduct inquiries into former charities and their charity trustees etc;
• A new power for OSCR to issue positive directions to charities;
• A new requirement for all charities in the Register to have and retain a connection to Scotland; and
• A requirement for de-registered charities’ assets to continue to be used to provide public benefit.

What do the changes mean for Charity Trustees in Scotland?

New requirements for OSCR to include charity trustee names in the Register:

The current charity legislation only requires the Scottish Charity Register to set out the principal office of a charity or (where the charity does not have such an office) the name and address of one of its trustees. The Act changes this by introducing a new requirement that that each charity’s entry in the Register must include the names only of each of its charity trustees.

In certain circumstances, such as when there are safety or security concerns, a charity trustee can apply to the Office of the Scottish Charity Regulator (“OSCR”) to request that their personal information is not published on the Register.

Having this information publicly available will increase transparency of those responsible for managing a charity in Scotland and bring the law in line with the legislation in England and Wales.

New criteria for disqualification of charity trustees and extending it to individuals with senior management roles:

Currently, Scottish charity legislation lists scenarios whereby a person would automatically be disqualified from becoming, or continuing, as a charity trustee in Scotland. For example, being an undischarged bankrupt or if they have a conviction for an offence of dishonesty. The Act amends the current law by expanding the range of offences that result in automatic disqualification of charity trustees as well as the addition of a number of descriptions which, if met, will also result in disqualification. The Act expands the offences to include being convicted under bribery, proceeds of crime or terrorism legislation or an offence of perverting the course of justice.

The criteria for the disqualification rules will also be extended to apply to individuals holding office or employment in a charity with senior management functions; as well as to charity trustees.

A new power for OSCR to appoint interim trustees:

Charity trustee recruitment and retention have long been concerns in the Scottish charity sector. Currently, OSCR has a power to appoint acting charity trustees. This is done at the request of a charity where the charity has does not have enough charity trustees to form a quorum to appoint charity trustees. Additionally, the charity’s governing document must be silent on what to do in these circumstances.

The Act amends the current law by providing OSCR with the additional power to appoint interim trustees either of its own accord or on the representation of any person. OSCR’s power to appoint interim trustees would apply in limited circumstances where:

(a) the charity has no existing charity trustees;
(b) all of the charity’s existing charity trustees either (i) cannot be found or (ii) aren’t acting and are not expected to resume acting, or
(c) the number of the charity’s existing charity trustees are such they are unable to make a request for the appointment of additional trustees.

Providing OSCR with a power to appoint interim trustees will help ensure that charitable assets are not ‘lost’ from the charitable sector because charity trustees are not able, or unwilling, to act.

How can we help?

The provisions of the Act will come into effect when the Scottish Ministers make regulations for this – which we hope will not be long. Once fully implemented will help to strengthen Scottish charity law by ensuring greater transparency and accountability of charities and their trustees; both key drivers of public trust in the charity sector.
At Macleod & MacCallum, we have a wealth of experience in advising charity clients on all aspects of governance and related matters.  Contact us for more information on the upcoming legislation.

Tel: 01463 239393
Email: corra.irwin@macandmac.co.uk

This Briefing has been produced for information purposes only and is based on the law and other information available at the time of writing. We cannot be held responsible for any losses incurred through acting or failing to act on the basis of anything contained in this Briefing.

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