Beware new conflicts of interest rules, says lawyer

Many charitable companies will have to alter their constitutions to avoid falling foul of a new law on conflicts of interest, according to charity lawyer James Sinclair Taylor.

A section of the Companies Act 2006, which comes into effect on 1 October, imposes a new duty on charitable companies to pass a resolution setting out how they will deal with "conflicts of duty", where conflicts of interest are created by trustees' links to other bodies, such as a council that funds the charity or a business that is affected by the charity's activities.

But Sinclair Taylor, head of charities at Russell-Cooke solicitors, said the legislation did not allow charities to pass resolutions about conflicts unless their articles contained such a power.

He also warned that the Charity Commission's model constitution for companies was not comprehensive enough. He said: "Understandably, perhaps, the commission has not been quick to recognise the substantial implications for the sector of these new duties."

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