Regulation with Rosie: Conflicting legislation

The Charity Commission's Rosie Chapman on conflicting legislation.

The forthcoming consultation to equalise the financial thresholds of incorporated and unincorporated charities is welcome news, but other tensions in meeting the requirements of the regulatory regimes for both companies and charities will remain.

Take the issue of proxy voting. The Companies Act 2006 gives proxies a number of rights, some of which might override what your articles say.

A number of the provisions in this act recognise that charitable companies are different from companies generally and are therefore modified accordingly, but this leaves room for trustees to misunderstand the regulatory requirements.

Take the provision related to objects clauses. Some trustees thought they would need to change their objects clauses when this provision in the Companies Act came into force in order to remain charitable. This isn't the case, but it's caused some worried enquiries to the Charity Commission.

And what if your accounts are delayed? You have to supply these to both Companies House and the commission. The first will fine you if you're late; the second will show your accounts as 'overdue' on its website.

The eventual introduction of the charitable incorporated organisation will see some of these tensions and duplications vanish for those charities that choose to convert. But many will decide CIOs aren't suitable for them and will still have to meet the requirements of both regulators.

The good news is that the Companies Act modifies some of the general provisions in the case of charitable companies, so there's no conflict. Trustees just need to be aware of these modifications or get advice from someone in the know. The Institute of Chartered Secretaries and Administrators website at www.icsa.org.uk is a good place to start.

Rosie Chapman is executive director of policy and effectiveness at the commission.

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