The animal charity Dogs Trust has created a private, non-charitable company to act as the charity’s sole trustee, in order to protect its individual trustees from being liable for any losses made by the charity.
A scheme authorised by the Charity Commission in May allowed the appointment of Dogs Trust Trustee Ltd as a trustee of the charity. The charity’s constitution, available on its website, now says that the company is the sole trustee of the charity.
The changes to the constitution also include giving it broader powers to fundraise, invest assets and acquire properties. They also include a provision that it may protect other animals at the trustee’s discretion.
The trustee company has the same 18 directors that were listed as the charity’s trustees in its 2013 annual report. Among them is Clarissa Baldwin, the chief executive of the charity, who is due to step down in October. Baldwin is also the company’s secretary. There will be between five and 27 directors of the company, its articles of association say.
The changes originated from a governance review by the charity’s auditors BDO in 2011, after which the solicitors firm Druces discussed possible options, according to a letter to members on 6 May.
As Dogs Trust is an unincorporated association, it is not able enter into contracts in its own name or hold property, and can only do so through individual trustees who are potentially liable for any losses the charity incurs. Directors of the new company now have liability limited to £1.
The decision to incorporate the board of trustees, rather than the whole charity, was taken on the grounds of cost, the letter says.
Many charities have chosen to incorporate the organisation as a whole or their trustee board in recent years. Another prominent charity with a sole corporate trustee is the Salvation Army, whose trustee is the Salvation Army Trustee Corporation – although this company was created in 1931.
Jonathan Burchfield, a partner at the law firm Stone King, said that the vast majority of new charities the firm establishes are incorporated. "Very many charities have incorporated over the past 10 years or so, and there must now be very few large service-providing charities that are not companies. Until this change, Dogs Trust stood out as an exception."
He described the Dogs Trust's new arrangement as a "half-way house".
Another route to incorporation is through registering as a charitable incorporated organisation, under which the organisation needs only be registered with the Charity Commission or the Office of the Scottish Charity Regulator, and does not have to be simultaneously registered with and regulated by Companies House.