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Charities Act 2006

Summary

3.The Act has 80 sections and 10 Schedules and is divided into four Parts.

4.Part 1 (sections 1-5) deals with the definition of a charity and of charitable purposes.

5.Part 2 (sections 6-44) deals with the regulation of charities and is divided into 11 Chapters as follows:

  • Chapter 1 (sections 6 and 7 and Schedules 1 and 2) establishes the Charity Commission and deals with the Commission’s objectives, functions and constitution;

  • Chapter 2 (section 8 and Schedules 3 and 4) covers the creation of a tribunal to hear appeals against some types of decision made by the Charity Commission;

  • Chapter 3 (sections 9-14 and Schedule 5) covers the registration of charities, including new arrangements for the registration of larger excepted charities and for the regulation of exempt charities. (Excepted charities are charities not at present obliged to register with the Charity Commission, though they are regulated by it. Exempt charities are charities at present neither registered with nor regulated by the Commission);

  • Chapter 4 (sections 15-18) covers changes to the rules governing the application, by scheme, of charity property “cy-près”. Charity property is said to be applied “cy-près” when it is used for purposes different from, but close to, the purposes for which it was originally given;

  • Chapter 5 (sections 19-27) covers the assistance and supervision of charities by the court and the Charity Commission. It includes new powers for the Commission:

    • (section 19) to suspend or remove trustees, employees etc. from membership of their charity;

    • (section 20) to direct charity trustees to take certain actions in administering their charity;

    • (section 21) to direct charity trustees to apply the charity’s property in a certain way;

    • (section 24) to give advice and guidance to charity trustees;

    • (section 25) to determine who are the members of a charity; and

    • (section 26) in the course of statutory investigations, to enter premises and take possession of information and documents.

    Chapter 5 also includes a provision (section 22) relaxing the rules on the advertising of schemes, a provision (section 23) to allow Common Investment Funds and Common Deposit Funds to accept investments from Scottish and Northern Irish charities, and a provision (section 27) to extend the circumstances in which the authority of the court or the Charity Commission is not required for the grant of mortgages over charity land;

  • Chapter 6 (sections 28-30 and Schedule 6) covers the audit and examination of the accounts of unincorporated charities, and the duties of auditors and examiners of those charities, and makes provision for the preparation and audit of group accounts;

  • Chapter 7 (sections 31-33) affects charitable companies only, covering changes to the rule restricting amendments to their constitutions, and the audit and examination of their accounts;

  • Chapter 8 (section 34 and Schedule 7) provides for the Charitable Incorporated Organisation, a new legal form for charities;

  • Chapter 9 (sections 35-39) covers changes to the rules on the disqualification of persons from acting as trustees, the remuneration of charity trustees, the relief of trustees from personal liability for breach of trust or duty, and the purchase by trustees of trustee indemnity insurance;

  • Chapter 10 (sections 40-42) covers changes to the rules under which small unincorporated charities may transfer their property to other charities, replace their current charitable purposes with new ones, or modify their constitutional powers or procedures;

  • Chapter 11 (sections 43 and 44) covers the spending of capital endowment funds by charities, and the registration of mergers between charities.

6.Part 3 (sections 45-71) deals with fundraising by, and the funding of, charities and other benevolent or philanthropic organisations and is divided into three Chapters as follows:

  • Chapter 1 (sections 45-66) establishes the arrangements for the conduct and regulation of public charitable collections;

  • Chapter 2 (sections 67 -69) makes changes to the rules requiring statements to be made to donors and consumers by, respectively, paid fundraisers and commercial participators. It also gives the Minister for the Cabinet Office a reserve power to regulate most forms of fundraising by charities and by other benevolent and philanthropic organisations;

  • Chapter 3 (sections 70 and 71) contains new powers for the Minister for the Cabinet Office, Secretaries of State, and for the National Assembly of Wales, to give financial assistance to charities and other benevolent and philanthropic organisations.

7.Part 4 (sections 72-80) contains the final provisions, covering:

  • (section 72) a power to allow the Secretary of State to make regulations authorising public bodies to disclose information to the proposed new Northern Ireland charity regulator (if and when it comes into existence), to put that regulator on a par with the charity regulators in the other UK territories;

  • (section 73) a requirement on the Minister for the Cabinet Office to institute a review of the operation of the Act within five years of its passing;

  • (section 74) the rules applying to the relevant Minister when he makes an order or regulations under the Act;

  • (section 75 and Schedules 8-10) amendments to, and repeals of, other Acts of Parliament, and transitional provisions and savings;

  • (section 76) a power for the Minister by order to amend charity legislation so as to make it easier to consolidate that legislation;

  • (section 77) an order-making power for the Minister to make changes to the 1993 Act and this Act to reflect changes in company law;

  • (section 78) interpretation of words and phrases;

  • (section 79) commencement;

  • (section 80) short title and extent.

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Explanatory Notes

Text created by the government department responsible for the subject matter of the Act to explain what the Act sets out to achieve and to make the Act accessible to readers who are not legally qualified. Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts.

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