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Charities Act 2006

Commentary on Sections

Sections 40, 41, and 42: Power to transfer all property; Power to replace purposes; and Power to modify powers or procedures

167.At present, section 74 of the 1993 Act gives the charity trustees of certain unincorporated charities with low annual income (currently £5,000 or less) the power, subject to specified controls and conditions, to make a resolution:

  • to transfer all the property of the charity to one or more other charities; or

  • to modify the trusts of the charity by replacing all or any of the purposes of the charity with other charitable purposes; or

  • to modify particular powers and procedures in the trusts of the charity.

168.Section 74 removes the need for charity trustees who wish to make any such transfer or modification, but who do not otherwise have the power to do so, to apply to the Charity Commission to make a scheme effecting the transfer or modification. Under section 74 the Commission’s concurrence in writing to the resolution is needed before the transfer or modification can take effect, but for small charities the process of obtaining that concurrence is normally much simpler and quicker than the process of applying for a scheme.

169.Sections 40– 42 of the Act preserve the essence of the current section 74 arrangements for low-income charities while modifying and extending some elements of them.

170.Section 40 substitutes for existing section 74 three new sections 74, 74A, and 74B, which deal with the power to transfer a charity’s property to one or more other charities. New section 74B makes specific provision for such a transfer where the charity has a permanent endowment (property which is subject to a restriction preventing its expenditure).

171.Section 41 inserts into the 1993 Act a new section, 74C, which deals with the power to modify a charity’s trusts by replacing all or any of the charity’s purposes with other charitable purposes.

172.Section 42 inserts into the 1993 Act a new section, 74D, which deals with the power to modify powers or procedures in the trusts of a charity.

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