Inquiries
Section 17 – Ability to issue positive directions
103.Following an inquiry under section 28 of the 2005 Act, a report often needs to be published under section 33 of the 2005 Act. In addition, where the conclusion of the inquiry is that there is a problem which requires to be addressed, there are a number of remedies available to OSCR (some of which require an inquiry to be held first, and others which do not)—
where a charity no longer meets the charity test, OSCR must either ensure that the charity takes steps to remedy that or must remove the charity from the Register (see section 30 of the 2005 Act),
OSCR is empowered to take a number of temporary measures where there has been misconduct by a charity/charity-controlled body, where it is necessary or desirable to act to protect charitable property, where a body is misrepresented as being a charity or as being a Scottish controlled charity, or where there has been misconduct in an activity carried out by a person misrepresenting themselves as acting for a charity; the steps that may be taken can include suspending a charity trustee, restricting the transactions which can be entered into without OSCR’s consent, or directing a financial institution not to part with property without OSCR’s consent (see section 31 of the 2005 Act),
OSCR may opt to apply to the Court of Session for one of the remedies set out in section 34(5) of the 2005 Act or for a transfer scheme under section 35 of the 2005 Act; the remedies available include an interdict preventing specified action from being taken, the removal of a charity trustee, or the appointment of a judicial factor.
104.The measures which can be taken under section 31 of the 2005 Act are almost exclusively directions that something is not to be done. Under section 32 of the 2005 Act, the effect of such a direction is limited to a maximum period of 6 months.
105.This section of the Act introduces a new power for OSCR to issue a direction requiring a positive action to be taken. Similar to certain aspects of the existing interdictory power, the exercise of this new power is limited to cases where, following inquiries, OSCR concludes that there has been misconduct in the administration of a charity or a body controlled by a charity, or that it is necessary or desirable to act to protect charitable property. Where this applies, OSCR will be able to direct the charity or body to take such steps as OSCR specifies in the direction which OSCR considers expedient in the interests of the charity.
106.Examples of directions which might be given under this section could include a direction to appoint additional trustees in order to form a quorum, a direction to take an action required by the charity’s governing document (such as the holding of an annual general meeting), or a direction to take action to remove a charity trustee following misconduct by that person.
107.OSCR is given the ability to revoke a direction or to vary it by allowing more time for compliance or by reducing the required steps. Clarification is also provided that OSCR is able to give more than one direction in respect of the same inquiries. This could mean giving more than one direction requiring positive action to be taken, or it could mean giving one direction requiring positive action to be taken and another direction preventing something else from happening.
108.A positive direction can require the charity to do something that its constitution does not contemplate or which it would not otherwise have express powers to do, but it may not require the charity/body to do something which is prohibited by an enactment or expressly prohibited by the charity’s/body’s constitution or, in the case of a charity, inconsistent with its purposes. Anything done by the charity or body under the authority of a positive direction is treated as having been properly done in the exercise of its powers, although the contractual and other rights of third parties are preserved in respect of anything so done.
109.A number of consequential amendments are made to the 2005 Act in light of this new power—
provision is made in section 3 for the issuing of a positive direction to appear on a charity’s Register entry until it is complied with,
the headings of sections 31 and 32 are adjusted to reflect the fact that section 31 is no longer the only section focusing on the powers of OSCR following inquiries,
section 32 is clarified so that the existing reference to being able to give more than one direction under section 31 in respect of an inquiry also refers to the fact that directions under section 31 can be combined with directions under new section 30B,
section 33 is adjusted to ensure that a report is prepared and published on an inquiry which results in a positive direction being given,
section 65 is amended so that, just as some of the interdictory direction powers do not apply to designated religious charities, nor does the power to issue positive directions apply to such charities (see paragraphs 49 and 50 of the Policy Memorandum for the rationale behind this and explanation of when a religious charity can be designated),
section 71 is modified to ensure that a review and appeal can be sought in respect of any decision by OSCR to issue a positive direction; any review or appeal would be in line with the 2005 Act’s usual procedures,
section 72 is modified to ensure that any notice of a decision to issue a positive direction is served on the person in respect of whom the decision is made (i.e. the charity concerned or, as the case may be, the body controlled by a charity),
provision is made in section 73 so that the effect of any such direction is suspended until it is no longer amenable to review (either because the 21 day period in which OSCR can be required to review it has expired without a review being requested, or because the review/appeal process has been exhausted).
