1.This Explanatory and Financial Memorandum has been prepared by the Department for Social Development in order to assist the reader of the Act and to help inform debate on it. It does not form part of the Act and has not been endorsed by the Assembly.
2.The Memorandum needs to be read in conjunction with the Act. It is not, and is not meant to be, a comprehensive description of the Act. So where a section or part of a section or schedule does not seem to require an explanation or comment, none is given.
3.The primary reason for the Act is to amend the public benefit provision of the Charities Act (Northern Ireland) 2008 (“the 2008 Act”) to provide clarity on the requirement to be met in determining whether an institution is, or is not, a charity within the meaning of that Act.
4.The need for clarity on the public benefit provision was first identified when the Charity Commission for Northern Ireland (CCNI) sought legal opinion on the draft public benefit guidance which it is statutorily obliged to issue. Opinion was that the provision in section 3 of that Act (“the public benefit” test) created legal uncertainty arising from the inclusion of an element of the public benefit provision contained in the Scottish Charities and Trustee Investment (Scotland) Act 2005 (“the Scottish Act”).
5.The Act amends section 3 of the 2008 Act by removing the provision taken from the Scottish Act and making provision for the determination of the public benefit requirement to be based on the law relating to charities in Northern Ireland.
6.While the primary reason for the Act is the amendment of the public benefit provision, it also provides a legislative vehicle for a number of other outstanding amendments to the 2008 Act. Company law references are amended to reflect changes made under the Companies Act 2006 since the 2008 Act was enacted. Amendments made to charity legislation in England and Wales prior to consolidation by the Charities Act 2011 are replicated to modernise language, clarify existing legislation, repeal provisions now obsolete and make consequential amendments that were previously missed.
7.The Act also makes certain other provision. It provides for the transfer of functions which are of a regulatory nature, but which still remain within the Department’s jurisdiction, to that of the CCNI. It also re-enacts provision in the Charities Act (Northern Ireland) 1964 that was repealed by the 2008 Act but which on reconsideration is believed to be a worthwhile mechanism for saving a charitable gift that would otherwise fail.
8.As the Act is largely comprised of technical amendments, re-enactment of repealed provision and the transfer of regulatory functions from the Department to the CCNI, a public consultation was considered unnecessary.
9.The public benefit amendment which instigated the need for the Act has been the subject of extensive discussion and consultation between the Department, the CCNI, HM Treasury, HM Revenue and Customs, the Departmental Solicitor’s Office, the Social Development Committee and representatives of the charitable sector. The consensus of opinion is that the public benefit provision of the 2008 Act should replicate that in force in England and Wales.
10.The Act contains eleven sections and two Schedules.
A short explanation of sections 1 – 6, 10 and Schedule 1 is given below. Sections 7 – 9, 11 and Schedule 2 are considered to be self-explanatory.
Section 1 substitutes a new public benefit provision for that in section 3 of the 2008 Act.
The effect of the substitution is that, similar to all other provisions of the 2008 Act, the new section 3 is based exclusively on the charity legislation of England and Wales. Provision is made for determination of the public benefit requirement by reference to the law relating to charities in Northern Ireland.
Section 1(2) applies the new public benefit provision retrospectively.
Section 2 re-enacts section 24 of the Charities Act (Northern Ireland) 1964 (gifts for mixed purposes). Re-enactment has the effect of restoring the mechanism through which a gift which is for both charitable and other purposes may be regarded as exclusively charitable.
Section 3 amends sections 33, 86 and 87 of the 2008 Act to extend the list of persons disqualified from being trustees of a charity to include persons who are subject to a bankruptcy restrictions order or persons subject to moratorium period under a debt relief order or a debt relief restrictions order. The amendment is consequential to corresponding provision made by the Enterprise Act 2002 (Disqualification from Office: General) Order 2006 and Tribunals, Courts and Enforcement Act 2007 (Consequential Amendments) Order 2012.
Section 4 transfers the Department’s functions under the Educational Endowments (Ireland) Act 1885, and other related Acts, to the CCNI. These functions are no longer appropriate to the Department as they fall within the CCNI’s statutory role as Regulator of charities.
Section 5 transfers certain other regulatory functions from the Department to the CCNI. Section 5(1) transfers relevant functions under the Education and Libraries (Northern Ireland) Order 1986 while section 5(2) transfers those under the Companies Act 2006.
Section 6 makes transitional provision and savings to facilitate the transfer of functions from the Department to the CCNI.
Section 10(1) provides that with the exception of sections 4 and 5(1) all provisions of the Act shall come into operation on the day following that on which the Act is enacted.
Section 10(2) enables the Department to bring sections 4 and 5(1) into operation by order.
The amendments in Schedule 1 make no change to policy. Most are consequential to the implementation of the Companies Act 2006 and amendments made by the Charities (Pre-consolidation Amendments) Order 2011. A few correct textual inaccuracies.
The following table sets out the dates of the Hansard reports for each stage of the Act’s passage through the Assembly.
| STAGE | DATE |
|---|---|
| Introduction of Act to the Committee for Social Development | 2 February 2012 |
| Introduction to the Assembly | 2 July 2012 |
| Second Stage | 11 September 2012 |
| Committee Stage – evidence from the Charity Commission for Northern Ireland | 13 September 2012 |
| Committee Stage – evidence from the Northern Ireland Council for Voluntary Action | 20 September 2012 |
| Committee Stage – Departmental briefing | 27 September 2012 |
| Committee Stage – consideration of sections 1 – 11 and Schedules 1 and 2 | 4 October 2012 |
| Committee Stage – consideration of proposed amendment to section 9 | 11 October 2012 |
| Committee Stage – consideration of proposed amendment to section 3 | 18 October 2012 |
| Committee’s Report on the Act (Reference NIA 68/11 – 15) | 23 October 2012 |
| Consideration Stage | 20 November 2012 |
| Further Consideration Stage | 3 December 2012 |
| Final Stage | 11 December 2012 |
| Royal Assent | 18 January 2013 |