Starting points for removing charity trustees
Posted on 26 January 2017 by Rhona McAdam
Having to remove a charity trustee from office is an awkward situation that no charity wants to encounter. If the board has concerns, they may choose to discuss these with the trustee; and generally he or she will resign afterwards. Alternatively, the outcome may be that the trustee is not re-elected at the AGM when their term of office ends. But what if a trustee refuses to resign, and has a significant part of their term left to serve? It’s worth checking where your charity constitution stands on this issue (and possibly making some updates – see below) so that, if the situation ever arises, you can deal with it with confidence. But if you’re not sure where to start, fear not - help is at hand! New provisions for removing a charity trustee have been incorporated into the SCVO model articles of association. The main changes can be found under the 'Conduct of directors' and 'Termination of office' sections.
Why could this be important?
Although members of a company can remove a charity trustee from office using powers set out in the Companies Act, the process required under the legislation is not straightforward; and the practicalities may be off-putting, particularly when the company has a large membership.Adverse effects could see friction within the membership, loss of confidence among funders and adverse media commentThe member who will be proposing the resolution has to give the company formal notice of his/her intention to do so 28 days before the meeting. The company then needs to give the members 14 days notice of the resolution; and the director concerned has a statutory right to require the company to circulate a statement setting out his/her position. The effect is that the issues become public; and this could lead to friction within the membership, loss of confidence among funders and other partner bodies, and/or adverse media comment. It’s worth noting that the other directors have a duty, under charity law, to “take such steps as are reasonably practicable” to ensure that a director who has been in serious or persistent breach of his/her duties is removed. So it is in very much the spirit of the legislation to have a procedure within the constitution which allows a situation of this kind to be addressed directly by the board.
What are the new provisions?
Model article 54: The first of the new provisions relate to the termination of office. In addition to the existing provisions of this article, wording has been added to provide that a director can be removed if he/she has:- committed a material breach of the code of conduct; or
- been in serious or persistent breach of his/her duties under charity law (such as the duty to act in the best interest of the charity and to ensure that the charity acts consistently with its purposes).
- the director concerned must be given written notice of the grounds for removal;
- he/she must be given the opportunity to address the other directors; and
- at least two thirds of the directors in office must vote in favour of the resolution.