Boards and Management Committees

Ever wondered where the word 'board' come from? Historically, many houses did not have dining rooms and a piece of wood would be set up to eat from! The host would sit at the head of the board and hence we refer to the chair of the board.

people talking over a cup of coffee

The word “board” in modern language means the organisation’s governing body. It is the body which has overall responsibility for the organisation.

To be a charity trustee and company director you have to be eligible. The requirements that must be met by people who wish to serve on management committees, trustee boards or company boards are explained below, along with an outline of the responsibilities that go with the roles.

Who can sit on a board

The content that follows has been kindly provided by Bev Cross, Legal Consultant for Voluntary Action Sheffield.

Age

Under charity law, a person must be aged 18 or over to serve as a trustee of an unincorporated charity, but can be aged 16 or over if the charity is also a limited company, provided there are certain safeguards in place: see the Charity Commission’s guidance on involving young people in running charities:

Personal Solvency

Under both charity and company law, a person is disqualified from acting as a company director or a charity trustee if he/she:

  • is an undischarged bankrupt or
  • is subject to an order for composition or arrangement with her/his creditors under the Insolvency Act 1986 and the order has not yet been discharged.

Under charity law, a person who is subject to an Insolvency Act Order for failing to make payments under an administration order is also disqualified, unless s/he has been specifically cleared to be a trustee by the Court that made the Order.

Please note: An undischarged bankrupt who acts as a company director knowing s/he is disqualified can be made personally liable for the company's debts.

Criminal Record

Under both charity and company law, a person is disqualified from being a company director or charity trustee if s/he has been convicted of a criminal offence involving dishonesty or deception which has not been spent under the Rehabilitation of Offenders Act 1974.  NB:  If the sentence on conviction for the offence was imprisonment (even if suspended) for 2½ years or more, then that person is disqualified for life.

Removal Orders

Company directors or charity trustees who have been removed as directors or trustees by the High Court or the Charity Commission are disqualified from acting as directors or trustees.

Company Directors Disqualification Act 1986

Company directors cannot act as directors or charity trustees while disqualified by the Court under this Act.  Directors can be disqualified for:

  • general misconduct i.e. persistently failing to file accounts and returns
  • conviction on indictment in relation to the formation. management or liquidation of a company
  • fraudulent trading resulting in the winding up of a company
  • unfitness to manage i.e. being involved in an insolvent company that has since wound up
  • because the Court declares the person unfit for other reasons

Company directors who serve while disqualified may be fined and required to pay back any to the company any expenses or salary received while they were directors. If they serve knowing they are disqualified, they may become personally liable for all the company's debts.

Duties of Directors

Company directors have seven duties and they are not all the same as responsibilities of trustees!

The statutory duties of directors are set out in section 177 of the Companies Act 2006.

The duties of directors are:

  • To act within the company’s powers
  • To promote the success of the company for the benefit of the members as a whole
  • To exercise independent judgement
  • To exercise reasonable care, skill and diligence
  • To avoid conflicts of interest
  • Not to accept benefits from third parties
  • To declare an interest in proposed transactions or arrangements

 

Role of company secretary

The Companies Act 2006 removed the requirement for most companies to have a company secretary. Unless your Memorandum and Articles of Association requires you to have a company secretary, you can now decide whether or not to appoint one. The point is that all the tasks normally carried out by a company secretary still need to be done. Someone has to deal with the company’s administration and compliance - why not let it be a company secretary?

A company secretary can sign contracts on behalf of the company. The company secretary can attend board meetings. The person in this role does not have to be a director. Indeed, they are more usually an employee.

Duties of the company secretary

  • Maintain statutory registers the company books
  • Complete statutory forms
  • Please refer to section on company responsibilities
  • File with Charity Commission - if applicable
  • Attend board meetings and members’ meetings
  • Carry out administration work in respect of resolutions

Duties of Trustees

Charity trustees are the people who serve on the governing board of a charity. Anyone who is responsible for the charity is classed in law as a trustee. This includes small charities whose income does not meet the registration threshold to register as a charity.

Your organisation it may refer to its trustees as: the board, the board of directors, board of governors, the trustees, the management committee or some other variation. They all mean the same thing: the body which has overall responsibility for the organisation.

Trustees must make sure that the charity is well run and that is keeping to its purposes. Trustees need to ensure that the charity has enough money to meet its liabilities or in other words that the charity remains ‘solvent’.  

Roles and Responsibilities of Trustees

Charity trustees need to be aware of the duties, or roles and responsibilities, associated with being a trustee.

There are six essential trustee duties:

  1. Ensure that your charity is carrying out its purposes for the public benefit
  2. Comply with your charity’s governing document and the law
  3. Act in the charity’s best interests
  4. Manage your charity’s resources responsibly
  5. Act with reasonable care and skill
  6. Ensure your charity is accountable.

These duties are examined in detail in the Charity Commission guidance: The Essential Trustee: What you need to know, available from their website.

Useful and readable guidance from Bates, Wells and Braithwaite- Duties of Charity Trustees – www.tinyurl.com/outgo6t