The Role of a Charity Member and Trustee

The Role of a Charity Member and Trustee – Who Am I?

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A guide for those undertaking the roles setting out the different duties and obligations

One of the issues we often come across with incorporated charities (whether a Charitable Incorporated Association or a Company Limited by Guarantee) and not-for-profit companies is confusion about who are ‘members’, and how they differ from ‘trustees’ or ‘directors’. Both have different duties and legal obligations. It is possible to be both a member and a trustee of your Charity.

This guide should help you to understand the legal implications of the terms - and help you ensure good governance when performing your duty. The terms can incorrectly become interchanged which can cause confusion and may have legal implications.

What is a charity trustee?

Charity ‘trustees’ have the responsibility for strategy, overseeing the day-to-day activities of the Charity, and deciding how it should be run. They ultimately control the management of the Charity. All Charities have trustees.

What is a charity member?

All Charities also have ‘members’.

Members will have the powers and authority to make the following decisions:

Appointment and removal of trustees
Changing the charity’s constitution
Deciding whether a charity should be wound up and handling the assets in the event of it being wound-up
Amending constitutional documents.

However, in many charities the trustees and the members are the same people, and this is written into the constitution. This is known as the ‘foundation’ model when adopting Articles of Association. Many charities who provide services, or run social businesses, use this structure.

Alternatively, charities may be established to bring together a large group of people who have a particular interest, with the intention that those running the charity would be answerable to a much wider group of people. This is known as an ‘association’ model. Examples of this might be large national charities such as The National Trust.

The model of the charity defines its key governance and constitutional documentation, and, therefore, the decision of which model to follow be made at the outset of your charitable formation.

Which charitable structures must have members?

Charitable incorporated structures which must have members:

A Company Limited by Guarantee (CLG);
A Charitable Incorporated Organisation (CIO); and
An Unincorporated Association.

If a Charity is incorporated as a company limited by guarantee (known as a charitable company), having registered with Companies House and, therefore, constituting a separate legal entity in its own right, a trustee is also a ‘director’. The significance of this is that they will have duties and legal obligations to follow under the Companies Act 2006.

The members of a charitable company guarantee an agreed amount (it is usual for this amount to be a nominal figure of say £1 or £10) which is their limited liability to be paid towards the charitable company’s debts in the event that the charitable company is wound up.

The remaining charitable structure which is not listed above is a ‘trust’, which has no members. Instead, the trustees are responsible for all the decision-making of the Charity.

Should I be keeping a register of members?

The short answer is: yes. It is a legal requirement that all charities must keep and maintain a register of its members. Section 113 of the Companies Act 2006 sets out the requirement to keep a register of members for CLGs. The register must contain details of:

The names and addresses of the members
The date on which each person was registered as a member
The date at which any person ceased to be a member.

Under Section 1135 of the Companies Act 2006, the register may be kept as a hard copy or in electronic form and it must be available for inspection at the charitable company’s registered office.

It is advisable to ensure that your register of members is regularly updated when there any changes in member details. It is one of the duties of the company officers to maintain an accurate register of members in compliance with the obligations contained within the Companies Act 2006.

A failure to maintain such register will result in an offence being committed by the charitable company and its officers which can lead to penalties being imposed.

If you are a CIO, the Charitable Incorporated Organisations (General) Regulations 2012 requires that Charitable Incorporated Organisation keep a register of trustees together with a register of members.

For advice on your charitable structure or any issues in relation to charity law, please contact one of our specialist solicitors in our Corporate and Commercial department.

Further information is also available at our dedicated Charity and Not-for-Profit page.

Charity and Not-for-Profit Corporate, Banking & Finance Commercial Law

Before relying on this commentary please read the Reliance on information posted section in our Terms of Website Use in our Legal section. Please note that specialist advice should be taken in relation to any specific queries and the information above is provided for general information purposes only.