Memorandum and Articles Companies Act 2006

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					The Companies Act 2006

Changes brought in by the Companies Act 2006 have required charitable companies to
review their memorandum and articles to make sure they comply with the changes as
well as complying with the Charities Act 2006. The last of the changes set out in the
Companies Act was implemented in October 2009. All new charitable companies using
the September 2009 version of model document Memorandum and Articles of
Association for a Charitable Company (GD1) which is available on the Charity
Commission website will comply with these changes. Charitable companies using an
older version can use the wording on this form to introduce any necessary changes.

The Act specifies changes including the following:

      directors’ duties defined;
      the requirements for directors to be at least 16 years old and for there to be at least
       one director who is a natural person (not a company);
      members’ have the right to appoint proxies and the requirement for notices of
       general meetings to refer to this right;
      minimum of 14 days’ notice for general meetings (longer if specified in the
       company’s articles), unless the short notice provisions are used;
      written members’ resolutions can be agreed by a simple majority;
      electronic communications can be used for formal correspondence;
      the exemption for charitable companies from the requirement to include “limited”
       in their names.

Directors Duties are now spelt out and are as follows
To act within the Companies powers
To exercise independent judgement
To exercise reasonable care, skill and diligence
A duty to act in the way in which a director considers to be in good faith would be most
likely to achieve the company’s purposes.

Organisations should now have a job description for trustees wo are directors which
should include explicit references to the statutory dutues.

Conflicts of Interest arise when a trustee/director has a financial interest in a transaction
with the charity. They can also arise for example if a trustee is also a trustee of another
charity. Knowledge gained by being a trustee of one charity could be used for the benefit
of a second charity. This can be managed by the trustee withdrawing while discussions
take place and taking part no part in decisions made. A change can be made to the
governing document to authorise the other trustees/directors. A register of interests which
is laid before directors and kept up to date will help manage potential conflicts of Interest.

Accounts do not have to be presented to an AGM. They must be sent to members and
others entitled to receive them on or before the date when they are filed at Companies
House. If your governing document states that they should be circulated 21 days before
an AGM then this must be complied with.

General Meetings. The notice period is now 14 days. It is easier to hold a short notice
meeting. To do this requires written approval of 90 per cent of members. It will not be
possible to take advantage of these changes if changes are not made to the governing
memorandum and articles.

Annual General Meeting (AGM). Companies are no longer obliged to hold an AGM. If
your charitable company considers giving up holding them then there are implications for
trustee elections.

It is important that charitable companies act according to their governing document. If no
changes are made to the governing document then it is necessary to comply with the old
law and the new law.

Information for this article came from an article by James Sinclair-Taylor of Russell-
Cooke and Charity Commission website. .

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