Broadly speaking, there are three kinds of trustees,
Charity (or Managing) Trustees ‘have and must accept ultimate responsibility for directing the affairs of a charity, and ensuring that it is solvent, well-run, and delivering the charitable outcomes for the benefit of the public for which it has been set up’.
Holding Trustees are appointed by the Charity/Managing trustees of an unincorporated association only to hold the legal title to any land, property or investments on behalf of the charity. Such an appointment is necessary because unincorporated associations cannot in their own name have such holdings. The charity is not a legal entity in its own right; it exists only by virtue of the legal identity of its charity trustees;
A Custodian Trustee performs the same function as a holding trustee, but is itself a corporate body – often a local authority. A Holding/Custodian trustee
- only holds the legal title to land, property and investments on behalf of the charity, and has no role in the charity’s management;
- must act on the lawful instructions of the charity trustees;
- may be replaced by the charity trustees at will – although the trustee(s) has/have to sign a deed transferring their interest.
Who is the Official Custodian for Charities?
The Official Custodian is an officer of the Charity Commission, appointed to hold land on behalf of charities. Once land has been acquired by a charity (whether by purchase, long term lease or other deed of transference), such land may be ‘vested’ in the Official Custodian, who will then act as holding trustee on behalf of the charity.
Further information can be found in our information sheet ‘
Community Association Trustees’.
What are the responsibilities of Charity Trustees?
You can find a document entitled ‘Responsibilities of Trustees’ in our online guide ‘Trustees Roles and Responsibilities’ which you can download by clicking here.
Charity Commission publication CC3 is an invaluable guide to these responsibilities, and a copy of it should be in the possession of every charity trustee.
Who may be a trustee?
Subject to any specific provisions of an organisation’s constitution (for example, that trustees must be members of the organisation), anyone may be a trustee who –
- is over 18 years of age;
- is not impaired by reason of mental or physical incapacity from properly attending to
the affairs of the charity; and
- is not disqualified from acting as a trustee.
It is an offence to act as a charity trustee while disqualified unless the Charity Commissioners have given a waiver under Section 72(4) of the Charities Act 1993.
Our
'Disqualified or Not' information sheet covers briefly all aspects of the disqualification of trustees, and includes a list of common offences which do - or don’t - lead to disqualification.
How are charity trustees appointed, removed and/or replaced?
The processes vary according to the circumstances.
The charity (or managing) trustees of unincorporated associations, directors of companies limited by guarantee and trustees of charitable trusts are normally replaced according to processes set out in the constitution of the particular organisation.
In membership-based organisations, replacement will usually take place by elections in the Annual General Meeting, although there will be special provisions for trustees nominated by another organisation (e.g. a local authority), or co-opted by the management committee itself, and in some instances for ex-officio members (e.g. honorary officers, some of whom may be appointed by the main committee rather than by the AGM).
In the case of charitable trusts, it is often the case that trustees themselves (as a body) appoint their own successors. Sometimes trustees are appointed by some other body (e.g. a parish council) or an individual (perhaps the parish priest, or some other patron). Many village halls adopt trusts which enable the local population to elect charity trustees. Unless the trust deed provides otherwise, such trustees, once appointed, may serve for life unless they resign or become disqualified.
In all cases where a constitution makes no other explicit provision, the law allows the trustees themselves to appoint new trustees provided there are enough of them to make a proper decision (i.e. they are quorate).
How are holding trustees appointed, removed and/or replaced?
Community Matters recommends that community organisations should arrange for their land to be vested in the Official Custodian for Charities rather than in holding trustees.
Holding trustees - in their formal office - may, unlike the Official Custodial, die or move to an unknown address or become incapable of managing their own or anyone else’s affairs. This may well happen at a time particularly inconvenient to a community organisation. Removing and replacing holding trustees can be problematic. Unless the initial deed of appointment is correctly worded in conjunction with adequate powers reserved to the charity (or managing) trustees in an organisation's constitution, it may be difficult to establish exactly who has the power to remove and/or replace holding trustees.
The position in relation to an organisation established as a trust
The first holding trustees are normally appointed by the donor of land (i.e. in a trust deed). Thereafter the removal and replacement of holding trustees is governed by powers reserved to the charity (or managing) trustees by the trust deed. However, if none are appointed or those appointed are incapable of acting, are dead or refuse to act, the trust does not fail for want of trustees. Once a trust has been created the donor or other person who holds the trust property will be the trustee and may appoint new trustees to carry out the terms of the trust. In the absence of specific provision in the trust deed sections 36 to 40 of the Trustee Act 1925 will apply. These provide that a new trustee may be appointed in place of a trustee who:
- is dead;
- remains outside the UK for more than 12 months;
- desires to be discharged;
- refuses or is unfit to act;
- is incapable of acting; or
- is a minor.
Occasionally the instrument declaring the trusts on which the holding trustees hold land will reserve the power of appointing new holding trustees to the existing trustees. The position in relation to an organisation established as an unincorporated association. The process of removing and/or replacing holding trustees will normally be set out in the constitution of the particular organisation. Unlike charity or managing trustees, holding trustees are not elected annually. The power of appointment and removal is usually reserved to the charity (or managing) trustees who may act at any time if so allowed by the constitution.
Generally
If inadequate machinery for the appointment and removal of trustees is provided in the trust deed or other constitution then an application can be made to the Charity Commission for a scheme under section 16 of the Charities Act 1993.
What powers has the Charity Commission to remove trustees?
Under the Charities Act 1993, the Charity Commission has power where it believes that misconduct or maladministration may have occurred or otherwise to prevent its occurrence
- to suspend any trustee(s) of a charity;
- to suspend employee(s) of the charity;
- to freeze the charity's bank accounts and property;
- to transfer the charity's property to the Official Custodian and/or to appoint a receiver to manage the charity's affairs.
Where misconduct has already occurred, the Commission has power –
- to remove the responsible trustee(s) or employee(s) permanently, and/or;
- to make a Scheme for the charity's reorganisation with or without the co-operation of the trustees.
For more information
To find out more about the roles and responsibilities that Trustees have in an organisation select the links below to download our set of publications.
If you would like to talk to one our advisers, call our advice service on 0845 847 4253 from 09.30 to 13.00 on Mondays and Thursdays. Alternatively, you can email us your question and we will get back to you.
Download Online Guidance and Advice
Click on any of the titles below for support:
Specimen Document