Charities Act 2022: third tranche of changes now in force

On Thursday 7 March 2024, the third tranche of changes to charity law brought about by the Charities Act 2022 came into effect.

We have covered the changes in previous articles but, by way of reminder, here's what they include:

1. Reforms to the rules regarding changes to charity governing documents, including:

• New criteria which the Charity Commission must consider when deciding whether or not to consent to a change to the objects of charitable companies and CIOs.

• Closer alignment between the regimes for making "regulated alterations" to the governing documents of charitable companies and CIOs.

• A new broad power for unincorporated charities to amend their constitutions, subject to the consent of the Commission when more fundamental changes are proposed.

2. A change to the wording of the provisions of the Charities Act 2011 that deal with gifts to merged charities, which should lessen the need for shell charities to be kept on the register post-merger to ensure that certain legacies do not fail.

3. Changes to provisions dealing with charity mergers and the appointment and remuneration of trustees.

Changes to the disposal of land

There have also been changes to the provisions of the Charities Act 2011 that deal with the statements which go into documents on the disposal of land. This is good news for charities as, under the new rules, all statements will be given by the party executing the document meaning, for example, that in sales of land on the administration of an estate, the statement will be given by the personal representatives. This resolves a previous anomaly, which required that where there was an appropriation to a single charity, it was the trustees of that charity that had to give the necessary "certificate".

It is also worth noting that, while the Act previously required a statement regarding the applicability of section 117 in both parts of the transfer documentation (i.e. the contract and the transfer) and a certificate of compliance in the transfer, under the new rules, only a statement is required.

The statement is included in both the contract and the transfer, and deals with both applicability and compliance. This simplifies matters and also ensures that buyers – who are entitled to rely on the certificate as conclusive evidence of the power to sell – receive protection from date on which they commit to the transaction, rather than having to wait until the date of transfer.

Transitional provisions are in place to deal with contracts exchanged prior to 7 March where completion has yet to take place.

What's next?

We are expecting one further set of changes to come into effect before the end of the year – the long-awaited provisions that will give charities a statutory power to make ex-gratia payments up to a certain value, and the Charity Commission broader powers to approve payments of a higher value.

These provisions were initially expected to come into effect in 2022 but they have been delayed amid concerns that they might enable the Commission to authorise the repatriation of artefacts held by museums, despite those institutions being prevented from making such transfers by the legislation under which they were formed.

It is understood that the government still intends to commence the relevant sections of the 2022 Act (sections 15 and 16) but it is clear from a recent letter from the Minister for Arts and Heritage to the Chair of the Charity Commission that certain national museums and galleries will be excluded from their scope. It is also likely that the power for charities to make ex-gratia payments without seeking consent will be limited so that it only applies to payments being made within the UK.

We will provide another update once we have more detail from the Department for Culture, Media and Sport.