Equity and Trusts: Regulations of Charities in England and Wales

This report provides a comprehensive overview of the regulation of charities in England and Wales, focusing on the legal framework established by the Charities Act 2011 and subsequent legislation. It examines the role of the Charity Commission and the different legal structures available to charities, including charitable trusts, charitable companies limited by guarantee (CCLG), Charitable Incorporated Organizations (CIOs), and unincorporated associations. The report delves into the merits and demerits of each structure, discussing legal obligations, liability, and the requirements for registration and compliance. It highlights key aspects such as the public benefit test, tax treatments, and the powers of the Charity Commission. Furthermore, the report covers the functions of the Charity Commission, exempted charities, and the various purposes considered charitable, such as poverty relief, education, religion, and environmental protection. The conclusion summarizes the importance of efficient administration and the need for proper agreements within charitable institutions.

EQUITY AND TRUSTS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Regulation of charities in England and Wales with critical analysis..........................................1
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Equity is referred as fairness; its legal system is directly based on specific rules and it is
the origin of the law of trusts. The set of rules are considered as trust law which are prepared for
regulating such situations where one party trusts with respect to other person to keep watch on
the affairs. It consists of charity or amount of money which has been laid to that person who is
present in a will which is governed. The most important aspect in legal system is considered as
equity and all the specific areas of laws are stretched by it. The present report will be giving brief
understanding on regulations of charities in England and Wales by different aspects. Further
there are different merits and demerits of the certain regulation of charity.
Regulation of charities in England and Wales with critical analysis
The charity law has been evolved in 20th century via legislation and case law. Under
Charity Act 1960, the charity commissioner’s power were grown and it has published a public
register of charities. The charities Act 1992 and 1993 were updated by Charities act 2006. The
charity commission was created as a new corporate body with respect to its own right and a
different charity tribunal which gives a different appeal with various decisions related to charity
commission1. The Charities Act 2011 is considered as consolidation of all the provisions. The
regulatory framework for English and Welsh has been set by The Charities Act 2011 as it
consists of all activities related to Charity Commission and it was applied in the industry on 14th
March 2012. It has been considered as recent legislation is of charity act 2016 and afterwards it
will give huge expansion to the powers of charity commission.
There are various legal regulations with respect to charitable organizations and activities.
Charities in England and Wales are usually governed by the latest charity act 2011 and it gives
charity as an institution which is framed for the purpose of charity and even it has been
controlled by high court on the context of charities and jurisdiction2. The statue has not defined
public benefit test and it is the most popular topic of debate in present era as it consists of two
important case in the context of Charity tribunal who has influenced to provide better shape to
present guidance of Charity commission. The cases are as follows:
1 Chahal, H. and Rani, A., 2017. How trust moderates social media engagement and brand equity. Journal of
Research in Interactive Marketing. 11(3). pp.312-335.
2 Wu, W., Ma, L. and Yu, W., 2017. Government transparency and perceived social equity: Assessing the
moderating effect of citizen trust in China. Administration & Society. 49(6). pp.882-906.
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 Independent Schools Council v Charity Commission for England and Wales [2011]
 Charity Commission for England and Wales and others v Majesty's Attorney general
As it has been discussed above that Charities in England and Wales are maintained by
Charities Act 20113. It is also applicable to some of specific structure and many legal matters like
tort, tax, competition, employment, intellectual property and contract as well as data protection.
There are different organizations for non-profit which are not considered as charities. The tax
treatment which is linked to charitable trust and giving great advantage cannot be claimed by
them but they have flexibility and freedom as well for not complying with charity law. Various
bodies which are linked to regular restrictions which are legal and implied to legal format i.e.
governing documents and even implied in activities4. With the context of charitable company
limited by guarantee charities are set up by them only. The structure will be related from the
company limited by shares but rather than shareholders organisation consists of members who
has guaranteed for contributing the amount which is nominal and it will lead to wounding the
organization.
Right of sharing margins has not been provided to the members of charitable company
limited guarantee and they must be used for the purpose of charity and while wounding assets
should be used for the same purpose of charity and must transferred very often. The company
law must comply with CCLG with respect to company activity. Along with this, Charity
commission must regulate it and in this registrar of organization must regulate it and it is referred
as company’s house. For regulating CCLG, directors for the purpose of company law and
trustees for the purpose of charity law according to the various legal obligations of each capacity.
With the context of CCLG, trustees will be having protection from such liability by
gaining the liabilities of each member who are limited for guarantee and legal personality with
its own structure. Assets can be hold, entering in the contracts, liabilities can be incurred and sue
may be sued with his own name. It is perfect match for charity with the activities which are
complex. There are various instances where the one who is liable for different losses to charity is
known as trustees. But in the perspective of demerit it should prepare the filings of charitable
organisation by Companies House and The Charity Commission. The Charity Commission
3 Charity law in England and Wales. 2018. [Online]. Available through :<https://www.icas.com/technical-
resources/charity-law-in-england-and-wales>.
4 Fletcher, J., 2018. An empirical examination of the diversification benefits of UK international equity
closed-end funds. International Review of Financial Analysis. 55. pp.23-34.
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indicates to some certain event driven filings and annual return and set of accounts and
Companies House indicates to same event driven filings and confirmation statement and set of
accounts.
Charitable trust is considered as a legal structure for different possibility of charities and
it has different alteration due to charitable company's benefit. The trustees who agrees for
holding asset on trust which has been applied for purpose of charitable and along with this only
there is formation of charitable trust. There is absence of any different legal identity from its
trustees. It cannot be elaborated as an example for owning land or to make documents by signing
it in own name and they must hold the assets of charity along with the activities which are
performed in accordance with individual trustees5. The procedure of trust deed is generally can
be dissolved and with the perspective of event related to charitable trust will dissolve and after
that all the assets will be expended. If the liabilities are settled and asset will be expended then
only trustees can resign from the trust from the registrar of charities. While, considering the
merit of this aspect, there is not any requirement for complying with company law and it is more
flexible as compared to charitable company as it is governed by trust law which is referred as
complex area has the need of advice of some specialist. The affairs of the organization are not
required to report to Companies House but it should give proper justification to Charity
Commission6. But on the contrary side, there is not presence of different legal personality in
charitable trust. The liabilities of charity are directly liable with respect to trustees and different
trustees who are potential are not comfortable with this situation and these liabilities will not be
as an outcome for breaching trust or wrong doing, generally trustees are entitled for indemnity
from the assets which are available.
There is presence of separate corporate structure which is specifically designed for
charities are referred as Charitable Incorporated organizations. Charities are provided and even
benefit has been given to trustees for protecting limited liability and a different legal personality
but not in context of company law. The Charities act 2011 has set legal framework for CIO and
even subordinate legislation regulation 2012, The Charity Tribunal constitutes in drafting this
framework. There are various CCLG who has desire for again registering as CIO and there are
5 Singh, J., Quamina, L. and Kalafatis, S., 2017. Under a Cloud: The Impact of Corporate Reputation Harm
on Brand Equity and Consumer Value Perceptions (An Abstract). In Marketing at the Confluence between
Entertainment and Analytics (pp. 467-468). Springer, Cham.
6 Charities Act 2011. 2018. [Online]. Available through :<https://www.legislation.gov.uk/ukpga/2011/25>.
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various mechanism for this in legislation. In the present scenario, January 2018 was scheduled
for consultation on conversion with different implementation. On the basis of insolvent or
solvent, CIO can be easily dissolved and according to the constitution of charity all the residual
assets must be implied7. For creating a simplified version of companies under Insolvency Act
various regulations has been set up by dissolution of CIO. In the series of advantages, there is
requirement for CCLG to file with Charity Commission but it should not be file with Companies
house. On the contrary, CIO is indicated as new structure and not able to be interpreted as
charitable company. There is great possibility that institutional lenders are not willing too much
for lending it to any CIO as compared to charitable company because of inefficiency of charges
related to public register.
There are various associations which are not incorporated and are used for very
simplified charities whose membership is not even based and there is absence of some important
liabilities or activities which are totally governed by rules and constitution. For observing the
administration, executive committee has been elected by the members. The executive
committee's members are trustees of unincorporated association for the purpose of charity law.
The associations which are unincorporated might be easily dissolved for any restriction or
procedure which has been set for governing the documents. The pros of unincorporated
association can be stated that it is not complex, it very easy to run and it has to prepare annual
filings with the Charity Commission. And in the aspect of cons, the association will be not
having presence of different legal personality with charitable trust. All the liabilities are incurred
and assets are held by the members on the behalf of association8. The laws which are directly
related to associations which are not yet incorporated are underdeveloped. These associations are
usually suitable for the charities which are small and has membership with very low assets and
employees and even there is absence of assets and employees.
Generally all the charities i.e. 99% are charitable companies limited by guarantee, CIOs,
Charitable trust and unincorporated associations and in this scenario there are more legal forms
undertaken by charities such as : Community benefit societies are bodies which have different
7 Dewulf, L., and et.al., 2017. The role of teacher trust in segregated elementary schools: a multilevel
repeated measures examination. School Effectiveness and School Improvement. 28(2). pp.259-275.
8 Baumber, A., 2018. Energy cropping and social licence: What's trust got to do with it?. Biomass and
Bioenergy. 108. pp.25-34.
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legal personality who are working for giving benefits to community and Royal Charter Bodies
are usually incorporated via a charter from monarch.
There are different department which are department of non ministerial with respect to
Charities in England and Wales which are usually regulated by Charity commission and has
more government role but it does not undertake any of the government department and it
operates as one important aspect of government9. The basic functions of Charity commission
consists of ; ensuring the charity compliance with specific legal obligations, to ensure the
accountability of charity, effectiveness and encouragement has been encouraged and even public
trust has been promoted with increasing confidence in charities10. There are various charities
which are exempted under the Charity commission which are not essential for registering. There
are different charities which are regulated by different bodies like : Department for academy
trusts or education, Higher education funding council for England or English universities and
Department for museums or Culture, media and sport. They are not subjected in register of
charities which has been regulated by Charity commission. There are many other charities like
religious and military are registered under the Charity act 2011 and in the same series it does not
reflect in Register of charities.
There are different purpose for charitable and it is mostly concerned with public benefit
such as : relief or prevention of poverty, advancement of education, religion, health or savings of
lives, developing citizenship or community, culture, arts, science or heritage. There is
advancement of amateur sport, human rights, resolving conflict or promoting racial or religious
harmony with equality and diversity11. And in the series of public benefit advancement of
protecting and improving environment. There is requirement for the declaration signature by the
trustees with the willingness for act as trustees of charity by registering and explanation of
charity commission about the operations for public benefit. The process of registration is very
complex as compared to incorporation and even it is time consuming.
9 Vecchi, V. and Hellowell, M., 2018. Public–Private Partnerships: Recent Trends and the Central Role of
Managerial Competence. In The Palgrave Handbook of Public Administration and Management in Europe (pp. 381-
401). Palgrave Macmillan, London.
10 Charity Law and Regulation. 2018. [Online]. Available through :<https://www.ncvo.org.uk/policy-and-
research/charity-law-and-regulation>.
11 Liao, Y. K. and et.al., 2017. Cognitive, experiential, and marketing factors mediate the effect of brand
personality on brand equity. Social Behavior and Personality: an international journal. 45(1). pp.1-18.
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CONCLUSION
From the above report it has been concluded that there are proper agreements within the
charitable institutions and fundraisers who are professional. Even the importance of agreements
of charitable institutions and commercial participators. It also able to administer the charities in
very efficient and effective manner and gives brief about charity with context of public benefit.
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REFERENCES
Books and Journals
Baumber, A., 2018. Energy cropping and social licence: What's trust got to do with it?. Biomass
and Bioenergy. 108. pp.25-34.
Chahal, H. and Rani, A., 2017. How trust moderates social media engagement and brand equity.
Journal of Research in Interactive Marketing. 11(3). pp.312-335.
Dewulf, L., and et.al., 2017. The role of teacher trust in segregated elementary schools: a
multilevel repeated measures examination. School Effectiveness and School Improvement.
28(2). pp.259-275.
Fletcher, J., 2018. An empirical examination of the diversification benefits of UK international
equity closed-end funds. International Review of Financial Analysis. 55. pp.23-34.
Liao, Y. K. and et.al., 2017. Cognitive, experiential, and marketing factors mediate the effect of
brand personality on brand equity. Social Behavior and Personality: an international
journal. 45(1). pp.1-18.
Singh, J., Quamina, L. and Kalafatis, S., 2017. Under a Cloud: The Impact of Corporate
Reputation Harm on Brand Equity and Consumer Value Perceptions (An Abstract). In
Marketing at the Confluence between Entertainment and Analytics (pp. 467-468).
Springer, Cham.
Vecchi, V. and Hellowell, M., 2018. Public–Private Partnerships: Recent Trends and the Central
Role of Managerial Competence. In The Palgrave Handbook of Public Administration
and Management in Europe (pp. 381-401). Palgrave Macmillan, London.
Wu, W., Ma, L. and Yu, W., 2017. Government transparency and perceived social equity:
Assessing the moderating effect of citizen trust in China. Administration & Society. 49(6).
pp.882-906.
Online
Charity law in England and Wales. 2018. [Online]. Available through
:<https://www.icas.com/technical-resources/charity-law-in-england-and-wales>.
Charities Act 2011. 2018. [Online]. Available through
:<https://www.legislation.gov.uk/ukpga/2011/25>.
Charity Law and Regulation. 2018. [Online]. Available through
:<https://www.ncvo.org.uk/policy-and-research/charity-law-and-regulation>.
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