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Our fee for registering a company limited by guarantee is ONLY £42.00. This type of company is normally incorporated for non-profit making functions. The company has no share capital. Common uses of guarantee companies include clubs, membership organisations, sports associations and charities. When first setting-up a business there are many issues to consider. You need to decide whether or not to incorporate your business, and to choose a structure for your business. There are several types of legal business entities which you can choose to operate as. For more information on these choices, follow the links below. We advise that professional legal and financial advice is obtained before a final choice of business entity is made. Sole Trader (Self-Employed) Limited Company Public Company Company Limited by Guarantee Limited Liability Partnership Branch or Place of Business Coddan is a leading service provider in the field of English, Scottish and Irish company formation and company registration. We can help you in starting a business in England, Wales Scotland & Northern Ireland. Over 95% of our companies are incorporated within 4-8 hours. The electronic submission of information enables a fast company start-up satisfying all of the required legal formalities: a director, a secretary, a registered office and shareholders. Our electronic filing software has been approved by Companies House.

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WHO ARE THE "CHARITY TRUSTEES" OF A CHARITY?

The charity trustees are the people responsible under the charity's governing document for controlling the management and administration of the charity (s.97 (1) of the 1993 Act). They may be called trustees, managing trustees, committee members, governors, or directors, or they may be referred to by some other title. In the case of an unincorporated association, the members of the executive or management committee are its charity trustees; in the case of a charitable company it is the directors.

An ex officio trustee is a trustee who is in that position by virtue of their office. Normally this relates to positions such as the vicar of a parish, the mayor of a town, etc. Ex officio trustees have the same responsibilities as other charity trustees.

WHAT IS A "NOMINEE"?

A nominee is an individual or corporate body, normally appointed by the charity trustees, whose function is to hold the legal title to the charity's property or investments on behalf of the charity trustees. Nominees have no role as such in the charity's management. They must act on the instructions of the charity trustees, unless they are told to do something which is in breach of trust.

Custodian trustees and the Official Custodian for Charities are types of nominee. Their roles and responsibilities are defined by statute. Other types of nominee are sometimes called "holding trustees" or "bare trustees". Their role and responsibilities may be defined in the charity's governing document, or in an agreement between the charity trustees and the nominee.

CAN ANYONE ACT AS A CHARITY TRUSTEE OR AS A NOMINEE?

No-one under the age of 18 can be appointed either as a charity trustee or as a nominee (except that a person under the age of 18 can be the director of a charitable company). Some people are disqualified by law from acting as charity trustees or nominees, including anyone described in section 72 (1) of the Charities 1993 Act This includes:

Anyone who has been convicted of an offence involving deception or dishonesty, unless the conviction is spent. Anyone who is an undischarged bankrupt. Anyone who has previously been removed from trusteeship of a charity by the Court or the Commissioners for misconduct or mismanagement. Anyone who is under a disqualification order under the Company Directors Disqualification Act 1986. It is normally an offence to act either as a charity trustee or as a nominee while disqualified unless we have given a waiver under section 72 (4) of the 1993 Act (there are some special provisions applying to the administration of charitable companies).

In addition to the disqualifications listed above, the governing document of a charity might also contain a provision which would disqualify certain people from acting as charity trustees. If the governing document does contain such a provision, we could not give a waiver under section 72 (4) of the 1993 Act, as these powers cannot override the provisions in a governing document.

In addition to the disqualifications detailed in section 72 (1) of the 1993 Act, which apply to trustees of all types of charities, the Criminal Justice and Court Services Act 2000 disqualifies certain individuals from holding a range of positions in children's charities, including charity trusteeship. This ban covers, for example, anyone who commits one of a number of serious offences against children and who is subject to a disqualification order made by the Court under that Act. It is also a criminal offence for a disqualified person to knowingly seek appointment to any position covered by this ban including charity trusteeship of a children's charity. It is also an offence for someone to knowingly appoint a disqualified person to such a post.

WHO APPOINTS NEW CHARITY TRUSTEES?

In many cases the governing document says who is to appoint new charity trustees. In some cases it says that some people are to be trustees because of an office which they hold (i.e. ex officio trustees); common examples are the vicar of a parish or the head teacher of a school. Sometimes a named person is given the right to say who shall be new trustees.

Sometimes different organisations are given the right to appoint representatives. If the governing document does not say anything about this, statute allows the existing trustees themselves to appoint new trustees (but the governing document may contain provisions which limit the availability of the statutory power, for example by requiring a quorum of trustees for the transaction of business). A trustee whose term of office has expired can be appointed for a further term of office, unless the governing document prohibits it. This should be checked before a new appointment is made.

WHAT DO TRUSTEES NEED TO CONSIDER WHEN RECRUITING NEW TRUSTEES?

Charity trustees should be selected for what they can contribute to the charity. They should not be appointed for their status or position in the community alone; this is the function of patrons. Charity trustees need to be prepared to take an active part in the running of the charity and therefore need to be able - and willing - to give time to the efficient administration of the charity and the fulfilment of its trusts.

When recruiting new charity trustees, the existing trustees need to be clear about the purposes and aims of the charity , as well as their broader duties and responsibilities as trustees so that they are able to explain to prospective trustees what is required of them. Trustees may wish to draw up a trustee job description to provide prospective trustees with a balanced account of what is involved in being a trustee, including their duties and responsibilities as a trustee.

When trustees are recruiting new trustees, we would recommend that they take the opportunity to look at the skills which are needed to run the charity effectively and identify whether there are any gaps in these skills which could be filled by a new trustee. Prospective trustees should consider whether there would be any possible conflicts of interest if they were to be appointed as a trustee. This is particularly important where personal interests may be significant enough to make it difficult for the individual concerned to make a full contribution to the trustees' discussions and decisions.

HOW DO YOU FIND NEW TRUSTEES?

The traditional methods of recruiting new trustees have been by word of mouth or personal recommendation. However, these methods are more likely to narrow the field from which trustees are drawn and will not provide such a thorough means of finding people with the skills to fill any gaps which the trustees have identified. These methods of recruiting are also likely to work against having a diverse trustee board from a range of ages and social and economic backgrounds.

The Commission believes that diversity is an important factor for accountability and promoting public confidence and Charity Commission would encourage trustees to seek greater diversity across the trustee body. One way of creating a more diverse trustee body is to use more inclusive and transparent methods of recruiting new trustees, such as using trustee brokerage services, networking with other charities and advertising. Advertising can be an effective way of reaching a wider group of people and you can specify the particular skills which you are looking for.

WHAT STEPS SHOULD TRUSTEES TAKE BEFORE APPOINTING NEW TRUSTEES?

Before a new trustee is appointed, the existing charity trustees will need to ensure that the person that they wish to appoint is eligible to act as a charity trustee. Charity trustees will need to make the necessary checks on prospective trustees to ensure that they are not disqualified from acting as a trustee. The extent of these checks will depend on the nature of the charity and the perceived risks.

For example, trustees of a grant making charity might consider that asking the prospective trustee to sign a declaration confirming that they are not disqualified from acting as a trustee is a sufficient check. Trustees of charities that work in higher risk areas, such as working with children or vulnerable adults, will need to make more detailed checks to ensure that prospective trustees are not disqualified under the Criminal Justice and Court Services Act 2000.

It is important that trustees do carry out adequate checks to ensure that any person they wish to appoint as a trustee is not disqualified from acting, since it is a criminal offence for a disqualified person to act as a trustee. If existing trustees appoint a disqualified person as a trustee, this is likely to be a breach of trust.

HOW OFTEN DO CHARITY TRUSTEES NEED TO MEET?

Not every charity conducts its business, or all of its business, at meetings of the charity trustees, but many do. Where the business of a charity is conducted in this way it cannot be administered properly unless the trustees meet regularly. How often that needs to be will depend on the size and nature of the charity, but guidelines may sometimes be set out in the charity's governing document.

The governing document may require the charity to have a certain number of charity trustees, or may specify a minimum number of trustees who must be present if a meeting of the trustees is to be properly constituted (a quorum). If so, the trustees must ensure that their strength does not fall below the minimum, or, if it does, that it does not stay below that number. If no such requirements are made in the governing document of the charity, then the number of trustees needs to be kept up to an effective working strength. What this number is will depend on the administrative requirements of the charity and the legal rule (if the governing document does not specify otherwise) that no decision can be taken except by the agreement of all or a majority of the trustees.

CAN A CHARITY TRUSTEE RESIGN?

Generally yes, if the governing document says so. The resignation is then handled in the way set out in the governing document. If the governing document does not state anything about this, the trustees may be able to rely on the statutory powers in the Trustee Act 1925, where appropriate. Under these statutory powers, however, a trustee cannot resign without replacement unless there will be at least two trustees or a trust corporation left after the resignation.

In some cases, where the title to land belonging to the charity is vested in a charity trustee or nominee who is resigning, the resignation should be effected by deed, or, where the resignation is being effected by a resolution of a meeting of the charity trustees, by a memorandum of the resolution which is executed as a deed. This will automatically transfer the title to the charity's land which was held by the charity trustee or nominee who is resigning into the names of the people who are or become the charity trustees/nominees.

WHAT PRINCIPLES ARE NEEDED TO GUIDE CHARITY TRUSTEES WHEN ADMINISTERING THEIR CHARITY?

The income and property of the charity must be applied for the purposes set out in the governing document and for no other purpose. It must be applied with complete fairness between persons who are properly qualified to benefit from it. The trustees of charities with permanent endowment must, for example when selecting investments for the trust, maintain a fair balance between the interests of present and future potential beneficiaries.

The income of a charity must be applied for its purposes within a reasonable period of receipt, unless the trustees have an explicit power to accumulate it. Without such a power, the trustees should not allow the charity's income to accumulate unless they have a specific future use for it in mind. If the trustees are allowed a discretion about the use of the charity property, but are in some doubt about the proper exercise of that discretion, they should ask us for advice.

Trustees are required to act reasonably and prudently in all matters relating to the charity and need always to bear in mind that their prime concern is the interests of the charity. They cannot let their personal views or prejudices affect their conduct as trustees. They need to exercise an appropriate degree of care in dealing with the administration of their charity. Whilst the standard of care referred to in the Trustee Act 2000 only applies directly to the exercise of the powers and the discharge of the duties set out in the Act (or corresponding constitutional powers) it seems likely that it will be applied by analogy to other aspects of charity administration as well.

Where trustees are required to make a decision which affects the personal interests of one of their number, the governing document of the charity may require that that person should not be present at any discussion or vote on the matter. Even where it is not a requirement in the governing document, we strongly suggest that trustees should follow this procedure as a matter of good practice.

WHAT ELSE DO CHARITY TRUSTEES NEED TO TAKE INTO CONSIDERATION?

We recommend that trustees find out what work is being done by similar charities and voluntary organisations operating in the same area. In some cases this can be done by joining an umbrella charitable association co-ordinating work in a particular field. Trustees need to co-operate with other charities and exchange information with them so as to avoid overlapping or duplicating their efforts. We suggest that they also work with local authorities and other statutory bodies which provide services similar or complementary to those of the charity.

Charities should not, however, use their resources to do what is already being done by statutory services financed out of rates or taxes (unless the governing document clearly permits it); however, they may supplement those services by providing additional benefits beyond the actual statutory provision. Trustees are also responsible for setting the strategic aims, objectives and direction of the charity. The identification of risk arising from activities undertaken and the management of identified risk is an important element in helping to ensure the strategic aims and objectives of the charity are achieved. Trustees of charities with gross income in excess of £ 250,000 are required to make a statement in their annual report as to whether they have given consideration to the major risks to which the charity is exposed and to systems designed to mitigate those risks.

CAN CHARITY TRUSTEES APPOINT NOMINEES?

The normal rule is that the charity trustees should jointly hold the title to all the charity's property. This maximises security, but often leads to practical difficulties of administration, particularly where the identity of the charity trustees changes regularly. It is often more convenient to hold the title to property in the name of a nominee, whose identity does not change, or changes only rarely. An explicit statutory or other authority is required to appoint a nominee. The Public Trustee Act 1906 and the Trustee Act 2000 give statutory powers to appoint nominees, and the Charities Act 1993 makes provision for vesting the title to charity land in the Official Custodian for Charities. The constitutions of many charities give wider powers to appoint nominees.

WHAT ARE THE LIABILITIES OF CHARITY TRUSTEES?

If trustees act prudently, lawfully and in accordance with their governing document then any liabilities they incur as trustees can be met out of the charity's resources. But if they act otherwise they may be in breach of trust and personally responsible for liabilities incurred by or on behalf of the charity, or for making good any loss to the charity. Since trustees are acting collectively in administering a charity, they will usually be responsible collectively (the legal term is "jointly and severally") to meet any liability to a third party which has been incurred by them or on their behalf, but they will normally be able to indemnify themselves out of the property of the charity where the liability has been properly incurred in the administration of the charity.