News

Charity law reforms receive Royal Assent

The Public Services Reform (Scotland) Act received Royal Assent on 28th April.  Once brought into force, the Act will introduce a number of important changes to charity law. 

Charity websites

One important change which will require action by charities is in relation to the rules on references in documents.  These rules require charities to disclose certain information on all documents produced by them or on their behalf.  The information which must be disclosed includes the full name of the charity and the charity number from the Scottish Charity Register.  The rules already cover emails and the effect of the 2010 Act is to extend these rules to charities’ websites.  Detailed provisions as to which parts of a website are affected will be passed by the Scottish Parliament later.

Charities will need to check their websites carefully to ensure that they comply with these new rules once the detailed provisions have been passed.  This is also a useful reminder to continue to review other documents produced to ensure that the rules more generally are satisfied.  The Office of the Scottish Charity Regulator (OSCR) has announced that it will take an increased approach to enforcing the regulations from now on.  This is a matter which charities should be dealing with proactively.

Trustee indemnity insurance

OSCR’s informal approach to the treatment of trustee indemnity insurance (TII) will be given legislative force in the Act, allowing charities to purchase TII for the protection of their trustees using charity funds.  The Act will apply to all charities unless the purchase of TII is expressly prohibited by the constitution.  Any cover which is put in place must not be framed in such a way as to include any liability incurred by a trustee for the payment of criminal fines, regulatory penalties, or where liability arises from the trustee acting in a dishonest or unreasonable manner.

Other amendments

The Act includes a series of additional amendments which impact on charities. 

• OSCR will be able to vary, revoke or review any directions it issues.  Previously OSCR only had this power in relation to decisions, not directions.
   
• The Court of Session will be given power to deem a person to have been removed from office as a charity trustee.
   
• The Reorganisation Regulations will be extended to apply to restricted funds within a charity as well as to entire charities.  They will also allow charities to introduce new administrative provisions, so long as they are not inconsistent with the spirit of the charity’s constitution. 
   
• OSCR will be given power to appoint charity trustees in certain circumstances.  This power will only be available to them at the request of a charity’s existing trustees.

Enforcement

Although the Act has received Royal Assent, all of the provisions relating to charities only come into force once Scottish Ministers have passed an appropriate order.  It is expected that the first commencement orders will be passed in the Scottish Parliament over the course of the summer and autumn of 2010.