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Many charities in Northern Ireland have as their legal structure the company limited by guarantee. But this does not mean that the people on the board of a company, i.e. known as the directors, are not also charity trustees at law. 

Under the Charities Act (NI) 2008 it says that trustees in relation to a charity means the persons having the general control and management of the administration of the charity. Under the Companies Act 2006 director includes any person occupying a position of director by whatever name called. Ultimately those who sit on the board, whatever they are called, are both company directors and charity trustees if the company limited by guarantee has charity status.

The rules and responsibility of a charity trustee are to carry out its stewardship role and duty to safeguard and protect the assets and that includes the reputation of the charity; a duty to act collectively, they must act in the best interests of the charity and exercise independent judgment; they are responsible for the proper administration of the charity; they have to avoid a conflict of interest between their personal interests and those of the charity; they are responsible for everything the charity does and they have to act reasonably and prudently in all matters.

Directors’ duties are codified and set out in the Companies Act 2006. There are seven general duties: to act within their powers; to promote the success of the company, i.e. in a charitable company to advance the objects of the charity for charitable purposes and for the public benefit; to exercise reasonable care, skill and diligence; to exercise independent judgment; to avoid conflicts of interest; not to accept benefits from third parties; and to declare interest in proposed arrangements for transactions with the company.

There is also a general duty of confidentiality but the above are the main duties which attach to the role. You can see there is an overlap between directors’ duties and charity trustees’ duties. It is important to note that when making any decisions in relation to a charity, those on the board have to have regard by law to the mandatory statutory guidance on public benefit when running the charity and reporting on it to the Charity Commission.

For further information on your duties contact Jenny or Sarah.