We are often asked about the legal position of the persons sitting on the board of a company which has charity status. Are they company directors or charity trustees and what does it mean anyway?
The governing body is the persons responsible in law for managing the organisation.
Regardless of the name given to the governing body, in a company the members of the governing body are company directors and must comply with company law.
The Companies Act 2006 defines a company director as “any person occupying the position of director, by whatever name called”.
If the company is charitable the directors are also charity trustees at law.
The governing body of a charity are charity trustees regardless of the charity’s legal form (i.e. whether a company, charitable trust, unincorporated body…) and regardless of what the governing body members are called in the governing document or in practice.
The Charities Act (NI) 2008 defines charity trustees as “the persons having the general control and management of the administration of a charity”.
The persons occupying the position of a director of a company that is also a charity therefore need to understand their roles, responsibilities and liabilities both as a charity trustee and also as a company director and will need to be familiar with both company law and charity law requirements. There is collective responsibility for decision making.
We deliver board training to the members of a charity company board which helps explain this further and aids them in carrying out their functions on behalf of the charity.
If you would be interested in knowing more about this please contact Sarah Burrows.