Commercial Law – Update 1

CHARITIES ACT, 2009

The Charities Act 2009 was signed into law on 28th February 2009. The key operative sections of the Act have yet to be commenced by the Minister for Justice, Equality & Defence. The purposes of the Act generally are as follows:-

  1. To establish a new Charities Regulator for the sector;
  2. To reform the law of charities by ensuring greater accountability; and
  3. To protect against fraud and the abuse of charitable status.

The new Charities Regulatory Authority (The “Authority”) as proposed in the Act will have the following objectives:-

  1. To increase public trust and confidence in the management and administration of charitable trusts and organisations; and
  2. To promote compliance by charity trustees in relation to their duties in the control and management of charitable trusts and organisations.

It is intended that the Authority will have an enforcement role and powers of investigation.  Any breaches of the law will be liable to prosecution under the provisions of the Act.  The Authority is also entitled to cooperate and share information with other regulators in Ireland.

The Authority will establish and maintain a register of charitable organisations.  Every charitable organisation must apply to be registered within six months after the commencement of the registration provisions of the Act.  Any organisation which is already registered with the charity section of the Revenue Commissions will be deemed to be on the register.  The tax status of the charity will be dealt with by the Revenue Commissioners and the charitable status will be dealt with by the Authority.

The Act introduces the concept of a charity trustee. If the relevant sections of the Act are commenced, directors and other officers of a charitable organisation such as the treasurer and the secretary will become charity trustees.  Charity trustees who are directors or secretary will continue to have other legal and regulatory duties which apply pursuant to the provisions of the Companies Acts, 1963 to 2013.  Charity trustees will, in addition to all obligations applicable under the Companies Acts, have additional duties as follows:-

  • A general duty not to have a conflict of interest and to act in the best interests of the charity.  The trustee must not profit from his position as a trustee and the trustee must not be influenced by conflicting loyalties.  There should, for example, be a policy regarding how to deal with conflicts of interest in the organisation.
  • In relation to statutory duties, these will include the following:-
    • Ensuring that the charity registers with the Authority, if necessary;
    • Ensuring proper books of account, statements of account and annual activity reports are prepared and filed;
    • Not to have any disqualified officers on the Board of the charity and this would include for example a person who has been adjudged a bankrupt or one who has made an arrangement with his creditors.

The Act also imposes annual ongoing financial record keeping and reporting obligations.  As a minimum requirement, every charitable organisation must keep proper books of account.  Within ten months of the end of its financial year a charitable organisation must submit to the Authority a report on its activities in that financial year, the form and content of which will be prescribed by Ministerial Order.

The Act proposes to introduce significant reforms in relation to fundraising, for example, it introduces a requirement for collection boxes to display the name of the charity for which the collection is being made as well as the organisation’s registered charity number.  Any collectors will need to wear clothing which shows the name of the charity and its registration number.  Documentation such as standing order requests where electronic fund transfers take place will need similar details.