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Part 13E+W[F1Powers to amend trusts and use capital]

Textual Amendments

Powers of F2... charities to spend capitalE+W

Textual Amendments

F2Word in s. 281 cross-heading omitted (14.6.2023) by virtue of Charities Act 2022 (c. 6), s. 41(4), Sch. 2 para. 16(2); S.I. 2023/643, Sch. para. 20(b)

281Power of F3... charities to spend capital: generalE+W

(1)This section applies to any available endowment fund of a charity F4....

(2)But this section does not apply to a fund if sections 282 to 284 (power to spend larger fund F5...) apply to it.

(3)If the condition in subsection (4) is met in relation to the charity, the charity trustees may resolve for the purposes of this section that the fund, or a portion of it, ought to be freed from the restrictions with respect to expenditure of capital that apply to it.

(4)The condition is that the charity trustees are satisfied that the purposes set out in the trusts to which the fund is subject could be carried out more effectively if the capital of the fund, or the relevant portion of the capital, could be expended as well as income accruing to it, rather than just such income.

(5)Once the charity trustees have passed a resolution under subsection (3), the fund or portion may by virtue of this section be expended in carrying out the purposes set out in the trusts to which the fund is subject without regard to the restrictions mentioned in that subsection.

(6)The fund or portion may be so expended as from such date as is specified for this purpose in the resolution.

[F6(6A)If—

(a)an amount falls to be repaid to or paid into the fund by the charity trustees because the charity trustees have borrowed an amount from the fund,

(b)the amount when repaid or paid would fall to be added to the fund and to be subject to the same restrictions as to expenditure as apply to the other capital in the fund, and

(c)the condition in subsection (6B) is met in relation to the charity,

the charity trustees may resolve for the purposes of this section that the obligation to repay or pay the amount ought to cease to have effect either wholly or in part.

(6B)The condition is that the charity trustees are satisfied that the purposes set out in the trusts to which the fund is subject could be carried out more effectively if the obligation ceased to have effect to that extent.

(6C)Once the charity trustees have passed a resolution under subsection (6A), the obligation ceases to have effect to that extent.

(6D)Where a resolution passed under subsection (6A) relates to all outstanding obligations to repay amounts to or pay amounts into the fund in respect of the amount borrowed from the fund, any other obligation which falls to be carried out by the charity trustees because the charity trustees have borrowed that amount from the fund also ceases to have effect once the resolution has been passed.]

(7)In this section “available endowment fund”, in relation to a charity, means—

(a)the whole of the charity's permanent endowment if it is all subject to the same trusts, or

(b)any part of its permanent endowment which is subject to any particular trusts that are different from those to which any other part is subject.

Textual Amendments

F3Word in s. 281 heading omitted (14.6.2023) by virtue of Charities Act 2022 (c. 6), s. 41(4), Sch. 2 para. 16(1)(b); S.I. 2023/643, Sch. para. 20(b)

F4Words in s. 281(1) omitted (14.6.2023) by virtue of Charities Act 2022 (c. 6), ss. 10(2)(a), 41(4); S.I. 2023/643, Sch. para. 2 (with reg. 4)

282Resolution to spend larger fund F7...E+W

(1)This section applies to any available endowment fund of a charity [F8if—

(a)in a case where subsection (1A) applies, the adjusted market value of the fund exceeds £25,000, or

(b)in any other case, the market value of the fund exceeds that sum.]

[F9(1A)This subsection applies where the charity trustees of the charity have borrowed from the fund and all or part of that borrowing is outstanding.]

(2)If the condition in subsection (3) is met in relation to the charity, the charity trustees may resolve for the purposes of this section that the fund, or a portion of it, ought to be freed from the restrictions with respect to expenditure of capital that apply to it.

(3)The condition is that the charity trustees are satisfied that the purposes set out in the trusts to which the fund is subject could be carried out more effectively if the capital of the fund, or the relevant portion of the capital, could be expended as well as income accruing to it, rather than just such income.

[F10(3A)If—

(a)an amount falls to be repaid to or paid into the fund by the charity trustees because the charity trustees have borrowed an amount from the fund,

(b)the amount when repaid or paid would fall to be added to the fund and to be subject to the same restrictions as to expenditure as apply to the other capital in the fund, and

(c)the condition in subsection (3B) is met in relation to the charity,

the charity trustees may resolve for the purposes of this section that the obligation to repay or pay the amount ought to cease to have effect either wholly or in part.

(3B)The condition is that the charity trustees are satisfied that the purposes set out in the trusts to which the fund is subject could be carried out more effectively if the obligation ceased to have effect to that extent.]

(4)The charity trustees—

(a)must send a copy of any resolution under subsection (2) [F11or (3A)] to the Commission, together with a statement of their reasons for passing it, and

(b)may not implement the resolution except in accordance with sections 283 and 284.

(5)In this section—

F13(6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F7Words in s. 282 heading omitted (14.6.2023) by virtue of Charities Act 2022 (c. 6), ss. 10(3)(a), 41(4); S.I. 2023/643, Sch. para. 2 (with reg. 4)

F9S. 282(1A) inserted (14.6.2023) by Charities Act 2022 (c. 6), ss. 10(3)(c), 41(4); S.I. 2023/643, Sch. para. 2 (with reg. 4)

283Notice of, and information about, s.282 resolutionE+W

(1)Having received the copy of the resolution under section 282(4), the Commission may—

(a)direct the charity trustees to give public notice of the resolution in such manner as is specified in the direction, and

(b)if it gives such a direction, must take into account any representations made to it—

(i)by persons appearing to it to be interested in the charity, and

(ii)within the period of 28 days beginning with the date when public notice of the resolution is given by the charity trustees.

(2)The Commission may also direct the charity trustees to provide the Commission with additional information or explanations relating to—

(a)the circumstances in and by reference to which they have decided to act under section 282, or

(b)their compliance with any obligation imposed on them by or under section 282 or this section in connection with the resolution.

284When and how s.282 resolution takes effectE+W

(1)When considering whether to concur with the resolution under section 282(2) [F14or (3A)], the Commission must take into account—

(a)any evidence [F15made] available to it as to the wishes of [F16any donor or donors to the available endowment fund], and

[F17(b)any changes in circumstances relating to the available endowment fund since it was established (including, in particular, the financial position of the fund, the needs of those who can benefit from the fund, and the social, economic and legal environment).]

(2)The Commission must not concur with the resolution unless it is satisfied—

(a)that its implementation would accord with the spirit of [F18any gift or gifts to the available endowment fund] (even though it would be inconsistent with the restrictions mentioned in section 282(2)), and

(b)that the charity trustees have complied with the obligations imposed on them by or under section 282 or 283 in connection with the resolution.

(3)Before the end of the [F19relevant period], the Commission must notify the charity trustees in writing—

(a)that the Commission concurs with the resolution, or

(b)that it does not concur with it.

[F20(4)The “relevant period” means—

(a)the period of 60 days beginning with the date on which the Commission receives the copy of the resolution in accordance with section 282(4), or

(b)that period as modified by subsection (4A) or (4B).

(4A)If under section 283(1) the Commission directs the charity trustees to give public notice of a resolution, the running of the relevant period is suspended from the date on which the direction is given to the charity trustees until the end of the period of 42 days beginning with the date on which public notice of the resolution is given by the charity trustees.

(4B)If under section 283(2) the Commission directs the charity trustees to provide any information or explanations, the running of the relevant period is suspended from the date on which the direction is given to the charity trustees until the date on which the information or explanations is or are provided to the Commission.]

(5)Where—

(a)the charity trustees are notified by the Commission that it concurs with the resolution, or

(b)the [F21relevant period] has elapsed without the Commission notifying them that it does not concur with the resolution,

[F22(6)Where the resolution passed under section 282(3A) relates to all outstanding obligations to repay amounts to or pay amounts into the fund in respect of the amount borrowed from the fund, any other obligation which falls to be carried out by the charity trustees because the charity trustees have borrowed that amount from the fund ceases to have effect when the obligations to repay or pay amounts cease to have effect.]

the fund or portion may, by virtue of this section, be expended in carrying out the purposes set out in the trusts to which the fund is subject without regard to the restrictions mentioned in section 282(2) [F23or (as the case may be) the obligation to repay or pay the amount to the fund ceases to have effect, by virtue of this section, to the extent resolved by the trustees under section 282(3A)] .

Textual Amendments

F18Words in s. 284(2)(a) substituted (14.6.2023) by Charities Act 2022 (c. 6), s. 41(4), Sch. 2 para. 17(5); S.I. 2023/643, Sch. para. 20(c) (with reg. 4)

F20S. 284(4)-(4B) substituted for s. 284(4) (14.6.2023) by Charities Act 2022 (c. 6), ss. 11(3), 41(4); S.I. 2023/643, Sch. para. 3 (with reg. 4)