To amend the articles of association for a charitable limited company in the UK, you must obtain approval from at least 75% of the company’s members (guarantors/trustees) by passing a special resolution at a general meeting.
There are, however, certain ‘regulated alterations’ that require written consent from the Charity Commission before a members’ resolution can be passed.
Approving changes to the articles of association for a charitable limited company
Unlike companies limited by shares, which are generally set up with the intention of making a profit for the benefit of their shareholders, charitable companies are usually set up as non-profit limited by guarantee companies.
This type of company does not have absolute freedom to alter its statement of objects (a description of the company’s purpose) or the administrative powers and provisions set out in its articles.
Section 198 of the Charities Act 2011 requires that prior written consent of the Charity Commission is obtained before a charitable company makes any changes to its objects, dissolution provisions, and trustee benefit provisions. These changes are defined as ‘regulated alterations’.
What are regulated alterations?
Regulated alterations are changes to a charitable company’s articles in areas of fundamental importance. These types of alterations fall into three broad categories:
- Any change to the statement of the objects of the charity – this is a description of the charity’s purposes
- Any change to what happens to the charity’s property upon being wound up
- Any change that authorises funds of property to be used to benefit the directors or members, or people or organisations connected with them
If the Charity Commission agrees to any such changes to the articles of association for a charitable limited company, the company’s members can pass a special resolution. The director must then send a copy of the resolution giving effect to the change, as well as a signed copy of the articles as altered, to Companies House within 15 working days of the resolution being made.
Where a charitable company amends its statement of objects, these amendments will only come into effect when they are registered at Companies House. A charitable company can only start acting under the new objects after this registration date.
Notifying the Charity Commission
The Commission also has a duty to maintain an accurate and up-to-date register. Therefore, company trustees have a legal duty to inform the Commission about any changes (regulated or not) at the same time as notifying Companies House. To tell the Charity Commission about alterations to your company’s articles, you will need to provide the following information on an online form:
- the changes that were made
- evidence that changes were properly made
- the date on which the special resolution was passed
- where the charity’s statement of objects has changed, the date these changes were registered at Companies House
The amended articles can be attached to this online form. The charity’s entry will then be updated on the public Register of Charities. With the exception of changes to the statement of objects, an amendment will take effect from the date the special resolution is passed by the company’s members.
In cases where the articles state that no consent is required from the Commission, the company members can agree to make any changes that are not classed as regulated alterations.
Notifying Companies House
To inform Companies House about changes to the articles of association for a charitable limited company, the director should file a copy of the new articles and members’ resolution online via WebFiling.