All charities and not-for-profit organisations should have a governing document. Trusts are governed by their trust deed. Companies are governed by their constitution, also known as Memorandum and Articles of Association. Unincorporated associations are usually governed by a set of rules or a constitution.
Charity trustees must understand and carry out the objectives of their organisation as stated in their organisation's governing document. It is important to act in accordance with the terms set out in the document. Charity trustees should also be aware that these terms may limit or restrict the activities the organisation engages in.
We set out below the most important provisions to be aware of.
Principal object or purpose of the organisation
You should know what the stated principal object of your organisation is and you must ensure that all activities of the organisation are carried out in furtherance of that object. The governing document should accurately reflect the current principal object of the organisation. If it does not, consider updating it.
Number of members, directors or trustees and how they are appointed
The governing document sets out who the members/directors/trustees of the organisation are and how they are appointed. Check to ensure that any specific rules in this regard are being adhered to. These include maximum / minimum number, method of appointment, terms of office, retirement provisions, among others. This can help to ensure that, at all times, the organisation has validly appointed members/directors/trustees.
The governing document will set out the quorum, or minimum number, of members/directors/trustees who must attend meetings. Know the quorum and ensure that the required number of persons are present at all meetings.
How much notice must be given of meetings? How should meetings be convened? What business can be dealt with at meetings? The answers to each of these questions also lie in the governing document. You should be familiar with each of these issues in order to ensure that meetings are validly held and to ensure all decisions taken at meetings are valid.
Know who is entitled to vote at meetings and how many votes each person has at a meeting. Can a...