We are changing! As announced at our 2017 Open Day, the trustees of the Nystagmus Network have been exploring the best legal structure for the charity to ensure it is in the best position to grow and support its members. Having taken advice on the matter, and with a new suite of trustees on board, the trustees have unanimously decided to transfer the existing charitable structure into a “Charitable Incorporated Organisation” (a “CIO”) and we will be seeking your approval for this at the AGM being held on the Open Day, formal notice of which is included with this note.
This note provides a brief summary of the reasons for the change, what that change means to you and how the change will be implemented.
While the change in structure has some important legal consequences, rest assured that there will be no change to your day to day experience of and interaction with the charity.
We are aware that some of the information set out below and contained in the enclosed documents can appear quite complex and full of legalese and jargon. If you have any questions please do not hesitate to contact us by email at email@example.com or by phone on 01427 718093. In addition, trustees will be available to answer your queries at our Open Day on Saturday 29 September 2018 at the Burlington Hotel in New Street Birmingham. Even members who have not booked a ticket for the Open Day are entitled to attend the Annual General Meeting formal element of the Open Day, which will be held at 15:45 – please arrive at the hotel and report to the Horton Suite by 15:40.
TRUST vs. CIO
When the Nystagmus Network was set up in 1984, it was structured as an unincorporated trust. Back then the trust structure was the most simple and inexpensive way to set up a charity whilst ensuring there was only a limited amount of administration required to manage the legal structure and regulatory filing requirements.
However, as some of you may be aware, a trust does not have its own legal personality. Instead, the trustees personally enter into contracts on behalf of the trust. As the charity continues to grow and employ additional staff, enter into research grants and commitments, etc. this lack of distinct legal identity creates a level of administration and bureaucracy difficult for a charity which is still relatively small to manage in a cost effective way. In addition, the absence of a legal personality means that it is the trustees who are each personally liable (beyond insurance cover) for the losses of the charity. This can create a significant hurdle in recruiting the most appropriate and best skilled trustees for the charity to excel.
In 2011 the government created a new legal structure specifically designed to remove the disadvantages of the unincorporated trust arrangement – the CIO. Unlike a trust, a CIO has its own legal personality (and can therefore enter into contracts and own property in its own right) and provides trustees with the concept of “limited liability”. In short, provided that the trustees comply with their legal obligations (which are governed by various charity and trust statutes) and manage the charity with due care and skill and in the best interest of the beneficiaries, they will not be held personally liable for the losses of the charity – not that the Nystagmus Network’s trustees have any intention of incurring any such losses!
IMPACT OF CHANGE
In order to become a CIO, the charity needs to adopt a new constitution. This is the framework document which sets out the legal structure and management of the charity. The current constitution has not been updated since creation in 1984 and unsurprisingly the trustees have found that there are a number of changes which they feel will improve the running of the charity and member experience.
A copy of the proposed new constitution is enclosed with this note and will be presented at the annual general meeting for approval. The new constitution is based on the standard form produced by the Charity Commission and indeed only a few, minor changes have been made.
In summarythe key changes to the charity’s current constitution are as follow:
- Votes by Proxy: The current constitution has a number of restrictions on the ability for members to vote by proxy (i.e. for a member to cast their vote at an AGM where they are unable to attend in person). To ensure that members can more easily participate in the decision-making process of the charity, members will be able to appoint any other person to vote on their behalf on any matter being proposed at a member meeting.
- Changing age restrictions: The current constitution requires all, members and trustees to be over 18 years old. In line with the Charity’s Commission’s desire to encourage younger people to become trustees and involve themselves in charitable governance, the new constitution allows trustees to be appointed from the age of 16. Whilst membership criteria will still be at the discretion of the trustees, the removal of the 18 year-old threshold will give the trustees more power to create junior member classes and junior committees should it wish to do so in the future.
- Re-election of Trustees: To ensure that there is proper and ongoing scrutiny of the make-up of the board of the charity, the new constitution adopts one of the Charity Commission’s proposal for good governance which is that a third of the board resigns (and is eligible for reappointed) at each AGM.
None of the above changes can take place unless we have your approval. In order for the charity to become a CIO, we the members present at the AGM to:
- approve the decision to convert the charity from an unincorporated trust into a CIO;
- approve the New Constitution and establishment of the CIO;
- following establishment of the CIO, approve the transfer of the unincorporated trust’s business and assets (and your membership) to the CIO; and
- subject to the completion of such transfer, dissolve the old unincorporated trust.
All of these decisions will be put to the membership at the AGM on Saturday 29 September 2018 at 15:45 and the trustees strongly recommend and encourage all members to vote in favour of them.In order to proceed, we will need a majority of the members present to approve items (i) and (iii) above and at least two-thirds of the members present to approve items (ii) and (iv).
Once the members have agreed to the incorporation of the charity as a CIO, it is hoped that all legal and administrative steps will be completed by Christmas so that the new entity will be up and running from 1 January 2019.