Introduction to Legal Structures                      John Black                 Business Adviser
Just Enterprise           Business support and development services to       enterprising third sector organisations acros...
Target Groups  •   Enterprising Third Sector Organisations  •   Start-up Social Enterprises  •   Established Social Enterp...
1-1 Business Support• Enterprising Third Sector Organisations on training  programmes may be eligible for 1-1 Business  su...
Business Support can include  •   Business Planning  •   Feasibility Study  •   Legal Structure  •   Marketing Plan  •   O...
Apply for support now at              www.justenterprise.org.ukJust Enterprise
Introduction to Legal Structures                      John Black                 Business Adviser
Overview    •   Raise awareness and knowledge    •   Review legal structure options    •   Identify key charitable issues ...
What stage of development is your  organisation currently at?  Discussion – issues to consider  •   Type of work you do  •...
Legal Structures for            Voluntary OrganisationsJust Enterprise
Types of legal structure: Overview    •   Voluntary association    •   Trust    •   Industrial & Provident Society (Commun...
Types of Legal Structure: Advantages/Disadvantages   • Voluntary association       – No formal registration requirements (...
Types of Legal Structure:   Advantages/Disadvantages • Trust     – No formal registration requirements (other than charity...
Types of Legal Structure:    Advantages/Disadvantages  • Industrial & provident society      – Full legal personality     ...
Types of Legal Structure: Advantages/Disadvantages  • Company limited by guarantee      – Full legal personality      – Li...
Company Limited by Guarantee  • 1985 Companies Act still main legislation but    now 2006 Act as well  • Limited liability...
Memorandum & Articles of     Association: Key areas •   Name – change needed? •   Objects: internal & external needs, outc...
Company limited by                   guarantee Decisions on:   Members                         •   changes to name,       ...
Types of Legal Structure: Advantages/Disadvantages  • Company limited by shares      – Full legal personality      – Limit...
Types of Legal Structure: Advantages/Disadvantages  • SCIO      – Full legal personality      – Limited liability      – S...
Types of Legal Structure:Advantages/Disadvantages • LLP     – Full legal personality     – Limited liability     – Very fl...
Types of Legal Structure:Overview (cont.) Community Interest Company (CIC) • A type of company; a CIC can be either a comp...
Types of Legal Structure: Overview(cont.) •   A CIC cannot distribute profits beyond a limit (“the dividend cap”)     set ...
Types of Legal Structure: Advantages/Disadvantages  • CIC      – badges the business as sitting within the social enterpri...
Core Governance, Roles &Responsibilities of CompanyDirectors
Charities: issues  •   Main benefit likely to be funding access  •   ‘public benefit’ test  •   2005 Act: 15 charitable ai...
New Definition of a Scottish Charity   • A body meets the charity test if       – its purposes consist only of one or more...
New Definition of a Scottish Charity (cont’d)   • FIRST PART OF THE TEST - the 15/16 charitable      purposes:       (a) T...
New Definition of a ScottishCharity (cont’d)     (i) The provision of recreational facilities, or the organisation of recr...
New Definition of a Scottish Charity(cont’d)   • The new definition:       – Wording of charitable purposes slightly more ...
Practical Implications for Existing Scottish Charities     – All Scottish charities will be required to file annual accoun...
Practical Implications for Existing Scottish Charities  •   Prior consent of OSCR will be required in relation to: change ...
Legal Responsibilities of                   DirectorsJust Enterprise
Legal Responsibilities of Directors    • Key principles: company law    • New legal duties for directors of      companies...
Directors’ Role & Responsibilities under Company Law   •   Role of directors   •   Limitations on directors’ powers   •   ...
Role of Directors   • To take decisions on management policy   • Generally control and supervise the activities     of the...
Limitations on Directors’ Powers  • Certain matters require to be dealt with (under the    Companies Acts) by the members;...
Duty of Good Faith  • The board must always exercise the powers of the company in a    way which the board considers will ...
Duty to Exercise ProperCare & Skill  • PROPER CARE: each director has a duty to take the    same care in relation to the c...
Relationship Between the Board andManagement Staff  • The practicalities of a typical voluntary sector company    are such...
Relationship Between the Boardand Outside Advisers  • In certain circumstances it would be    irresponsible (and a breach ...
Statutory Obligations/Liabilities  • Company records & returns: the Companies Act    imposes responsibilities on the direc...
Other Legal Hazards   • Serious breaches of health & safety legislation   • Claims by third parties who suffer injury etc ...
Wrongful Trading Provisions • The "bottom line" in relation to these provisions is that a   director would have to pay out...
Wrongful Trading Provisions   • FINANCIAL MONITORING: each director should     satisfy himself/herself that (a) the indivi...
New Legal Duties – Directors ofCompanies with Charitable Status • Charity trustees must act in the interests of the   char...
New Legal Duties – Directors of Companies with Charitable Status  •   Breach of trustees’ duties specified above is to be ...
Good Governance       “A Code for the Voluntary        and Community Sector”Just Enterprise
Good Governance:         Good Practice in Managing                   SEOsJust Enterprise
Code of Governance  • Not mandatory  • Compliant with legal and regulatory    requirements, including those relating to   ...
Governance  • Governance is high on the agenda in all    sectors  • As voluntary organisations working for public    benef...
A Definition  • One writer on governance defined    governance as being:      “ the systems and processes concerned with  ...
Principles  There are seven main principles that underpin the  Code and supporting principles underlying each of  these is...
Principles Principle 1: Board leadership •   Every organisation should be led and controlled by an effective     Board of ...
Principles (cont’d)  Principle 4: Board review and renewal  • The Board should periodically review its own     and the org...
Principles (cont’d)   Principle 6: Board and trustee integrity   • The Board and individual trustees should act      accor...
The Way You ‘Govern’    • The way your organisation governs will be      different depending on your circumstances    • Th...
Good Practice Checklist  • Appropriate and transparent structures should    be in place  • Balance of skills should be rig...
Good Practice Checklist  • Follow your own rules – governing document  • Keep written records of meetings - important    d...
Good Practice Checklist  • Seek professional or specialist advice when    needed – even the most qualified/experienced    ...
Good Practice Checklist   • Make sure conflicts of interest are declared,     recorded and dealt with openly   • Make sure...
Good Practice Checklist  • Monitor the organisation’s progress against its    plans – performance targets delivered  • Kee...
Good Practice Checklist • Consult and inform all stakeholders – staff,   volunteers, funders, members and partners • Set u...
Good Practice Checklist • Review performance of committee • Compare the existing skills of   committee against what is nee...
Good Practice Checklist    • Review organisations/projects      work    • Has it achieved what it set out to      do?    •...
Thank you!Just Enterprise
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Legal structures presentation

  1. 1. Introduction to Legal Structures John Black Business Adviser
  2. 2. Just Enterprise Business support and development services to enterprising third sector organisations across ScotlandJust Enterprise
  3. 3. Target Groups • Enterprising Third Sector Organisations • Start-up Social Enterprises • Established Social Enterprises • Equalities Groups • Social Entrepreneurs • Leaders, Managers and StaffJust Enterprise
  4. 4. 1-1 Business Support• Enterprising Third Sector Organisations on training programmes may be eligible for 1-1 Business support• Small scale, targeted consultancy assignments• In-depth, strategic consultancy assignmentsJust Enterprise
  5. 5. Business Support can include • Business Planning • Feasibility Study • Legal Structure • Marketing Plan • Operational Review • Costings for procurement/tenderingJust Enterprise
  6. 6. Apply for support now at www.justenterprise.org.ukJust Enterprise
  7. 7. Introduction to Legal Structures John Black Business Adviser
  8. 8. Overview • Raise awareness and knowledge • Review legal structure options • Identify key charitable issues • Identify directors responsibilities • Introduce Code of practice on Good GovernanceJust Enterprise
  9. 9. What stage of development is your organisation currently at? Discussion – issues to consider • Type of work you do • Management, staff resources and track record • Any major liabilities e.g. Building, staff • Predictability of your future • Current funding mixJust Enterprise
  10. 10. Legal Structures for Voluntary OrganisationsJust Enterprise
  11. 11. Types of legal structure: Overview • Voluntary association • Trust • Industrial & Provident Society (Community Benefit Society or Bone-Fide Co-operative) • Company limited by guarantee • Company limited by shares • Scottish Charitable Incorporated Organisation (SCIO) • Limited liability partnership (LLP) • Community Interest Company (CIC)Just Enterprise
  12. 12. Types of Legal Structure: Advantages/Disadvantages • Voluntary association – No formal registration requirements (other than charity recognition process – Less on-going admin. (e.g. no need to notify changes in those serving on management committee) – Very limited legal overlay (e.g. no statutory rules for AGMs) – Much less intimidating for people wanting to get involved But – Not treated as a legal entity for most purposes – Risk of personal liability for those serving on the management committee [a serious disadvantage]Just Enterprise
  13. 13. Types of Legal Structure: Advantages/Disadvantages • Trust – No formal registration requirements (other than charity recognition process) – Less on-going admin. (e.g. no need to notify changes in trustees) – Limited legal overlay (as compared with e.g. a company) – Absence of member-level reduces administration But – Does not have full legal personality (so need to show linkage in trustees) – Possibility of personal liability for trustees (though lower risk than in voluntary association) – May be regarded by funders as more exposed to abuse, since no accountability at AGMsJust Enterprise
  14. 14. Types of Legal Structure: Advantages/Disadvantages • Industrial & provident society – Full legal personality – Limited liability – Body of statutory requirements is less detailed than for companies – Use of standard models may make formation process seem more simple – Useful vehicle for public share issue But – Registration procedures are needed to form an IPS – Registration is more expensive than company incorporation (where there are major departures from model rules) – On-going requirement to notify changes to the FSA – Statutory overlay – and less flexible than for companies – IPS structure is unfamiliar to lawyers, many banks etcJust Enterprise
  15. 15. Types of Legal Structure: Advantages/Disadvantages • Company limited by guarantee – Full legal personality – Limited liability – Companies House provides much more up-to-date framework than FSA – Can be charitable or be a CIC or neither But – Registration procedures are needed to form a company – There are on-going requirements to notify changes in directors, secretary, registered office etc – Major body of statutory and case law as overlay – Can be intimidating (as compared with voluntary association or trust) for those wanting to get involvedJust Enterprise
  16. 16. Company Limited by Guarantee • 1985 Companies Act still main legislation but now 2006 Act as well • Limited liability – important if you own assets, employ staff • Democratic structure • Registrar of Companies • Memorandum & Articles of AssociationJust Enterprise
  17. 17. Memorandum & Articles of Association: Key areas • Name – change needed? • Objects: internal & external needs, outcomes • 2-tier structure: members and Board • Membership qualification • Board compositionJust Enterprise
  18. 18. Company limited by guarantee Decisions on: Members • changes to name, objects, articles • directions to the board (rare) • winding-up ELECT • AGM matters Board of directors Decisions on management policy Overall supervision & controlJust Enterprise
  19. 19. Types of Legal Structure: Advantages/Disadvantages • Company limited by shares – Full legal personality – Limited liability – Readily lends itself to detailed tailoring in relation to decision-making and financial returns (e.g. through separate classes of shares) – Can be a CIC if appropriate But – Registration procedures are needed to form a company – There are on-going requirements to notify changes in directors, secretary, registered office etc – Major body of statutory and case law as overlay – Company will be liable to tax, so not optimum for a joint venture where one or more shareholders are public sector bodiesJust Enterprise
  20. 20. Types of Legal Structure: Advantages/Disadvantages • SCIO – Full legal personality – Limited liability – Simple model rules (one-tier and two-tier) – Limited legal overlay – User-friendly registration process with OSCR; and single-step (near as….) registration and charity recognition process – Limited on-going requirements in relation to returns to OSCR – [over time] User-friendly guidance notes available from OSCR But – Only available if the objects are charitable – Will take time to build up wider recognition of what an SCIO is and why you would choose this structureJust Enterprise
  21. 21. Types of Legal Structure:Advantages/Disadvantages • LLP – Full legal personality – Limited liability – Very flexible in relation to structuring of decision-making and financial returns (but very few models available as yet) – The members of the LLP are taxed on their share of profits (not the LLP itself), so much more tax-efficient than a company limited by shares in the context of a a joint venture where one or more shareholders are public sector bodies But – Registration procedures are needed to form an LLP – There are on-going requirements to notify changes in members etcJust Enterprise
  22. 22. Types of Legal Structure:Overview (cont.) Community Interest Company (CIC) • A type of company; a CIC can be either a company limited by shares or a company limited by guarantee • A company that is a CIC will have “C.I.C.” (or “Community Interest Company”), not “Ltd”, at the end of its name (if it is a plc, the name will be “…..Community Interest plc”) • A CIC must satisfy the “community interest test” i.e. it must carry on activities which are for the benefit of the community (or a section of the community) • A CIC cannot have charitable status, even if its objects are charitable
  23. 23. Types of Legal Structure: Overview(cont.) • A CIC cannot distribute profits beyond a limit (“the dividend cap”) set by regulations; but that limit does not apply to distribution of profits to a charity • Any surplus assets remaining on the winding up of a CIC must not be paid/transferred to its members (except – in the case of a company limited by shares – to the extent of the amount paid up on the shares); the surplus assets have to be paid/transferred to other CICs or to a charity or charities • A CIC has to issue an annual report describing the manner in which the company’s activities during the financial year have benefited the community • A company can be formed as a CIC; alternatively, an existing company can convert to a CIC
  24. 24. Types of Legal Structure: Advantages/Disadvantages • CIC – badges the business as sitting within the social enterprise sector (or, in some cases, quasi-public sector) – allows people setting up the enterprise to retain control but within a social enterprise model (not possible for employee- directors to have majority control in a charitable company) – may be more acceptable to funders than a conventional private sector model (though will take time for funding criteria to adapt) – may be an attractive vehicle for private sector investment – But – Does not carry with it any tax advantages – Not yet widely recognisedJust Enterprise
  25. 25. Core Governance, Roles &Responsibilities of CompanyDirectors
  26. 26. Charities: issues • Main benefit likely to be funding access • ‘public benefit’ test • 2005 Act: 15 charitable aims • Documents to OSCR: 2005 Act laid down more formal obligationsJust Enterprise
  27. 27. New Definition of a Scottish Charity • A body meets the charity test if – its purposes consist only of one or more of the charitable purposes and – it provides (or intends to provide) public benefit in Scotland or elsewhere unless its constitution allows distribution (on a winding-up or at any other time) for a non-charitable purpose; or its constitution expressly permits the Sc Ministers (or a Minister of the Crown) to direct/control its activities (unless disapplied); or it is (or advances) a political party For the purposes of s505 ICTA 1988, “charity” means – a body of persons established for charitable purposes onlyJust Enterprise
  28. 28. New Definition of a Scottish Charity (cont’d) • FIRST PART OF THE TEST - the 15/16 charitable purposes: (a) The prevention or relief of poverty (b) The advancement of education (c) The advancement of religion (or philosophical belief) (d) The advancement of health (inc. prevention/relief of sickness, disease or human suffering) (e) The saving of lives (f) The advancement of citizenship or community development (inc. urban or rural regeneration, promotion of civic responsibility, volunteering, the voluntary sector or effectiveness/efficiency of charities) (g) The advancement of the arts, heritage, culture or science (h) The advancement of public participation in sport (if physical skill & exertion)Just Enterprise
  29. 29. New Definition of a ScottishCharity (cont’d) (i) The provision of recreational facilities, or the organisation of recreational activities, with the object of improving the conditions of life for the persons for whom the facilities or activities are primarily intended (j) The advancement of human rights, conflict resolution or reconciliation (k) The promotion of religious or racial harmony (l) The promotion of equality and diversity (m) The advancement of environmental protection or improvement (n) The relief of those in need by reason of age, ill-health, disability, financial hardship or other disadvantage (which may include relief through accommodation or care) (o) The advancement of animal welfare (p) Any other purpose which may reasonably be regarded as analogous to any of the preceding purposesJust Enterprise
  30. 30. New Definition of a Scottish Charity(cont’d) • The new definition: – Wording of charitable purposes slightly more in tune with modern terminology, and slight widening of charitable field – Difficult to determine at this stage whether public benefit test will represent an additional barrier, or introduce greater flexibility – Detailed approach will be built up through OSCR policy/practice (currently, general guidance through “Meeting the Charity Test” document; detailed guidance on particular objects and public benefit test likely to be issued in stages, possibly in line with review of existing charities) – Approach taken by OSCR will, over time, be modified and supplemented by decisions of Scottish Charity Appeals PanelJust Enterprise
  31. 31. Practical Implications for Existing Scottish Charities – All Scottish charities will be required to file annual accounts and an annual return; larger charities (gross income over £25k) will require to lodge more detailed monitoring return – Scottish charity register will be available for public inspection – Commitment by OSCR to adopt proportionate approach to annual returns – Also duty on OSCR to review all entries on the Scottish charity register – Active review process should reduce incidence of irregularities/abuse; wider powers should facilitate more effective action where abuse is uncovered – Non-Scottish charities operating in Scotland will require to be entered in the registerJust Enterprise
  32. 32. Practical Implications for Existing Scottish Charities • Prior consent of OSCR will be required in relation to: change of name, adjustment to objects clause, amalgamation, winding up/dissolution • Certain other changes require to be notified to OSCR: any change to the charity’s principal office (or, if no office, then name/address of charity trustee who acts as key contact), constitution, any other details set out in its entry in the register, change of objects/amalgamation, winding up/dissolution, administration order/ appointment of receiver • Specific duties are imposed on charity trusteesJust Enterprise
  33. 33. Legal Responsibilities of DirectorsJust Enterprise
  34. 34. Legal Responsibilities of Directors • Key principles: company law • New legal duties for directors of companies with charitable statusJust Enterprise
  35. 35. Directors’ Role & Responsibilities under Company Law • Role of directors • Limitations on directors’ powers • Duty of good faith • Duty to exercise proper care & skill • Relationship between the board and management staff • Relationship between the board and outside advisers • Statutory obligations/liabilities • Other legal hazards • Wrongful trading provisionsJust Enterprise
  36. 36. Role of Directors • To take decisions on management policy • Generally control and supervise the activities of the companyJust Enterprise
  37. 37. Limitations on Directors’ Powers • Certain matters require to be dealt with (under the Companies Acts) by the members; directors can convene General Meetings but decision rests with members • Objects clause • Restrictions in memorandum and articles (e.g. no paid directors) • Residual power of members to issue directions (normally by special resolution) • Authority of an individual director: – power to bind the company – liability associated with overstepping authority delegated by the boardJust Enterprise
  38. 38. Duty of Good Faith • The board must always exercise the powers of the company in a way which the board considers will best further the interests of the company [note: slightly different test applies to directors of a charitable company] • Where a director has a personal interest in a proposed contract – he/she is under a duty to disclose this – he/she will (normally) be barred, in terms of the articles, from voting on the relevant resolution • A director appointed to the board on the basis of nomination by some outside body ought, in terms of the legal principles, to take decisions at board meetings on the basis of what he/she considers will best further the interests of the company - even if a particular decision is in conflict with the policy of the outside body which nominated him/herJust Enterprise
  39. 39. Duty to Exercise ProperCare & Skill • PROPER CARE: each director has a duty to take the same care in relation to the companys affairs as a person would normally take in relation to his/her own affairs [new charity legislation alters that standard for directors of charitable companies] • PROPER SKILL: each director has a duty to apply to the best of his/her ability the skills and experience which he/she actually has (the "wrongful trading" provisions do, however, apply an objective standard)Just Enterprise
  40. 40. Relationship Between the Board andManagement Staff • The practicalities of a typical voluntary sector company are such that a high level of delegation by the board is inevitable ... but the responsibility for overall supervision and policy‑making remains with the board • An appropriate balance should be struck in relation to delegation of powers, in particular: – the board should ensure that there are adequate reporting procedures – the board should keep under review the reliability and competence of senior employeesJust Enterprise
  41. 41. Relationship Between the Boardand Outside Advisers • In certain circumstances it would be irresponsible (and a breach of directors duties) for the board to proceed without first obtaining outside professional advice • It is important, however, that the board should not follow outside advice blindly; the responsibility for making the decision rests with the boardJust Enterprise
  42. 42. Statutory Obligations/Liabilities • Company records & returns: the Companies Act imposes responsibilities on the directors personally with regard to the keeping of proper company records and filing of returns with Companies House (especially annual accounts and annual returns) • Accounts and accounting records: the Companies Acts impose duties in these areas on the directors personally (now emphasised in the wording of the auditors’ report).Just Enterprise
  43. 43. Other Legal Hazards • Serious breaches of health & safety legislation • Claims by third parties who suffer injury etc if board is grossly reckless • Defamation, where board is party to the issue of the defamatory material • Company directors’ disqualification orders • Personal liabilities imposed under new charities legislation; and……Just Enterprise
  44. 44. Wrongful Trading Provisions • The "bottom line" in relation to these provisions is that a director would have to pay out of his/her own personal funds and assets towards a companys debts if it has gone into liquidation • Fortunately, there are a number of hurdles which have to be gone over before the court could order this to be done; the following circumstances would have had to apply: – at some point before liquidation commenced, the director knew, or ought to have concluded, that there was no reasonable prospect that the company would avoid going into insolvent liquidation – as from the point when the director knew or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation, he/she failed to take all necessary steps to minimise further loss to creditorsJust Enterprise
  45. 45. Wrongful Trading Provisions • FINANCIAL MONITORING: each director should satisfy himself/herself that (a) the individuals responsible for book‑keeping and preparing financial reports are competent and reliable, (b) the accounting systems are adequate, (c) financial information, in a form which would show up financial difficulties, is presented to the board on a frequent basis and (d) he/she personally understands the financial information which is presented to the boardJust Enterprise
  46. 46. New Legal Duties – Directors ofCompanies with Charitable Status • Charity trustees must act in the interests of the charity; and must in particular – seek in good faith to ensure that the charity exercises its functions in a manner which is consistent with its purposes – act with the care and diligence that it is reasonable to expect of a person who is managing the affairs of another person – in circumstances where a conflict of interest may arise, put the interests of the charity first (or, where some other duty prevents that, disclose the conflict and take no part in the deliberations/decision) In addition, the charity trustees must ensure that the charity complies with any direction, requirement, notice or duty imposed on it by virtue of the ActJust Enterprise
  47. 47. New Legal Duties – Directors of Companies with Charitable Status • Breach of trustees’ duties specified above is to be treated as misconduct in the administration of the charity • The Act provides that where a charity trustee provides services to a charity or might benefit from any remuneration paid to a connected party for such services, then (unless otherwise provided in a constitution in force prior to the Act) – the maximum amount of the remuneration must be specified in a written agreement and must be reasonable – the charity trustees must be satisfied that it would be in the interests of the charity to enter into the arrangement (taking account of that maximum amount) – less than half of the charity trustees must be receiving remuneration or benefit from remuneration – the remuneration must not be expressly prohibited by the constitution Remuneration contrary to the above will be recoverable.Just Enterprise
  48. 48. Good Governance “A Code for the Voluntary and Community Sector”Just Enterprise
  49. 49. Good Governance: Good Practice in Managing SEOsJust Enterprise
  50. 50. Code of Governance • Not mandatory • Compliant with legal and regulatory requirements, including those relating to charities • It links closely with other codes and standards e.g. the Charity Commission’s The Hallmarks of an Effective Charity and the new booklet The Essential Charity TrusteeJust Enterprise
  51. 51. Governance • Governance is high on the agenda in all sectors • As voluntary organisations working for public benefit you are increasingly expected to demonstrate how well you are governedJust Enterprise
  52. 52. A Definition • One writer on governance defined governance as being: “ the systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organisation”Just Enterprise
  53. 53. Principles There are seven main principles that underpin the Code and supporting principles underlying each of these is the additional principle of equality - that of ensuring equity, diversity and equality of treatment for all sections of the community. We see this as fundamental to the work of all voluntary and community sector organisations; rather than creating a separate Equality section, the principle has been applied throughout the Code.Just Enterprise
  54. 54. Principles Principle 1: Board leadership • Every organisation should be led and controlled by an effective Board of trustees which collectively ensures delivery of its objects, sets its strategic direction and upholds its values. Principle 2: The Board in control • The trustees as a Board should collectively be responsible and accountable for ensuring and monitoring that the organisation is performing well, is solvent, and complies with all its obligations. Principle 3: The high performance Board • The Board should have clear responsibilities and functions, and should compose and organise itself to discharge them effectively.Just Enterprise
  55. 55. Principles (cont’d) Principle 4: Board review and renewal • The Board should periodically review its own and the organisations effectiveness, and take any necessary steps to ensure that both continue to work well. Principle 5: Board delegation • The Board should set out the functions of sub- committees, officers, the chief executive, other staff and agents in clear delegated authorities, and should monitor their performance.Just Enterprise
  56. 56. Principles (cont’d) Principle 6: Board and trustee integrity • The Board and individual trustees should act according to high ethical standards, and ensure that conflicts of interest are properly dealt with. Principle 7: Board openness • The Board should be open, responsive and accountable to its users, beneficiaries, members, partners and others with an interest in its work.Just Enterprise
  57. 57. The Way You ‘Govern’ • The way your organisation governs will be different depending on your circumstances • The size of the organisation • How long in existence • Culture and valuesJust Enterprise
  58. 58. Good Practice Checklist • Appropriate and transparent structures should be in place • Balance of skills should be right • Be in charge • Everyone should know what they are responsible for and what they have to do • Delegate jobs the committee can’t do – take on staff volunteers or even a consultant.Just Enterprise
  59. 59. Good Practice Checklist • Follow your own rules – governing document • Keep written records of meetings - important decisions are made • Financial management is vitally important • Plan to deal with problems should disputes arise • Prepare for risksJust Enterprise
  60. 60. Good Practice Checklist • Seek professional or specialist advice when needed – even the most qualified/experienced committee needs advice • Check which laws and regulations apply to your organisation – e.g. compliance with charity law • Know where you are going as an organisation - your strategy - governing document • Make sure committee meetings are well run – balance of skills knowledge and experienceJust Enterprise
  61. 61. Good Practice Checklist • Make sure conflicts of interest are declared, recorded and dealt with openly • Make sure any ‘payments’ to committee members are allowable in law • Make sure that the committee is in control with respect to compliance with the law, its own rules and any other regulations • Information is key to complianceJust Enterprise
  62. 62. Good Practice Checklist • Monitor the organisation’s progress against its plans – performance targets delivered • Keep an eye on the finances – get regular financial reports – deal with any major variations from budget • Make meetings work – meet as often as you need – Chair is most important role in meetingsJust Enterprise
  63. 63. Good Practice Checklist • Consult and inform all stakeholders – staff, volunteers, funders, members and partners • Set up ways to consult and inform • Annual reports/accounts • Quarterly newsletters • Website • Public MeetingsJust Enterprise
  64. 64. Good Practice Checklist • Review performance of committee • Compare the existing skills of committee against what is needed for the future • Recruit or train? • Succession?Just Enterprise
  65. 65. Good Practice Checklist • Review organisations/projects work • Has it achieved what it set out to do? • Is the work still relevant?Just Enterprise
  66. 66. Thank you!Just Enterprise

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