UPDATE DETAILS

Governing bodies and the removal of trustees

Most organisations have a two tier structure of members and “trustees”. Sometimes the same people fulfil both roles and this often creates confusion.

The members of an organisation (distinct from the members of the governing body) are defined as such by the governing document. They meet in general meeting and deal with matters such as the election of the members of the governing body and amending the constitution. The members of the governing body are the people who are responsible in law for managing the organisation and can go by many names. Regardless of what it is called:

• in any company, including a charitable company or a community interest company, the members of the governing body are the company directors;
• in a trust or charitable association and in some other charities they are trustees for the purposes of the Trustee Act 2000 and most other trust law;
• in any charity, regardless of its legal form and regardless of whether it is registered with the Charity Commission, the members of the governing body are charity trustees for the purposes of charity law.

Leaving the governing body

A person may leave a governing body in accordance with the governing document by retiring, resigning or being replaced. They can also become disqualified from serving as a director and/or a trustee or be removed for a reason set out the in organisation’s governing document. It is also possible for a person to be removed from a governing body by the Charity Commission or the High Court.

Removal by members of the organisation

In certain circumstances the members of an organisation can remove someone from that organisation’s governing body.

Under company law, members of a company always have a right to remove a director and to appoint a replacement by passing an ordinary resolution on special notice following procedures set out in the Companies Act 2006. This right cannot be taken away or amended by the company’s governing documents or by any agreement with directors. The decision must be made at a general meeting of the members. The director has the right to make representations and to be heard at the meeting.

Provision for removal of governing body members must be included in the rules of an industrial and provident society. IPSs and associations often have provisions similar to those for companies.

Members of the organisation or of the governing body may call for a vote of no confidence but unless it meets the statutory requirements or provisions in the governing document, such a vote has no meaning legally and there is no obligation on the person to resign, even if 100% of those voting say they have no confidence.

This article is based on an extract from the recently published third edition of the Russell-Cooke Voluntary Sector Legal Handbook.

The Russell-Cooke Voluntary Sector Legal Handbook is written by James Sinclair Taylor (James.Taylor@russell-cooke.co.uk) and other partners at Russell-Cooke, edited by Sandy Adirondack and published by DSC.

For further information, please contact:
JAMES SINCLAIR TAYLOR on 020 8394 6480, James.Taylor@russell-cooke.co.uk, or ANDREW STUDD on 020 8394 6414, Andrew.Studd@russell-cooke.co.uk