Governance Review/Advice on the Articles
Stone King have provided advice on how the Governance Review proposals would affect the Articles of Association, which follows. This advice is published with their permission. The Land (talk) 17:13, 7 February 2013 (UTC)
The recommendation is that the Governance and Audit Committees will consist of three to five people, including the Chair of the Board and two to four other people, with a majority always to be trustees. At present the Articles do not permit non trustee (non directors) to serve on committees (under Article 21 of WMUK’s Articles, the directors may delegate powers or functions to a committee of two or more directors). If the intention is to allow non-trustees to serve on committees, the Articles will need amendment.
Number of Directors
The recommendation is that the company shall resolve by ordinary resolution to provide a maximum number of directors of eleven, that the ordinary number of trustees be nine, comprising six elected and three co-opted trustees. At present the Articles do not provide for co-option, other than by unanimous decision of the directors to fill a vacancy (among the elected trustees). The Articles will require amendment to allow co-option of additional (non-replacement trustees) trustees; and we would recommend that the Articles provide for a normal board size of nine, composed as specified.
Election rules/terms of service
We note the recommendation to adopt two-year terms with maximum service. We suggest that these provisions (including the power to extend the six-year ceiling in exceptional circumstances) are introduced into the Articles for clarity and certainty.
Generally, we recommend that the phrase “directors” to be changed to “trustees” throughout the Articles. The directors are trustees, of course, and use of the term directors is misleading and may lead to unhelpful perceptions.
We have not reviewed the Articles generally, although we do note that they are in some respects outdated and reflect the charity’s previous, non-charitable existence (as we noted at the time we amended the objects for registration). We would recommend that the Articles are given a more comprehensive review to ensure they are suited for purpose. We note, for example, in relation to Article M5:
a. Article M5.2(a) could also be clarified (without the Commission’s consent) to make clear that a director can be re-imbursed for reasonable expenses when acting in that capacity on behalf of the charity.
b. Article M5.4 currently prohibits employment of existing directors completely; you may wish to consider seeking the Commission’s consent to amend the Articles allow employment in exceptional circumstances where the Commission consents.
c. Article M5.5(a)(ii) requires updating to reflect the 2011 Charities Act.
d. Article M5.7 could be adapted to allow non-conflicted trustees to authorise the non-sharing of confidential information by a conflicted trustee (for example relating to his or her employer) that they may otherwise be obliged to share with trustees under their duties to the charity; in other words to resolve that potential conflict of duties in the trustee concerned.
Other areas in which the Articles could be amended include: the introduction of electronic/postal voting for election of trustees, if desired, and the introduction of a power for the trustees to remove one of their number who despite warnings is acting contrary to the interests of the charity/its objects and fails to remedy, for example.