Private Client
The Charities Amendment Act 2023 introduced several important changes to the Charities Act 2005 (the Act) which were aimed at strengthening governance and accountability within registered charities. We set out an overview of these changes below.
Governance Procedures Must Be Reviewed Every Three Years
One of the most significant changes was the insertion of section 42G. This section provides all registered charities must now review their governance procedures at least once every three years.
As part of that review, charities should consider whether their governance arrangements:
- Are fit for purpose.
- Help the charity achieve its charitable purposes.
- Support compliance with the Act and other relevant legislation.
Although the Act does not specifically define "governance procedures", charities should take a broad approach to the review. This may include examining:
- Trust deeds, constitutions, and rules.
- Board charters and governance policies.
- Conflict of interest procedures.
- Financial controls and delegations.
- Complaints and dispute resolution processes.
- Board and officer induction procedures.
- Other operational policies relevant to the charity's activities.
Many charities operate under governing documents that were drafted years ago and may no longer reflect current legal requirements or the way the organisation functions in practice. While a trust deed or constitution may still be legally valid, it may no longer adequately support the charity's current operations, governance structure, or future objectives.
A governance review provides an opportunity to identify areas for improvement, assess whether amendments are necessary, and ensure that officers understand the rules and obligations that govern the organisation. Importantly, charities should keep records of the review process and any decisions made as a result. This demonstrates good governance and helps provide evidence of compliance with the Act.
Expanded Definition of "Officer"
Another key amendment is the expansion of the definition of an "officer". Previously, the term primarily applied to trustees and board members. The amended Act broadens this definition to include individuals who exercise significant influence over the management or decision-making of a charity. This may now include:
- Trustees.
- Senior personnel who have significant influence over the charity's management or decision-making.
- Individuals with delegated decision-making powers whether or not they hold a formal position within the charity.
- Any other persons prescribed by regulations as officers for the purposes of the Act.
This change reflects a broader focus on accountability and recognises that governance responsibilities often extend beyond the governing board.
The amended Act expressly requires officers to assist the charity to deliver its charitable purpose and assist the charity to comply with its obligations under the Act and other applicable legislation. These duties place greater responsibility on those involved in governing and managing charities. Officers who significantly or persistently fail to meet their obligations may be disqualified from holding office in a registered charity for up to five years.
What Should Charities Do Now?
Registered charities should take steps to:
- Identify all individuals who now fall within the expanded definition of "officer".
- Ensure officer details are accurately recorded with Charities Services.
- Review governance documents and policies to ensure they remain fit for purpose.
- Assess whether governance practices align with the charity's legal obligations.
- Consider whether amendments to governing documents or internal policies are required.
Taking a proactive approach now can help reduce compliance risks and strengthen the long-term effectiveness of your organisation.
How We Can Help
Governance reviews often identify outdated constitutions, unclear trustee responsibilities, gaps in policies, or governance practices that no longer meet legal requirements. Obtaining advice early can help charities address these issues before they become compliance concerns. If you are unsure whether your charity's governance arrangements meet the new requirements, or you would like assistance reviewing your governing documents, we can help.
The Private Client Team at Brookfields regularly advise charities, trusts, incorporated societies, and not-for-profit organisations on governance, compliance, constitutional amendments, and charity law obligations. Contact us to discuss how these changes affect your organisation and how we can help ensure your charity remains compliant and well-governed.
