Constitutions. This Information Sheet will help you to draft a constitution for a voluntary or community organisation CHARITABLE LIMITED COMPANIES

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1 Constitutions This Information Sheet will help you to draft a constitution for a voluntary or community organisation What is a constitution? A constitution is an agreement between the members about what the organisation is for and how it should run the written rules. It regulates the organisation s dealings with other people and other organisations. Organisations wanting to become registered charities will need a constitution and will need to have it approved by the Charity Commission (see Information Sheet on Legal Status) CHARITABLE LIMITED COMPANIES There are three Using a model The most straightforward way to draft a constitution is to take the constitution of a similar organisation or a ready made model constitution, and base yours on that. The Charity Commission can provide a model for groups who wish to become a registered charity, and many national organisations provide model or specimen constitutions for the use of their member groups. If the Charity Commission start charging for registration, the procedure will be cheaper and quicker for groups who use an approved model constitution. Doing it yourself The disadvantage of using the ready-made model is that it may not meet the specific requirements of your organisation. If you draw up the constitution yourselves, everyone has a chance to have a say in deciding the objectives of the organisation, how decisions are taken, and who will be responsible for what. It is best to begin with a clear and simple draft, which you may need to elaborate as you go on. The constitution should provide for the unexpected (disagreements, resignations, deaths, winding up) as well as for the smooth running of the organisation. Check with the list below, or with another group s constitution, to see that you have included all the necessary points. Once you formally adopt the constitution, you are bound by it. Keep it as a draft until everyone is happy and expects to agree with it (or at least agrees to put it to the vote). If you are going to apply for registration as a charity, it is better to submit the constitution as a draft and consider any changes that the Charity Commission may suggest, otherwise you will need to call a special meeting to formally amend it. 1

2 Constitutions and legal structures Not all organisations have written rules called a constitution it depends on their legal status. VAS s Legal Structures Information Sheet describes the different sorts of legal status available to voluntary organisations, including the addresses of the bodies mentioned here. Unincorporated Associations which are not registered charities can decide their own constitution. Companies limited by guarantee have a legal document called the Memorandum and Articles of Association instead of a constitution. Trusts have a legal document called a Trust Deed instead of a constitution. Registered Charities have to have aims and objectives that the law accepts as charitable and need to have their constitution, memorandum and articles of association or trust deed, approved by the Charity Commission. Friendly Societies have to follow the Friendly Societies Act over the content (though not the detail) of their rules. The Chief Registrar of Friendly Societies can provide model rules. Industrial and Provident Societies have to include certain specified rules in their constitution. If they register through a promoting body, it will provide model rules. Checklist for a constitution This is designed mainly for unincorporated organisations not registering as charities, and so it does not cover the requirements for registration, or the needs of bodies which have a different legal status. It is not exhaustive, but covers the points found in most straightforward constitutions. Name of the organisation Aims and objectives: (in charity law these are called objects and powers ) What the organisation is there to do, and how it expects to do it. This should be written in broad terms, or you will have to change it if you change your emphasis or methods. For example, it is usually better to talk about promoting services for elderly people in a wide area, than about running a lunch club at a specific address. Registered charities have to obtain the consent of the Charity Commission in writing before they can change their objects. Membership: Who can apply, and who decides whether they are accepted. Any special categories of membership (associate, honorary, group etc) or of subscription (children, unemployed, students, pensioners etc). Who fixes the subscription, and how it is changed. Who keeps a record of members and subscriptions paid. When membership ends if subscriptions are not paid. How to expel a member for other reasons. Annual General Meeting: When is it held (normally after the accounts for the previous year are available), procedure for calling it, period of notice. What it does, what its powers are, reports to it by officers. Quorum (which means the 2

3 minimum number of people needed at the meeting in order to make decisions), chairing, conduct of meeting, voting procedure, arrangements for motions or resolutions. Procedure for calling a special general meeting, on the initiative of the committee or at the request of members. The Annual General Meeting of a limited company has to follow a pattern laid down by law, and companies limited by guarantee often have a less formal meeting immediately after it when the directors and members can raise other matters. Special General Meeting: Procedure for calling a special general meeting, who can call a meeting eg. the committee or a certain number of members. Management Committee: Who is on the committee, how are they chosen, maximum and minimum size. When and how elected committee members are chosen. Details of any ex officio or nominated members (ex officio means they are on the committee because of the post they hold in another organisation, instead of being elected). Powers to co-opt and to have non-voting observers. Whether paid staff can be members (not allowed for registered charities). How long members serve, whether they can be re-elected. Filling vacancies. Removing members for non-attendance or other reasons. How often it meets, how meeting are called, period of notice. Quorum, conduct of meeting. What its powers are. How it takes decisions (voting procedure, casting vote). Whether it can delegate its responsibilities, to a subcommittee for example. Keeping minutes of meetings. Officers of the organisation: (Sometimes called honorary officers because they are unpaid). What officers there should be (eg. President, chairperson, secretary, treasurer). How they are to be chosen (by the annual general meeting or by the committee). Whether for a limited or an unlimited period. How they can be removed. How vacancies can be filled. Their powers and responsibilities. Power to pay reasonable expenses to them and to other committee members. Finance: Duties of Treasurer: Keeping books and records, preparing annual accounts, controlling expenditure. Provision for bank accounts, authority to sign cheques (usually two signatures from among three or four specified officers). Organisations that are unincorporated may wish to include the power to appoint Holding Trustees, who will hold property on their behalf. If this is done there should be at least three individuals. Holding Trustees are not needed by limited companies or Industrial and Provident Societies. Provision for accounts to be independently examined or audited, and for the annual general meeting to appoint a person authorised to do this; and the power to dismiss that person. Officers, committee members and staff of the organisation are not allowed to act as the independent examiner. The following types of organisation must have their accounts audited by a professionally qualified accountant: Limited companies with incomes of more than 90,000 a year Industrial and Provident Societies Friendly Societies Charities with incomes of more than 250,000 a year 3

4 Staff: Powers to employ staff, and for the committee or officers to settle their terms and conditions of employment. Winding up: How a decision to wind up can be taken. Payment of any debts, disposal of any remaining assets (there are rules about this for charities; other organisations could provide for the committee to transfer the assets to an organisation with similar objectives). Changing the constitution: Procedure, circulating the proposal, period of notice, how the decision is taken. The constitution, and especially what it says about aims and objectives, is the basis on which members join the organisation, so it should not be changed too easily. For example, changes might need a two-third vote at an annual general meeting (twice as many voting in favour as against). This permits changes that everyone agrees to be needed, but stops controversial ones which might displease a lot of members. Sometimes the provisions about aims and objectives are entrenched that is, they cannot be changed at all, or only with the agreement of the great majority of members. This ensures that money contributed for one purpose is not diverted to some quite different purpose. 4

5 Organisations that can advise and help Voluntary Action Sheffield The Circle 33 Rockingham Lane Sheffield S1 4FW Tel: VAS can help you to draft a constitution, and it has a selection of constitutions which you can look at. The Charity Commission PO Box 1277 Liverpool L69 3UG Tel: Minicom: The Charity Commission s model constitution for a charitable unincorporated association (GD3), has blank spaces for you to fill in the details specific to your organisation. It is free of charge. A model memorandum and articles of association for a charitable company, and a model declaration of trust for a charitable trust, are available from the same address. 5

6 INFORMATION SHEETS available from VAS: Accessible Organisations Acquiring and Managing Premises Action Planning Business Planning Child and Vulnerable Adult Protection Closing Down Community Interest Companies Constitutions Contracts and Partners Data Protection Disciplinary and Grievance Procedures Employing a Worker Handling Redundancies Health and Safety Incorporated Charities Insuring your Organisation Involving Volunteers Legal Structures Management Committees Monitoring and Evaluation Parents and Carers at Work Quality Assurance Starting Up Trading and Fund-raising The Circle 33 Rockingham Lane Sheffield S1 4FW Tel: Fax: info@vas.org.uk Website: Registered charity no: Company limited by guarantee no: