Object lessons

Why should independent schools consider amending their objects? Ros Harwood explains

The public benefit guidance has caused independent schools to consider their charitable objects to decide whether:
• what their school is doing falls within their objects;
• the objects allow the school to do enough to fulfil the requirements; and
• the activities of the school can be counted in assessing the overall public benefit provided.

The reasons why schools may wish to amend their objects are:
• to restate them in modern terms;
• to widen overly restrictive objects eg which limit them to providing a school in a certain area;
• to incorporate recent changes in the law to expressly refer to public benefit; and/or
• to allow the school to carry out wider community-based activities and for those activities to count in assessing public benefit.

In 2003, the Charity Commission reached agreement with legal advisors that would allow schools with narrow objects to interpret them more widely so that the school could carry out “ancillary or incidental educational activities and other associated activities for the benefit of the community as a whole”.

Being objective
As the Charity Law Association asserted in its response to the supplementary guidance on public benefit and the advancement of education, the purpose of the agreement with the commission was to allow schools whose objects were narrow to construe them as permitting broader work for the benefit of the community beyond the classroom. The commission says it regards “the purposes of charities established for the provision and maintenance of a school to be broad enough to permit the trustees to carry out educational or community activities and other associated activities incidental or ancillary to running the school”.

The commission confirms that it views such a widening of the objects to be a restatement, rather than a cy-près event. In practice, the commission’s approach has been inconsistent.

The process for amending objects differs depending on whether your school is unincorporated or corporate. The governing document of some unincorporated schools will contain provisions or procedures for amending their objects (and may state that no amendment may be made or no amendment may be made without the prior written consent of the commission). The latter is the most desirable from a school’s point of a view as, if it does wish to change its objects, the procedure for obtaining written consent is slightly less painful than having to demonstrate a cy-près case under section 13 Charities Act 1993 (as amended).

Options for change
Some governing documents permit changes to the objects, provided they are not fundamental or substantial. In such cases, commission consent is not usually required. In the absence of an express power, then a school would have to demonstrate to the commission that a cy-près circumstance had arisen and seek a Scheme. The commission produces helpful guidance on cy-près cases in its operational guidance OG2A.

Where a governing document allows the objects to be changed with the prior written consent of the commission, it asks the reason for the change, whether the charity has assessed its financial position and is satisfied it has sufficient funds to do so, and that the existing pupils will not be detrimentally affected.

Compare the position of a charitable school, constituted as a company limited by guarantee. They can amend their memorandum and articles of association by special resolution (unless stated otherwise). There are certain regulated alterations which require the commission’s approval, an amendment to the objects being one of them.

Unless the change to the objects is merely a restatement, then the commission will need to be provided with a written case in support of the proposed change.

On your side
The commission states in its guidance that it usually approves changes to the objects provided that the new wording expresses exclusively charitable objects and the proposed change is not something that no body of reasonable trustees could make, and the new objects do not undermine or work against the previous objects.

Governors of schools that are unincorporated have more hoops to jump through should they wish to amend the objects, than the directors of school that is a company limited by guarantee. The anomaly cannot be explained by the commission: it is the position at law.

Obviously, schools may be constituted in other ways and different requirements may apply (for example, if it is a Royal Charter body, the Privy Council will need to be involved).

Incorporation often provides a useful opportunity to update the objects of a school, and schools looking to re-state their objects may find it useful to consider incorporation simultaneously.

Ros Harwood is a partner at Dickinson Dees LLP.

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