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Correspondence with Companies House re use of “Foundation”

CLA-Letter-to-Companies-House_-Incorporation-and-Names-Guidance-Foundation-02-02-17-1.pdf CHARITY LAW A55OCIAIION •

It is not uncommon for charitable companies using the word “Foundation” in their name to have weighted voting rights for members; where this is the case they will not meet the new criteria. Charities are established in diverse forms with different types of members and stakeholders.

We do not believe that a ‘one-member one-vote” clause is practical or appropriate for all charities using the word “Foundation” in their name. As noted above, it is also not clear to us why the criterion should be considered an essential element of an organisation referring to itself as a “Foundation”. To illustrate this, we would refer to the approach of the Charity Commission in respect of appropriate constitutional requirements for charitable incorporated organisations CIOsCIOs Charity legislation distinguishes between “association” and “foundation” ClOs: a foundation CIC has a small membership (namely the same people as the trustees); an association CIO has a wider membership. The Charity Commission has produced model constitutions for each form.

The model constitution for an association ClO contains a one-member one-vote clause; however the ‘foundation” ClO model constitution does not. We consider this demonstrates that use of the word “Foundation” in a charity name does not bring with it the connotation of a membership organisation where a one-member one- vote clause should be expected. We can see that there may be a rationale for a “one-member one-vote” clause requirement (subject to any rights of a particular class of membership) for a business organisation or company with “Association” in its name and a wide membership. However, there is no reason of which we are aware why Foundation charities should be subjected to the same requirement. We ask, therefore, that you review your guidance and remove the “one-member one-vote” provision in relation to the use of the word “Foundation” in company and business names. If you have any questions, please do not hesitate to contact me.

Yours faithfully, Nicola Evans Chair, Charity Law Association

Email: nicolaevans@bdb-law.co.uk Address. Pox Box 828. Gillingham Kent ME8 IDJ Tel: 01634 373253

Attached Files

CLA Letter to Companies House Incorporation and Names Guidance Foundation 02 02 17 1