Requirements to Establish a Charitable Companies

Requirements to establish a charitable company: organisations which have been set up to help benefit the public in some way may wish to access some of the tax breaks, reduced rates, and other benefits offered to charities by the Government. Specific criteria must be fulfilled before an organisation can become a charitable company and some of these are laid out below.

Charitable aims: to be a charity, the aims of the organisation must be exclusively charitable. That is, there can be no objectives held by the organisation which are not charitable.

The Charities Act 2011 states 13 descriptions of charitable purposes that are agreed to be for the public benefit, and every charity's aims and objectives must fall into the scope of at least one of these descriptions. These purposes are broad descriptions of charitable activity and they range from "the prevention or relief of poverty", to "the advancement of environmental protection or improvement".

"Public benefit" has a specific, two-part meaning with regards to charities. It means that the purposes of the charity must be beneficial, and that any results from the purpose that are detrimental in any way must not outweigh the benefit. It also means that the purposes must benefit the public – or a large enough section of the public – and must not cause any more than incidental personal benefit.

Trustees: the people responsible for the management of the administration of a charity are called trustees. They have the ultimate responsibility for operating the affairs of a charity and no charity can exist without them. Depending on the type of governing document held by the charity, they might have other names, but their responsibilities are the same. There are many responsibilities shouldered by trustees, and these range from ensuring that the charity complies with charity law, to avoiding any personal conflicts of interest or misuse of charity funds.

Trustees should be recruited with as full a knowledge of their responsibilities and duties as possible.

Charity law jurisdiction: the Charities Act 2011 states that a charity is subject to the High Court's charity law jurisdiction. This means that the power to make decisions about the way in which a charity is administrated, and about the purposes of a charity, is held by the court.

The jurisdiction can be affected by a number of things, including where the trustees live – the majority of them must live in England or Wales; where the charity's property is located – most of it must be in England or Wales; and where the charity's centre of administration is located – it must be in either England or Wales.

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