Isle of Man: Isle Of Man Charities Registration And Regulation Act 2019

The final provisions of the Isle of Man Charities Registration and Regulation Act 2019 (2019 Act) came into force 1 April 2020.

Whilst, the 2019 Act updates the registration and regulation provisions which were previously contained in the Charities Registration Act 1989 (1989 Act), it does not consolidate all of the Charities Acts.

The main purposes of the 2019 Act are to:

• Provide definitions of charity and charitable purpose which are at least as broad as in England and Wales
• Provide a modern register of charities
• Assist charity trustees in the proper delivery of their charity's objectives by ensuring that charities have constitutional documents which are fit for purpose
• Ensure more effective regulation of charities by increasing reporting requirements
• Improve public service and administrative efficiency by combining the functions of registrar and regulator in the Attorney General, mirroring the position in England and Wales
• Provide a simplified mechanism for appealing decisions of the registrar/regulator with the creation of a Charities Tribunal.

DEFINITION OF CHARITY

Under the 2019 Act a Charity is an institution which is established for charitable purposes only.  To be a charitable purpose, the purpose must fall within one of the descriptions set out in section 6 of the 2019 Act and it must be for the public benefit.

The definition of charity is now at least as broad as in England and Wales and, as a result, any institution which is deemed to be charitable in England and Wales will also be deemed to be charitable in the Isle of Man.

REGISTRATION

Similar to the 1989 Act, an institution which is in the Isle of Man, or any Isle of Man institution which is in the Isle of Man or elsewhere, "takes or uses any name, style, title or description implying or otherwise pretends, that it is a charity or holds itself out as a charity" must be registered as a charity. Unless exempt, failure to do so is an offence.

Exempt charities include for example ecclesiastical charities and those charities or class of charities that the Attorney General may by regulation exempt.

An application for registration of the charity must now be made by or on behalf of the charity trustees to the Attorney General in the approved form and the Attorney General must approve or refuse the application within 28 days.

Similar to the 1989 Act, there is no guarantee that an application for registration will be automatically accepted. The Attorney General has discretion to refuse to accept any application if he is satisfied that:

(a) The institution is not established for charitable purposes

(b) The institution does not have a substantial and genuine connection with the Isle of Man (although the same test as under the 1989 Act, guidance is to be provided by the Attorney General of what "substantial and genuine connection" means in practice); or

(c) The name of the institution is undesirable or misleading.

In addition, the Attorney General may now refuse to accept any application if he is satisfied that:

(d) The governing instrument of the charity does not adequately make provision for such matters as may be prescribed

(e) The charity trustee is disqualified for acting as a charity trustee

(f) It would be contrary to the public interest for any charity trustee named in the application to act as such

(g) The charity trustees do not have appropriate expertise and experience to ensure the successful delivery of the charity's objectives; or

(h) That there is substantial risk of the charity becoming involved in or reasonably susceptible to being used for money laundering activities or of its property being used to finance terrorism.

FORMAL REQUIREMENTS

Governing Instrument

Every registered charity (even small charities) must now have a written governing instrument and the Attorney General must give prior written consent to any amendment to the written instrument (unless it is a foreign charity).

The Attorney General Chambers will provide template documents for charities to adopt if they wish.  Existing charities have until 1 April 2022 to adopt a written governing instrument that is compliant with the new legislation.

Charity Trustee

A charity trustee is any person having the general control and management of the administration of a charity, for example a director of a company, a trustee of a trust or a council member of a foundation.

A person is disqualified for being a charity trustee if he:

(a) Has been convicted of an offence (whether in the Isle of Man or elsewhere) involving dishonesty

(b) Is subject to a disqualification order or disqualification undertaking under the Company Officers (Disqualification) Act 2009 or to an order or undertaking of equivalent effect (whether in the Isle of Man or elsewhere)

(c) Is an undischarged bankrupt (whether in the Isle of Man or elsewhere)

(d) Has made a composition or arrangement with, or granted a trust deed for, creditors and has not been discharged in respect of it

(e) Is the subject of an order of the Court relating to the protection of charities under section 39(2)(a) of the 2019 Act or section 10(2)(a) of the 1989 Act; or

(f) Is subject to the notification requirements of Schedule 1 to the Criminal Justice Act 2001 or to equivalent notification requirements elsewhere in the British Islands.

FOREIGN CHARITIES

Under the 2019 Act, a foreign charity is a charity which is an institution established under the law of a country or territory outside of the Isle of Man. If none of the charity trustees are ordinarily resident in the Isle of Man, the foreign charity must appoint a person resident in the Isle of Man as the "responsible person".

This responsible person must retain all books, records and documents of the charity which relate to the activity of the charity in the Isle of Man.

APPEAL

The Charities Tribunal has been created under the 2019 Act. A person aggrieved by certain decisions or directions of the Attorney General may appeal to the Charities Tribunal.  The Tribunal must confirm, vary or revoke the decision or direction in question and may give necessary directions to give effect to its decision.

SUMMARY

The main changes that the 2019 Act brings to charities are more regulation and increased reporting requirements.

It is important for charities to undertake a review and make any amendments as appropriate to be compliant with the new legislation.  In particular, if it has not already done so, a charity will need to adopt a written governing instrument that is compliant with the legislation.  Charities that are classed as foreign charities will also need to consider whether it is necessary to appoint a responsible person.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.