Removing difficult trustees
Within a charity one hopes that all trustees will be equally motivated and willing to participate, taking responsibility for the charity’s management, collaborating in a common cause and overseeing compliance with both the charity’s objectives and the general law. However, problems can arise.
When a trustee behaves improperly
It is perfectly possible for trustees to have bona fide differences of opinion about management of their charity, and it is proper for trustees to give any issue proper scrutiny and debate. Healthy discussion is acceptable provided it remains within the bounds of proper behaviour. However, trustees need to accept the decisions of the majority of their co-trustees and the outcome of the decision-making process which should be clear for all to follow.
The standards of behaviour expected of trustees are higher than for individuals, and as custodians of the assets and reputation of the charity they have to act in the overall best interests of the charity. This extends to personal behaviour which may affect the reputation and effectiveness of the charity.
Misconduct can take the form of various behaviours within a range of seriousness but can include bullying of staff or co-trustees, physical and mental abuse of others including beneficiaries of charities, sexual harassment or discriminatory behaviour and outright acts of criminality whether linked to the activities of the charity or otherwise. It can include abusing charity resources and permitting conflicts of interest to be allowed. It can extend to breaching the terms of the charity’s trust deed or articles.
Insolvency too can impact on a trustee, although there are specific regulations dealing with this.
Solving problems through discussion
Any conflicts between trustees or misconduct by a trustee can become debilitating for the charity concerned (especially if they enter the public domain). Although it is usually desirable to seek a soft solution through discussion, to try to achieve compromises and reach consensus on issues, sometimes this simply isn’t possible and the trustees collectively as a body have to decide the best way forward.
Some misconduct is so serious that lengthy informal discussions or mediation are simply not appropriate. Whilst proper process has to be followed at all times, the overriding issue is what is best for the charity.
Sometimes the only solution is that a trustee whose position is no longer tenable should be removed from office.
Following legal procedures
In relation to taking into account legal procedures the starting point is the constitution of the relevant charity whether it is in the form of a Trust Deed or Articles of Association of an incorporated charity.
These documents often contain specific procedures to be followed to expel a trustee and these need to be considered and applied very carefully.
Proper process must be followed not only for its own sake but also to avoid subsequent allegations of breach of a procedure which may give rise to invalidation of any steps taken by the trustees, exacerbating the crisis. Being seen to comply with procedures is essential because any adverse publicity from disgruntled former trustees is likely to be extremely damaging to the public image of the charity concerned.
It is necessary for the trustees to have sufficient evidence of non-compliance or breach of the trustee’s obligations entitling the remaining trustees to expel them. Producing such a paper trail may be difficult to establish and may take some time. Where staff are involved as witnesses or whistleblowers their contractual rights and protections need to be taken into account.
As well as following the prescribed procedure to convene meetings and give notice of meetings and the subject matter of the meeting, trustees must be shown to comply with the general principles of natural justice, requiring the accused to be given due notice, to see the case against them, to consider their position and to provide responses where appropriate.
The very act of giving due notice of disciplinary action may be sufficient in itself to persuade a trustee to resign in order to avoid any decision against them which may damage their reputation.
If a trustee accused of misconduct resigns, that may not be the end of the matter. Some activity maybe so serious or potentially serious that additional steps should be taken to involve the Charity Commission or the police. If a former trustee becomes involved in other organisations where their misconduct is later repeated, whether financial misconduct or physical or sexual assaults, the charity trustees will have no place to hide and may face damaging accusations of cover-up or even collusion.
Handling conflicts of interest
An ever-present requirement for trustees is to avoid situations where conflicts of interest occur.
There may be circumstances in which the relationship between a trustee whose removal is being sought and another trustee has become so poisoned by animosity that it would be impossible for that other trustee to participate in a fair and objective way in any proceedings to remove the accused trustee. Where such bias or predetermination of the issues is apparent then it would be proper for the trustee to step aside due to their conflict of interest.
The same applies where the other trustee is the victim of the accused’s misconduct.
Removing an absent trustee
Similar principles apply where a trustee has simply absented themselves from the proceedings and management of the charity.
Whilst it is only fair and proper for the trustee in question to be given an opportunity of explaining their absence and failure to participate, ultimately the remaining trustees have a duty to ensure proper management of the affairs of the charity and are entitled therefore to take action to remove the absent trustee.
The starting point again is the constitution of the charity (whether in the Trust Deed or Articles of Association) where this scenario is commonly addressed but there is too a statutory power to replace them (see below).
Again, compliance with procedures is essential and all reasonable steps should be taken to ensure that the absent trustee is made aware of the proposed resolution to remove them.
In addition to the charity constitution, legislation does play a role in the procedures that can be adopted.
Where a charity is incorporated, the Companies Act 2006 provides a procedure for removal of trustees where they are directors of the company.
In addition to the above procedure under the Companies Act, the Trustee Act 1925 contains longstanding provisions which allow a trustee to be removed from office in a number of circumstances (section 36 of the Trustee Act 1925), including absence abroad for more than 12 months or where they refuse to act or become incapable or unfit to act as trustee.
Other ways of removal
Before engaging in controversial steps to remove a trustee, it is important to examine the constitution of a charitable trust to see if there are alternative methods of bringing their trusteeship to an end.
Many charities have trustees who are appointed for a fixed term of office and therefore it may be considered appropriate simply to allow that term of office to run its course and for that person not to be reappointed.
Similarly, trustees may be appointed because of their role elsewhere. Such ex-officio trustees automatically cease to have a role when their outside office or appointment comes to an end.
Some charity constitutions require trustees also to be members of the charity. If the conduct of a trustee is so serious as to justify expulsion from membership, the expelled member then also ceases to be eligible to continue as a trustee.
The comments above about the proper procedure, due notice and fairness of treatment apply equally in this scenario.
A trust constitution may be vague as to how to remove or replace a trustee. Charities may wish to consider updating their constitution to remove any ambiguity. Subject to the overriding oversight of the Charity Commission, this can often be carried out in accordance with the existing rules of the constitution, for example to provide for rotation of trustees or to introduce clearer procedures to allow trustees to be removed from office.
The Charity Commission’s role
The Charity Commission can step in to intervene if it feels this is justified.
Under the Charities (Protection and Social Investment) Act 2016 there is power, where the Commission considers that there has been a breach of trust or duty or other misconduct or mismanagement, to issue official warnings both to an individual charity trustee, or to the charity generally.
The Charity Commission can also intervene more drastically into the affairs of a charity. with powers to appoint additional trustees or to suspend or remove a trustee.
An application can be made to apply to the court for an order to remove a trustee. The court’s inherent jurisdiction to manage such things is very much a last resort and it should not normally be necessary given the powers usually available under the terms of the charity’s constitution and/or within existing legislation.