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Time Is Ticking: Guernsey Charities To Comply With New Law By 31 July 2022 – Corporate and Company Law



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In April 2022, new charities legislation in Guernsey came into
force, replacing the Charities and Non Profit Organisations
(Registration) (Guernsey) Law 2008 which previously regulated
charities and non-profit organisations (NPOs).

For those involved in Guernsey charities, there is a
very short deadline of 31 July 2022 to comply with
the new regime.

For the last two months, Angela Calnan and the private client
team in our Guernsey office have been working hard to advise
charities as to their obligation to register, assisting with that
process and refreshing the constitutional documents of numerous
charities to bring them into line with the new regime.

So, what is the new regime, who is caught by it and what action
needs to be taken now by whom and when?

The new legislation is contained in:

What is the purpose of the new legislation?

  • To clarify the distinction between a charity and an NPO by
    introducing a charitable purposes test;

  • To define “charitable purposes” and bring much needed
    clarity to Guernsey’s law in this area;

  • To ensure that charities and NPOs comply with international
    standards against money laundering and terrorist financing;
    and

  • To increase the financial probity and transparency of charities
    and NPOs.

What is the difference between a charity and an NPO?

A charity is defined as an organisation that has only
‘charitable purposes’ which provide, or intend to provide,
benefit to the public or a section of the public. The list of
‘charitable purposes’ are broad and can be found at
Schedule 4 of the Ordinance.

NPOs are organisations which cannot be defined as a charity but
provide non-financial benefit to their members or the public.

Which organisations need to register under the Ordinance?

The Ordinance introduces a single register for both charities
and NPOs. Organisations that are already registered under the old
legislation will automatically be entered into this new
register.

Charities and NPOs will be required to register if:

  • they have a gross annual income over £20,000; or

  • gross assets and funds worth more than £100,000.

Charities or NPOs that conduct ‘international activity’
will need to register, irrespective of the financial threshold.
Broadly, ‘international activity’ is raising or
distributing assets outside the Bailiwick, subject to limited
exceptions. This article does not focus on organisations that
conduct international activity, but such organisations should note
that they are subject to more stringent regulation and earlier
deadlines in respect of some requirements. This provision will
often bite where Guernsey organisations make payments to the United
Kingdom or further afield recipients.

Charities and NPOs that meet the financial threshold but do not
accept donations from the public and do not carry
out international activity do not need to be registered. Membership
fees do not constitute donations.

All unregistered organisations will need to review their
position in line with the Ordinance and if required, have submitted
their application to register by 31 July 2022.

Ongoing requirements

Registered organisations will be required to have basic
governance measures in place. They involve:

  • Having constitutional documents that meet the minimum standards
    (set out in the schedule to the Regulations) – these do not
    have to be in place until 30 June 2023, or
    31 December 2022 for organisations that carry out
    international activity;

  • Keeping financial records that demonstrate how funds, assets
    and income are used from 1 August 2022;

  • Producing annual financial statements – the first of
    which is due within one year of the first financial year end on or
    after 29 April 2022 (i.e. 29 April
    2023
    at the earliest);

  • Having at least three managing officers, at least two of whom
    (including the treasurer) are unconnected to one another;

  • Increased compliance measures surrounding risk assessment and
    policies, record-keeping, donations and international
    activity;

  • Notifying the Guernsey Registry of any changes to the
    information supplied in their application to register.

Higher risk payments

From 1 August 2022, all registered charities
and NPOs will be expected to identify and verify their donors where
the donation falls into any one of these categories:

  • The donation has come from outside of the Bailiwick;

  • The donation exceeds £15,000 in any given year; or

  • The donation is considered to be ‘unusual’ in
    nature.

Any international payments of £100,000 or more will need
to be reported to the Guernsey Registry.

Financial probity and transparency

From 1 August 2022, all registered charities
and NPOs need to have certain financial probity and transparency
measures in place.

Funds will have to be kept separate from those of any third
party (including the organisation’s members).

All funds are required to pass through a bank account, other
than:

  • petty cash payments that do not exceed £1,000 in any
    12-month period; or

  • payments made or received wholly within the Bailiwick that are
    ancillary or incidental to the purpose of the organisation.

At least two unconnected individuals need to be involved in
releasing funds, unless the amount falls below a de
minimus
threshold set by the organisation and communicated to
the Guernsey Registry.

More generally, the organisation will have to adopt policies and
procedures which follow accepted principles of accounting and
control.

Next steps

Applicable organisations must ensure that they meet the most
pressing deadlines highlighted above in bold.

To ensure that any future key deadlines are not missed, consult
the Guernsey Registry’s summary timeline of key dates. The Registry
has also produced guidance for charities and NPOs.

It should be noted that organisations conducting international
activity are subject to additional compliance requirements that
must be met by 30 November 2022.

Recent work highlights

Collas Crill is heavily involved in the charities space, both
domestically and internationally. Some of our recent local projects
include advising:

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.

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