Part 4 of the Charities Act 2009 (the “Act”) came into force on Monday, 5 September 2016 and sets out the various provisions for the protection of charitable organisations.
The introduction of Part 4 of the Act gives investigative and protective powers to the Charities Regulator who may appoint an ‘inspector’ to investigate the affairs of a charitable organisation and to impose sanctions if a charity breaches certain obligations, such as the requirement to keep proper accounts or to submit its annual report.
Power of Charities Regulator to require production of documents
The Charities Regulator may, by direction in writing, compel a charitable organisation or the charity trustees of a charitable organisation, to produce such books, documents or other records as may be so specified by the Charities Regulator. The Charities Regulator must, however, be of the opinion that the charity has/will undertake unlawful or fraudulent activities, or that examination of these documents is required to determine whether an inspector should be appointed to the charity.
When appointed, an inspector may also compel the production of such documents. This requirement to produce, applies to documents within the possession, under the control or within the procurement of a charity trustee or agent of a charitable organisation.
A charity trustee or agent of a charitable organisation shall also attend before an inspector and give all assistance in connection with the investigation which he/she is reasonably capable of giving when required to so do by an inspector.
Entry and search of premises
Where the charitable organisation fails to comply with the direction of the Charities Regulator to produce such books, documents or other records as may be so specified, an inspector, or the Charities Regulator as the case may be, may apply to the District Court for a warrant to:
- enter the premises, if necessary by the use of reasonable force
- search the premises and inspect and take possession of all such books, documents or other records that are the subject of the investigation
- take all necessary measures to ensure that such books, documents, or other records are preserved and not interfered with
Application to the High Court
The Charities Regulator may also apply to the High Court for such Order as it considers appropriate in circumstances where there has been misconduct on the part of any charity trustee or member of staff in relation to the affairs of the charitable organisation, where property of the charitable organisation is being misapplied or where the provisions of the Act are not being complied with.
The High Court has the power to make a number of orders including the following:
- an order suspending or removing any charity trustee or member of staff
- an order prohibiting the removal, sale or application of any property of the charitable organisation
- an order vesting any of the property in the Charities Regulator
- an order appointing any person to act as charity trustee
- orders restricting the payment of debts to, or the entering of agreements by, the charitable organisation
CEO of the Charities Regulator, John Farrelly, welcomed the new powers stating:
“The introduction of Part 4 of the Act is a very positive and welcome step for charity regulation in Ireland. The powers it confers will allow the Regulator to take steps to ensure that charitable organisations are protected and well managed. Where breaches of the Act are suspected the Regulator can now work proactively to prevent and counter mismanagement and protect charitable organisations. These powers will be applied in a proportionate and fair manner, recognising that the majority of charities require support rather than enforcement.” ¹
When one considers the recent high level media attention to issues involving charities, charities should assume that the CRA will use the powers afforded to it. It has been our experience, even in the short time since commencement, that it will do so.