Entrenchment provisions

Urgent action required by charities who are companies

The Companies Act 2006 has introduced major changes to the law relating to articles of association.

It will soon be impossible to make changes to the objects of a company without the sanction of the Court. For most companies this is irrelevant, because EU law enables a trading company to carry out any commercial activity.

For charities, it is much more significant. All charities who are limited companies should now be seeking professional advice on how the entrenchment provisions may affect them, and what steps should now be taken to ensure that future changes to objects can be made.

If steps are not taken before the new rules are implemented, it may not be possible to change the objects of a charity in an entirely flexible way in the future.

We would be happy to advise any charity that might be affected.