Drafting Your Governing Instrument
A governing instrument is a formal document setting out the key provisions regarding the administration of your organisation such as the charitable purposes, composition of the governing board, how the meetings will be held, etc. The types of governing instrument depend on the legal structure you have chosen for your organisation:
- Memorandum and Articles of Association (or now known as Constitution) for a company limited by guarantee;
- Constitution for a society; or
- Trust instrument for a charitable trust.
To meet the requirements for registration under the Charities Act, your organisation’s governing instrument should generally include the following provisions:
Provisions in the Governing Instrument
Company Limited by Guarantee
The purpose(s) must be exclusively charitable for the public benefit and must be clearly and concisely stated. Any power to carry out activities as means to further the charitable purposes (e.g. to raise fund, to conduct seminar and events, etc.) should be provided under an incidental clause.
Governing board members
There should be at least 3 governing board members. The duties, terms of office, appointment and removal procedures of the governing board members should be specified.
It should also state that the Commissioner of Charities or the respective Sector Administrator should be notified of any changes in the governing board members.
Conflict of interest policy
There should be proper procedures in place to manage conflict of interest. Whenever a member of the governing board is in any way, directly or indirectly, has an interest in a transaction or project or other matter to be discussed at a meeting, the member should disclose the nature of his/her interest before the discussion on the matter begins.
The member concerned should offer to withdraw from the meeting and not participate in the discussion or vote on the matter. The governing board should decide if this should be accepted.
Quorum for meeting
The number of governing board members present to form a quorum for any meeting should be clearly stated.
Where your organisation is incorporated as a company limited by guarantee or trust, the minimum number to form a quorum should be 3.
*Note: The quorum can remain at three (3) if this constitutes at least half (1/2) of the governing board members. Otherwise, the quorum should be fixed at least half of the governing board members.
If your organisation is set-up as a society, the quorum at the Annual General Meeting should be 25% of the total voting membership or 30 voting members, whichever is the lesser. The quorum at the Committee Meeting should be at least half (1/2) of the governing board members.
Trustees of immoveable property
The governing board members must inform the Commissioner of Charities or the respective Sector Administrator of the name(s) of the Trustee(s) and the address of each immovable property, as well as any subsequent changes.
Amendments to governing instrument
Any amendments to the governing instrument must be approved by the Commissioner of Charities or the respective Sector Administrator.
Dissolution or cessation of charity status
The circumstances under which your organisation can be dissolved/wound-up should be clearly stated.
Upon dissolution/winding-up or cessation to be a registered charity under the Charities Act,any remaining funds and assets (after settling all debts and liabilities) should be donated to registered charities or Institution(s) of a Public Character, when your organisation is an Institution of a Public Character, as the case may be, with similar objectives. The Commissioner of Charities or the respective Sector Administrator must be notified upon the dissolution of the charity.
Click on the following legal structure for more information on the provisions which should be included in your organisation’s governing instrument: