Disqualification criteria for charity trustees

Charity Law

The Charities and Trustee Investment (Scotland) Act 2005 is the law which applies to charities that are registered in Scotland and regulated by the Office of the Scottish Charity Regulator (OSCR).  The 2005 Act has been updated by the Charities (Regulation and Administration) (Scotland) Act 2023 and will be further updated in the coming months.

What is a charity trustee?

Charity trustees are the people in overall control and management of a charity.  They may be called directors, management committee members or committee members, but the law considers them to be 'charity trustees'.  In short, this applies to whoever is responsible for the charity's governance, strategy, and for making sure that the charity is administered effectively.  They are required to account for its activities and outcomes.

Our Guidance and good practice for charity trustees sets out the duties and responsibilities of charity trustees.  It also offers examples of good practice in the governance of charities, which should help charity trustees fulfil their duties and responsibilities.

What this guidance is about

The 2005 Act provides (S.69(1)) for the disqualification of individuals from being or becoming charity trustees who meet specific criteria.

All charity trustees have legal duties and responsibilities under the 2005 Act. A duty is something that you must do, and all the duties must be met. These duties are separated out into general duties, that set out a broad framework that all charity trustees must work within, and specific duties detailed in the 2005 Act. The general and specific duties apply equally to all charity trustees and to all charities registered in Scotland. All of the charity’s trustees should work together to make sure that these duties are met.

Every charity trustee must ensure that they comply with the law whilst undertaking their role in a charity.  It is the responsibility of individuals to make sure that they do not meet the criteria set out in law, that would automatically disqualify them from being a charity trustee. 

Anyone who acts as a charity trustee whilst disqualified is guilty of an offence punishable by a fine, imprisonment, or both.

The automatic disqualification criteria in the 2005 Act will be extended by further provisions of the 2023 Act, due to come into force in summer 2025 and new guidance will be published to explain those changes.

This guidance explains what the existing law says about disqualification.

All charities should review this guidance and refer to the latest version when recruiting new trustees

Criteria that automatically disqualify an individual from acting as a charity trustee

·        Unspent conviction for an offence involving dishonesty or an offence under the 2005 Act

·        Undischarged bankruptcy (sequestration)

·        Granting a Protected Trust Deed

·        Entering into an Individual Voluntary Arrangement (England and Wales) to pay off debts with creditors

·        Being removed by a court from being a charity trustee

·        Being disqualified from being a company director

Disqualification is automatic in these circumstances, and it is a criminal offence to become or continue to act as a charity trustee whilst the circumstances apply. 

Disqualification may be for a specific period of time

• A conviction may become ‘spent’ after a certain period of time.  You should seek your own legal advice to confirm your personal circumstances.
• A Protected Trust Deed usually lasts for four years but can last longer.  Once your Protected Trust Deed is discharged you will be eligible to become a charity trustee again.  You should seek appropriate advice to confirm your personal circumstances.
• Bankruptcy (can also be referred to as sequestration) is usually for a period of 12 months.  Once your bankruptcy has been discharged you will be eligible to become a charity trustee again.  You should seek appropriate advice to confirm your personal circumstances.
• After your conviction is spent or your bankruptcy or Protected Trust Deed is discharged, you would be eligible to become a trustee again.

Are there any exceptions?

The 2005 Act provides a mechanism to waive an automatic disqualification.  A waiver application form allows a disqualified individual to apply to OSCR for a waiver in terms of section 69(4) of the 2005 Act in relation to a particular charity, a type of charity, or to charities in general.  Each case is considered on its own merits.  

We make our decision based only on what is in the best interests of the charity or charities covered by the waiver application.  We will also check that the waiver is not likely to damage public trust and confidence in a charity or charities.  A waiver decision can be appealed.  

If granted, a waiver would allow that individual to become a charity trustee. 

Before applying for a waiver, an individual must have declared their disqualification to the charity so that the existing charity trustees can consider whether they wish to support the application.

A disqualified individual will remain disqualified unless OSCR grants a waiver.

OSCR’s assessment is based upon the following criteria:

• Whether a charity’s governing document would permit someone to become a charity trustee even if a waiver was granted
• The details and circumstances of the disqualification
• An evaluation of the individual’s role in any particular charity, which they wish to be a charity trustee of
• An evaluation of the possible risks to the charity’s property or reputation, or to the property or reputation of a type of charity or the sector in general
• Consideration of the supporting material from the charity trustees and/or others

In the case of a particular charity or type of charity, OSCR will also look at whether it is essential for an individual to serve as a charity trustee. 

OSCR will consider:

• What role and/or responsibilities the individual will have in the charity or type of charities
• What relevant skills or experience that they would bring
• How being a charity trustee would contribute to the charity or type of charities, and to achieving its purposes
• How the charity intends to mitigate and manage the risks arising if the individual is granted a waiver to allow them to become a charity trustee
• What the legal form of the charity is
• What identifiable risks or disadvantages to the charity or type of charity would arise if the individual making the application was unable to serve as a charity trustee

The decision on whether to grant a waiver will be made on the information provided in the waiver application form and the supporting information submitted with it.  There might be some circumstances where OSCR may need to ask for further information from the individual, or a charity to enable a decision to be made.

The law about automatic disqualification will change in summer 2025.  We will publish new guidance about the changes.