Ken Obetto v The Charity Commission for England and Wales

Background

1. The Appellant is a trustee of a charity named Swahili Support Network (“the Charity”).

2. The Charity was incorporated at Companies House as a company limited by guarantee on 25 November 2004. It was registered with the Respondent as a charity on 24 November 2005 and entered onto the Register. On registration with the Respondent, the Charity was recorded as being governed by its memorandum and articles of association, both dated 24 November 2004, as amended by special resolution dated 29 October 2005.

3. On 16 October 2011, two of the then Directors and Trustees of the Charity signed an application to strike off the company. The application was received by Companies House on 18 October 2011. After publication of the notice, the company was dissolved on 14 February 2012.

4. However, the Charity remained on the Register and submitted yearly annual returns from 2012 to 2022 to the Respondent. On 24 August 2023, as part of a proactive wider exercise to remove charities which had ceased to exist or operate, the Respondent reviewed Companies House records and noted that the company had been dissolved at Companies House some years previously and removed the Charity from the Register, the Respondent having concluded that the Charity, being incorporated, had ceased to exist upon the dissolution of the company.

5. On the same day, the Appellant submitted an appeal to the Tribunal. The appeal was stayed whilst the Respondent conducted an internal review, which upheld the original decision. Following the internal review, the Appellant confirmed to the Tribunal that he wished to continue with his appeal against the original decision. The Relevant Law The Companies Act 2006 Section 1003 Striking off on application by company (1) On application by a company, the registrar of companies may strike the company's name off the register. (2) The application— (a) must be made on the company's behalf by its directors or by a majority of them, and (b) must contain the prescribed information. (3) The registrar may not strike a company off under this section until after the expiration of [12 months] from the publication by the registrar in the Gazette of a notice— (a) stating that the registrar may exercise the power under this section in relation to the company, and (b) inviting any person to show cause why that should not be done. (4) The registrar must publish notice in the Gazette of the company's name having been struck off. (5) On the publication of the notice in the Gazette the company is dissolved. The Charities Act 2011 (‘ the Act ’) Section 29 The register (1) There continues to be a register of charities, to be kept by the Commission in such manner as it thinks fit. (2) The register must contain— (a) the name of every charity registered in accordance with section 30, and (b) such other particulars of, and such other information relating to, every such charity as the Commission thinks fit The Respondent’s powers are exercised to further its statutory objectives and general functions, as set out in ss.14 and 15(1) of the Act . Section 34 Removal of charities from register (1) The Commission must remove from the register— (a) any institution which it no longer considers is a charity, and (b) any charity which has ceased to exist or does not operate. (2) If the removal of an institution under subsection (1)(a) is due to any change in its trusts, the removal takes effect from the date of the change. (3) A charity which is for the time being registered under section 30(3) (voluntary registration) must be removed from the register if it so requests Section 35 Duties of trustees in connection with registration (1) If a charity required to be registered by virtue of section 30(1) is not registered, the charity trustees must— (a) apply to the Commission for the charity to be registered, and (b) supply the Commission with the required documents and information. (2) The required documents and information are— (a) copies of the charity's trusts or (if they are not set out in any extant document) particulars of them, (b) such other documents or information as may be prescribed by regulations made by the [Secretary of State], and (c) such other documents or information as the Commission may require for the purposes of the application. (3) If an institution is for the time being registered, the charity trustees (or the last charity trustees) must— (a) notify the Commission if the institution ceases to exist, or if there is any change in its trusts or in the particulars of it entered in the register, and (b) so far as appropriate, supply the Commission with particulars of any such change and copies of any new trusts or alterations of the trusts. (4) Nothing in subsection (3) requires a person— (a) to supply the Commission with copies of schemes for the administration of a charity made otherwise than by the court (b) to notify the Commission of any change made with respect to a registered charity by such a scheme, or (c) if the person refers the Commission to a document or copy already in the Commission's possession, to supply a further copy of the document Section 228 Application for conversion by charitable company (1) A charitable company may apply to the Commission to be converted into a CIO, and for the CIO's registration as a charity, in accordance with this section. (2) But such an application may not be made by— (a) a company having a share capital if any of the shares are not fully paid up, or (b) an exempt charity. (3) The company must supply the Commission with— (a) a copy of a resolution of the company that it be converted into a CIO, (b) a copy of the proposed constitution of the CIO, (c) a copy of a resolution of the company adopting the proposed constitution of the CIO, (d) such other documents or information as may be prescribed by CIO regulations, and (e) such other documents or information as the Commission may require for the purposes of the application. …….. 319 Appeals: general (1) Except in the case of a reviewable matter (see section 322) an appeal may be brought to the Tribunal against any decision, direction or order mentioned in column 1 of Schedule 6. (2) Such an appeal may be brought by— (a) the Attorney General, or (b) any person specified in the corresponding entry in column 2 of Schedule 6. (3) The Commission is to be the respondent to such an appeal. (4) In determining such an appeal the Tribunal— (a) must consider afresh the decision, direction or order appealed against, and (b) may take into account evidence which was not available to the Commission. (5) The Tribunal may— (a) dismiss the appeal, or (b) if it allows the appeal, exercise any power specified in the corresponding entry in column 3 of Schedule 6. Issues & Evidence

6. The only issue for the Tribunal to determine, standing in the shoes of the Respondent, having regard to the fact that the Respondent is the regulatory body charged by Parliament regulatory oversight over charities or institutions that wish to be entered onto the Register as charities, while making its own decision afresh, was whether the decision to remove the Charity from the Register was correct in law, under section 34 of the Charities Act 2011 .

7. As the Tribunal was taking the decision afresh, it was not relevant for it to consider arguments directed towards asserting that the Respondent acted ultra vires, in bad faith, or with maladministration in making its decision.

8. The Tribunal had a consolidated bundle of 275 pages, further submissions from the Appellant, the Respondent’s skeleton argument and a bundle of authorities. The consolidated bundle contained submissions and communications from the Appellant, the Respondent’s submissions and decision review with exhibits, regarding the history of the charitable company. There were no written witness statements, and no oral witness testimony was given. The Appellant attended the hearing, gave oral evidence and asked questions of the Respondent’s representative.

9. The Appellant’s grounds of appeal were that while the directors of the Charity, an incorporated institution, resolved to dissolve the incorporated institution, it remained as a registered, but unincorporated, charity only, and had been filing annual returns throughout. He stated that as far as he was aware, the only requirement to stay ‘active’ was to file annual returns. but that there was no requirement that they must retain the status of an incorporated institution in order to be on the Register. He maintained that, therefore, because the Charity was active and operating, the decision of the Respondent was erroneous. He further maintained that although the Respondent submitted that the Charity never informed them when the incorporated institution had been dissolved, the Respondent had not presented any evidence to that effect. He submitted that the Respondent maintained it had no recollection or records as to the events that occurred over 10 years ago nor whether there were telephone conversations with the Appellant, and it could not tell due to the passage of time. He submitted that the Charity has continued to operate all these years, had met its legal obligations and there was no justification to be removed from the Register and that the decision to do so went against the Respondent’s own principle of fairness. The Appellant relied on the decision in Hipkiss v Charity Commission CA/2017/0014 and submitted that the Respondent gave an opportunity to Hipkiss to respond before removing that charity from the Register and since the Charity in this appeal was not afforded the same opportunity, the decision was discriminatory and unfair. He asked that the Charity be reinstated onto the Register.

10. The Respondent submitted that, as a matter of law, the Charity ceased to exist on the date that the incorporated institution, a charity, was dissolved. Accordingly, it was submitted, the Charity, then an incorporated institution, ceased to exist on 14 February 2012 when the company was dissolved. Following dissolution, it was submitted, the Trustees of the Charity failed to understand the legal consequences of the dissolution of the incorporated institution that was then the Charity entered on the Register and failed to notify the Respondent of the dissolution of the company, pursuant to section 35(3) of the Act . Instead, the Trustees continued as if the company, an incorporated charity, was still entitled to continue as a charity as an unincorporated institution. It was submitted that had the Trustees followed the notification requirements in section 35 , they would have been advised of the consequences of dissolution.

11. The Appellant’s position that the charitable company converted in 2012 from a charitable company to an unincorporated charity, that should be allowed to proceed as a charity entered onto the Register using the same charity number, is wrong as a matter of law. The Act does not permit the conversion from a charitable company to an unincorporated charity in the fashion presumed by the Appellant. When the incorporated company, that was a Charity entered onto the Register, was dissolved the Charity ceased to exist. In accordance with section 34 of the Act the Respondent must remove from the Register any charity which ceases to exist. Having identified in 2023 that the charitable company had been dissolved, the Respondent proceeded to remove the Charity from the Register. The Respondent therefore submits that the decision to remove the Charity from the Register was the correct decision, as a matter of law, and invited the Tribunal to uphold the decision under appeal and dismiss the appeal.

12. In his oral evidence the Appellant submitted that the Respondent exists to help charities and to be fair. He submitted that it was not fair that it took the Respondent 10 years to realise what had occurred, arguing that the Respondent should take responsibility for having done nothing for 10 years, when this could have been resolved earlier. He again pointed out that the Respondent has accepted annual returns for the Charity, now an unincorporated association, for over 10 years and waited until 2023 to contact the Charity and that the Charity could not tell whether it had communicated with the Respondent upon dissolution of the then incorporated Charity, but the Respondent had not provided evidence that the Charity had not done so. The Appellant could not recall the conversion process but submitted that everything had been done correctly. The Appellant confirmed he had been one of the Trustees of the incorporated charity at the time of the dissolution, but that due to the passage of time there were no records available to the Appellant to say what had or had not happened.

13. The Respondent’s representative confirmed that the Respondent did not have the resources to proactively supervise or reconcile all changes to the status of registered charities and relied on the Trustees’ obligations to inform it of any relevant changes as there are over 170,000 charities, whether registered or not. He explained that if a charity submitted an annual return, it was electronically stored against that charity with no manual oversight and there was no manual oversight when returns were submitted by post. He submitted that had the Charity communicated with them around the time of dissolution of the incorporated charity, there would be a record but that the Respondent did not have the resources to proactively reconcile records concerning charities with Companies House on a regular basis. Conclusion

14. The question of whether a charity does or does not exist is a question of fact to be assessed in every case. The Tribunal was satisfied, on the basis of the evidence before it, that the incorporated charitable company had ceased to exist. This is because once the incorporated charitable company was dissolved it ceased to exist as a legal entity on 14 February 2012, in accordance with sections 1003 and 1012 of the Companies Act 2006 . A dissolved incorporated charitable company ceases to exist, in law, as a separate entity; the Directors/Trustees of the incorporated charitable company lose access to company bank accounts and cannot make transactions on behalf of the incorporated charitable company, upon the company being dissolved.

15. In accordance with section 34(1) of the Act , the Commission must remove from the Register any charity which ceases to exist. There is no discretion which engage any issues of proportionality or fairness or any requirement to seek submissions from a charity, before making the decision. Either the charity exists, or it does not and no further information is required to make the decision.

16. Even if the Respondent had acted 10 years earlier, or provided advice at any stage, the outcome would have the same, as there is no mechanism in law for an institution that is an incorporated charitable company to change into a charitable unincorporated organisation retaining the same charity number on the Register, without undergoing certain procedural requirements, that is, if before dissolution, the charitable incorporated institution converts from a company to a Community Interest Organisation (‘CIO’), namely, on 228 of the Charities Act, namely, to establish a unincorporated institution that has charitable status and is entered and on the Register by the Respondent and assigned a new Charity Number. , transfer the assets of the incorporated charitable company and then dissolve the company. In this case, the incorporated charitable company was dissolved but trustees, including the Appellant, purported to continue the activities of the dissolved company. No evidence was provided by the Appellant that any processes were contemplated or carried out at the time of the dissolution of the company. It did not apply to the Respondent to convert to a CIO before dissolution and has not provided any evidence that it established a new unincorporated institution with charitable status e dissolution of the company. The ‘Charity’ could not continue to function as a charity as the charity had ceased to exist and was legally obliged to inform the Respondent of the dissolution of the company so that the Charity could be removed from the Register in accordance with section 35(3) of the Act . The Tribunal found that the directors of the company did not notify the Respondent of the dissolution of the company because, on the balance of probabilities, if they had, they would have received the appropriate advice and not continued to operate under a misunderstanding.

17. Whilst we sympathise with the Appellant’s misunderstanding that the company could simply be dissolved and the Charity continue to operate as an unincorporated charitable institution, it is for the trustees of a charity to satisfy themselves of the legal implications of any actions taken in governance of their charity. We note that this confusion was compounded by the Respondent’s ongoing acceptance of annual returns. However, it was for the Directors of the company to satisfy themselves before the company was dissolved of the appropriate steps that should be taken to operate as an unincorporated institution with charitable status. If the Trustees required advice and guidance from the Respondent, they should have approached the Respondent before taking any action. The Tribunal also understands that the purported Charity considers it is unfair that the issue took 10 years to come to light, However, as stated, it was for the Directors of the company to proactively seek guidance from the Respondent on the consequences of dissolving the company and not assume that they could continue to operate. The Respondent has explained that it relies on Trustees complying with their obligations and informing them of any significant changes, as it does not have the resources to proactively oversee over 170,000 charities.

18. We agree with the Appellant that there is no requirement to be an incorporated charitable company, in order to be a functioning charity, or to be registered with the Respondent. However, when the company was dissolved without following the processes set out above, the company ceased to exist, and the Charity has properly been removed from the Register by the Respondent. We accept that there may be charitable activities continuing and a new charity continuing in an unincorporated form, in the same name. However, this new entity will need to apply to the Respondent to be entered onto the Register if wishes to have charitable status, following any guidance issued by the Respondent.

19. It is clear from the evidence provided, that the reason for the removal of the incorporated charitable company from the Register was that it no longer existed. On the basis of the evidence before the Tribunal the Tribunal exercises the statutory power under section 34 (1) (b) of the Act to remove the Charity (the corporate charitable company) from the Register, with there being no power to permit the unincorporated purported charity to continue under the aegis of the dissolved company: a new application for charitable status for the unincorporated association must be made, if desired, to the Respondent. Signed Judge McMahon Date: 20/11/2025