1.04 LEGAL DUTIES OF IQ COUNCIL MEMBERS

Directors’/trustees’ duties

In 1958 the Institute of Quarrying became incorporated as a Company limited by Guarantee.  This means that each member of Council is a director under the terms of the Companies Act and, as such, owes the same general duties to the Institute that would be required by a director of any limited company.

Unusually, IQ is also a registered charity.  In this regard, it is important to bear in mind that if a Company is a registered charity, this does not in any way reduce or mitigate the duties of those who would normally be charitable trustees.  Instead, it means that the directors (i.e. members of Council) wear two hats.  First, they are directors of a limited company; and second, they are effectively treated as trustees of a charity.  In other words, they have two sets of responsibilities.

Having two sets of responsibilities is not as unusual as it sounds; since many of the duties which fall upon directors under the general law are very similar, if not identical, to the duties that are imposed upon trustees of a charity.  For example, an obligation to act in the best interest of the company/charity. 

There are, however, some specific obligations which are imposed upon trustees of a charity and a list of basic duties is set out in the appendix.  This list is not exhaustive and is merely intended to indicate the breadth of duties that are imposed upon a charitable trustee.

For ease of understanding, IQ’s lawyers have been asked merely to summarise the responsibilities.  Further information, however, can be made available on request to the Executive Director if any points of detail require clarification. 

You’re either in, or you’re not!

From both a Companies Act and Charity law point of view, a person is either a Director and Charitable Trustee of a charitable company, or he is not.  For example, if a person wants to be a Council Member, then the individual concerned must accept all  the duties and responsibilities of a Director under the Companies Act.  In addition, they have to recognise that they are taking on all the responsibilities under Charity Law which are imposed upon Charitable Trustees.  It is not possible to pick and choose. 

Similarly, it is not possible for an individual to attend Council meetings and have any voting or other rights without also assuming the responsibilities that are implicit upon Directors and Charitable Trustees.

The only exception to this rule relates to the Young Members of Council who have the option to attend meetings as observers if they are not comfortable being included as directors of the company.

Risk assessment and control measures

It goes without saying that while Council members must be aware of their responsibilities, it should also understood that the Institute has always been run in a way that reduces any personal risk to an absolute minimum.

Specifically, this means that as well as having an experienced team at head office, IQ retains professional advisors to provide guidance on all legal and financial matters that need to be considered by Council.

The responsibilities of the senior staff retained at the Nottingham office can be summarised as follows:-

• Executive Director* - oversees all activities and provide the main link with both senior officers and professional advisors.
• Secretary - looks after administrative function including statutory returns to Companies House.
• Treasurer* – deals with all aspects of finance, accountancy, insurance etc
• General Manager – looks after day-to-day operation of IQ embracing membership, education, technical and liaison with branches

Professional advisers are retained in the following areas (in conjunction with QMJ Publishing Ltd):-

• Legal (company law, employment, intellectual property)
• Audit, tax and VAT
• Investment management
• Pensions
• Trade Marks/Patent Attorneys
• Surveyors & valuers
• Insurance broker

In addition, the Institute is not only comprehensively insured (public liability insurance covers all national and branch activities), but it also retains a significant level of reserve funds (c.£2m) to provide the wherewithal to deal with any unexpected financial problem that might arise.

Thus, taking everything into account, including the essentially low-risk nature of the Institute’s normal activities, it is considered that all the necessary experience and support and experience is in place to ensure that Council members are able to make properly informed decisions on the running of the Institute.

* In dual employment with QMJ Publishing Ltd
Appendix - Specific duties of Charitable Trustees

• to notify the Charity Commission if the company ceases to exist, or if there is a change in its trusts or in the particulars registered, and to supply the Commission with details of such changes and copies of altered trusts
• to state on all official documents including cheques and invoices, that the charity is a registered charity, if the gross income in the last financial year exceeded £10,000

• not to benefit personally from the trust or allow himself to be placed in a position where a duty as a trustee conflicts with a private interest, and not to take advantage of information gained as a trustee
• to be involved in all major decisions – this means that Council members should be actively involved in strategic decision making and those who cannot attend meetings regularly should consider whether it is appropriate for them to remain as a trustee
• to exercise reasonable skill and care, which is judged according to the actual knowledge or experience the trustee has and the knowledge or experience that it is reasonable to expect of that trustee
• to ensure the Charity keeps accounts and produce them in accordance with companies law requirements
• to comply with all the rules and requirements set out in the Charity’s  constitution and fulfil the charitable purposes and objects
• to ensure the Charity is and will remain solvent
• to use charitable funds and assets reasonably, and only in furtherance of its objects
• to avoid doing anything which may place the Charity’s funds, assets or reputation at risk
• to take special care when investing funds of the Charity or borrowing funds for the Charity
• to consider getting external professional advice where there may be a material risk to the Charity

Finally, it should be noted that a breach of any duty amounts to a breach of the trust, and in exceptional circumstances may result in the trustee having to make good any loss that may result from the infringement.