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Members of academy trusts: who are they and what do they do?

September 2017

In this article, we look at who the members of an academy trust are, what they do, and what they should consider when making decisions.

As charitable companies limited by guarantee, academy trusts are required to have members as well as trustees.

Who are your members?

Members do not grow on trees: they will usually be someone you already know.

For converter academies, the first members are usually individuals with some connection with the school (from example, members of the existing governing body).  For sponsored academies, they will be connected with the sponsor.  In Diocesan controlled MATs, members will usually include key Diocesan individuals or Diocesan corporations, such as the Bishop, the Chair of the Diocesan Board of Education or the Diocesan Director of Education.

DfE template documents require a minimum of three, but DfE recommends five, and that the majority of those members are not also trustees.  Some cross over is acceptable, but there needs to be some separation between the two roles, to enable the members to have proper oversight of the trustees' work without conflicts of interest arising.  For similar reasons, the most current model articles of association produced by DfE do not permit employees of an academy trust to act as its members.

What do the members do?

Members of charitable companies limited by guarantee have similar functions to the shareholders of companies limited by shares.  They are not involved in its day to day running, but play a vital part in overseeing its performance.  DfE describes this as an 'eyes on, hands off' approach.

Members have certain rights over the company, set out in the articles of association (its constitution) and in law.  These rights include:

  • the power to make amendments to the articles of association (although in the case of academy trusts, certain amendments need prior consent from DfE);
  • the power to appoint and remove members;
  • the power to appoint and remove trustees;
  • the power to direct the trustees to take specific action;
  • the power to appoint auditors and the right to receive the academy trust's annual accounts; and
  • the power to wind up the academy trust.

Members therefore help to ensure that an academy trust has a strong governance framework.  Most of the time, they will not have to do very much, but they provide a check and balance.  If things go wrong in an academy trust, the members can step in and help, but that does not allow them to take control ('hands off').

What should members consider when making a decision?

It is a general principle of company law that members can exercise their voting rights however they see fit.  Where shareholders are concerned, that includes voting in any way that may increase their own profit even where other shareholders or the company itself may suffer.

This principle was always thought to apply to charitable companies, even where members are prohibited from receiving any personal benefit.  However, a recent case held that members of charitable companies (like academy trusts) must act in the best interests of the charity when exercising their vote (The Children’s Investment Fund Foundation (UK) v H.M. Attorney General and Others [2017]).

In this case, the court ordered one of the CIFF members to vote in favour of a grant to another charity, as being the most beneficial course of action for CIFF.  

Members have to set aside their own, personal interests when voting and instead consider what would be in the best interests of the academy trust.  Members of academy trusts will need to consider this carefully in future when called upon to exercise their powers.

 

If you would like to discuss any aspect of this article further, please contact Chris Billington or any other member of the Education team on 0113 244 6100.

You can also keep up to date by following Wrigleys Schools team on Twitter here

The information in this article is necessarily of a general nature. Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors

 

 

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