The Insolvency Service is understood to have given all eight former Kids Company charity directors and founder and former chief executive Camila Batmanghelidjh a deadline of December 20 to agree to a voluntary ban on holding company directorships or face being disqualified for periods of between two-and-a-half and six years..
Despite not being a registered company director or charity trustee, Camila Batmanghelidjh is considered to have been a ‘de facto’ director of the company by the Insolvency Service.
The vast majority of charity boards are composed entirely of non-executive trustees registered with the Charity Commission, who may also be company directors registered at Companies House, with the Chief Executive attending and taking part in the board decision making process and yet not being formally registered as a director or trustee.
A number of charity Chief Executives I have spoken with say that they are happy with this arrangement in the belief that they cannot be held personally liable for any decisions made by the board which may lead to prosecution – however, as we have seen with Kids Company, this is an unfounded belief.
The test for whether or not someone is acting as a director, either ‘de facto’, someone who holds themselves out to be a director, by, for example, having the title Chief Executive or CEO, or ‘shadow’, in the case of someone who is for all intents and purposes a member of the board, is not that they are registered as a director but is to do with their attendance at and contribution to board meetings.
I believe that it is time for more Charity Chief Executives to consider their positions and if they are acting as directors or trustees then they should seek formal recognition by obtaining permission from the Charity Commission to be registered Company Directors and or Charity Trustees, to gain the protection of the Companies and Charity Acts, and to become fully fledged members of a unitary board.
Charity trustees also need to heed the lessons of Kids Company – Alan Yentob faces being disqualified from running or controlling companies for five years including his ‘I Am Curious Productions’, the company he set up last year after having been forced to quit the BBC creative director in December 2015 by his colleagues who accused him of attempting to interfere in the broadcaster’s coverage of the Kids Company scandal.
There seems to be a widely held misconception amongst Charity trustees that their duties, liabilities and responsibilities are a somewhat watered down version of those for an equivalent private sector director and clearly this is not the case.
Trustees need to ensure that they are fully aware of what they are letting themselves in for before they accept appointments to a Charity Board.