Know your constitution

  • 1st July 2024

Kate Parkinson advises going back to basics regarding your school’s operations

 

There are numerous external factors affecting current and future school operations. Front of mind is the potential for a change in government policy towards independent schools after the forthcoming general election. This, alongside greater scrutiny from regulators, and increasing societal demand for more environmentally and diversity conscious institutions, make it more important than ever for governing bodies to look inwards, to ensure they have robust and appropriate governance in place.

Ensuring that a school’s governance foundation is strong allows governing bodies to move quickly and confidently when they need to. We will consider wider governance reviews in a separate article, but in this first piece we go back to basics looking, specifically, at the charitable school’s constitution. This checklist highlights the provisions most likely to affect the administration of your school.

Knowing your constitution is essential, not least because it contains key information about your charitable purposes (which you exist to do) and the powers the governors have to further those purposes. Not only that, but the constitution will also include obligations and procedures that must be adhered to, for example, to ensure valid decision-making (and which may or may not be included in published guidance or legislation). Even if you have a working knowledge of your constitution, when was it last reviewed to ensure that it is fit for purpose? Is it fit for a modern school facing new challenges?

  1. What type of constitution do you have?

Most independent schools are governed by Articles of Association. This type of constitution indicates that the school is incorporated, which means that it has a legal personality of its own and can enter into contracts and own land in its own name. However, some constitutions are in the form of a declaration of trust, indicating that the school is unincorporated. The distinction is important because if your school is unincorporated the governors may be exposed to personal liability for operational liabilities incurred which cannot be met out of the school’s assets.

If your school is unincorporated, it may therefore be time to consider whether this remains appropriate or whether it would be in the school’s best interests to incorporate (not least to provide limited liability for the governors).

  1. What are your charitable objects?

When shaping a school’s strategy or considering a new activity, you should keep in mind how the proposal would further the school’s objects. This is particularly relevant for schools whose objects refine the charitable purpose of the advancement of education, for example, by reference to a particular faith.

Governors should be mindful that objects must be compliant with the Equality Act 2010 to be considered charitable at law.

  1. Does your constitution include an express power to borrow and grant security?

If no such power is included, then it may be necessary to amend your constitution if your school is looking to borrow or grant a security. Sometimes having express powers in a constitution can help third parties, such as banks, be more comfortable with lending.

This could be particularly relevant to schools looking to further a ‘green agenda’ due to environmental aspirations, as well as in the face of growing pressure, particularly from parent bodies.

  1. Who can become a governor?

Your constitution may require a certain number of governors to come from or be nominated by particular groups, for example, the livery company with which the school is associated, or your school alumni, or parent body. In addition, there may be limits on the size of the governing body and other requirements as to board composition.

Governing bodies should consider whether existing nomination rights or governor positions are appropriate in modern times, particularly in light of equality, diversity and inclusion aspirations. In some cases, it may be that the nominating body no longer exists. But in all cases, the governing body should be mindful of achieving a good mix of skills and backgrounds to ensure proper management and scrutiny of the school and, if necessary, take steps to amend the constitution accordingly.

  1. How long can governors stay in office?

It’s good practice to ensure a regular turnover of governors and many constitutions provide that governors are elected for a set term, for example three years. To that end, we generally recommend that a constitution includes a maximum number of terms or consecutive years which a governor can serve. It can also be helpful to have flexible provisions to enable a governor to be re-elected beyond this maximum period in exceptional circumstances, typically on the approval of at least two-thirds of the rest of the governing body.

A governing body should consider whether the current length and number of terms are appropriate. If the constitution does not facilitate a healthy turnover of governors, to bring fresh ideas and new scrutiny, then it may be appropriate to amend the constitution.

  1. How can governors be removed?

You should understand what mechanisms are in place to remove governors, if necessary. Constitutions will normally set out disqualification and removal provisions in circumstances where the law requires a governors’ removal or where it is impractical for them to continue. It is common to provide that a governor can be removed by the governing body if he or she has not attended, for example, three consecutive meetings of the governing body without leave. In addition, if your school is incorporated, and regardless of what the constitution says, the school’s company members (who may or may not be the same people as the governors) will have a statutory right to remove a governor by resolution.

  1. What is the quorum for governor meetings?

Circumstances sometime require meetings on short notice, but if you don’t have enough governors to form a quorum then the decisions made at the meeting will be invalid.

  1. Can you hold meetings electronically?

Lockdowns certainly expedited the use of videoconferencing platforms for electronic board meetings, but did the school’s constitution follow suit? If the constitution was not reviewed and amended, if necessary, to allow meetings by electronic means, then governing body meetings may be being held outside of what the constitution permits.

  1. (If you are incorporated) do you need to hold an annual general meeting?

The Companies Act 2006 dispensed with the previous requirement for companies to hold annual general meetings of the company members. However, if your constitution requires you to hold an AGM (which is likely to be the case for those drafted before the introduction of the Act) then this obligation still stands, despite the change to company law. Amending the constitution to do away with the requirement to hold AGMs provides for administrative ease and more time in the governing body diary.

So, how did you fare?

It is possible to let your constitution gather dust on a shelf and run a very successful school. However, ignorance of the underlying governance framework exposes the governors and the school to unnecessary risk which can be easily mitigated. If school practices have departed from those provided for in the constitution, then you should consider altering these practices or, if appropriate, refreshing your constitution so that it works for the school. Doing so ensures that the governing body has the structural underpinning it needs to be truly effective, as well as clear procedures to act quickly when it might be necessary to react to changes beyond a school’s control.

 

Kate Parkinson is a senior associate at law firm BDB Pitmans.

Kate Parkinson

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