Our governance

Groundwork Trusts are companies limited by guarantee which are also charities. They are charities because they have objects which are exclusively charitable in law. As charities, Groundwork Trusts are established for the benefit of the public and not for the private benefit of the company members, board members/ directors, or any third party.

Company members

A Groundwork Trust is formed by the Founder Members agreeing to form a company and applying for charitable status. The Founder Members are, by convention, the Groundwork Federation and the sponsoring Local Authorities in the area in which the Trust will operate. Other organisations may also be members or may be afforded membership later in the Trust’s life. Additional Local Authorities may be afforded membership if the Trust expands its geographical coverage.

Members of Groundwork Trusts do not hold shares in the company and are not entitled to receive distributions of profit. Each member’s liability is limited to its guarantee which is set out in the Memorandum of Association. For all Groundwork Trusts this is the nominal sum of £1. This sum would only be called upon if the company is wound up and does not have sufficient funds to meet all the claims of its creditors.

Although the members of Groundwork Trusts do not have rights of ownership in the Trusts or responsibility for management and administration, they nevertheless have a constitutional role in holding the trustees to account for their control of the charity. The Company Members are entitled to:

Attend and vote at general meetings; normally there would be one meeting per year called the Annual General Meeting or AGM of which three weeks’ notice of the place and time of the meeting is given. Other general meetings may be called in exceptional circumstances.
Receive the annual report and accounts of the company from the Board of Trustees.
Nominate one or more Trustee Board members (as provided in the Articles of Association).
Vote on any fundamental changes to the nature of the company, its name, its constitution or which charitable institution should receive any surplus assets on winding up.

Company members attend and vote at general meetings by proxy. The person appointed as a proxy may or may not be the same person as the company has nominated as a trustee. As the role of the company members is a different role from the role of a trustee, and the company members are essentially voting on the performance of the Trustee Board in managing the Charity, there are sound reasons for suggesting that it is preferable, in practice, that they should not be the same individuals.

Unless a company member has appointed a Trustee Board member as proxy, he or she does not have a right to vote at a general meeting. The Chair of the Trust, who may or may not be a proxy for a member, normally chairs general meetings. Unless a member appoints the Chair as a proxy, he or she may not vote at general meetings, except that they have a casting vote in the case of a tied vote.

Board members

The directors of Groundwork Trusts in company law are also the charity trustees. They are the persons having the general control of the management of the administration of the charity. They have a fiduciary duty to act and take decisions in the best interests of the charity. When considering individuals for nomination to the board as trustees, company members must have regard to the nature and requirements of the role of the trustee and select a person with the appropriate knowledge and skills, someone who will attend meetings regularly and act independently in the best interests of the Groundwork Trust. Such a person must be able to recognise and manage conflicting loyalties and interests if and when they occur.

Article 32.4 of the most recent model of the Groundwork Trusts’ Articles of Association places the following obligation on members when nominating Trustees:

“Members having a right of nomination to the Board shall consult with the Board before making any such nomination and shall, when making a nomination, select an individual who would be most likely to further the purposes of the Company”.

Nominated Trustees may potentially be placed in positions of conflict of interests because of their perceived allegiance to their nominating member organisation or local authority. Nominated Members need to be clear that they are the “nominees” of their appointing body and not “representatives”. They are not appointed to represent or pursue a sectional or special interest in the role or activities of the Trust.

Nominated Trustees must act independently of their nominating body and should be clear that their overriding duty is to make decisions in the best interest of their Trust. Indeed there may well be occasions in the administration of the charity where such trustees may have to act in the proper discharge of their trusteeship in a way which is in conflict with the interests of the body nominating them. While they can contribute comments based on their experience of involvement with their nominating members, their voting must be based on what is in the best interests of the Trust, not what is in the best interests of their nominating organisation.