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Kids Company - lesson for academies

1 August 2017

The recent notification from the Insolvency Service that they intend to prosecute the previous trustees of Kids Company shows that simply because the role is voluntary does not mean that there will not be real world consequences to not fulfilling the responsibilities of the role. All nine of the final directors, plus the former chief executive, who the Insolvency Service will argue was a ‘de-facto’ director, will be prosecuted in the High Court. This follows an investigation by the Insolvency Service.

Whilst academies have a more predictable income stream making them less prone to sudden collapse as Kids Company did, trustees of academies need to be aware of the potential consequences for them personally of failing to manage the trust’s budget or failing to follow companies legislation. The importance of getting advice at an early stage when financial or regulatory issues are presented cannot be understated.

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