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roles and responsibilities

30 May 2011

Academy status introduces a new governance structure which many governors are unfamiliar with. In particular, it is important that governors understand their duties under company and charity law. In addition, many school leaders have traditionally relied on their local authority for guidance when making important decisions about their school. So, when a school decides to convert to academy status, the loss of this support (unless they choose to buy-back governor services) can leave schools feeling exposed.

With increased freedom comes increased responsibility

Increasing numbers of schools are converting to academy status, all of which are responsible for ensuring their governors are trained and supported in their new roles. A recent survey carried out by Ipsos Mori on behalf of Browne Jacobson LLP indicated that 4 out of 10 head teachers wished they had dedicated more time to training governors on their new legal duties and responsibilities.

Autonomy and independence from local authority control is heralded as one of the key freedoms of academy status, but with increased autonomy comes a higher degree of accountability. Governors decisions on financing, school curriculum, employment and admissions will be scrutinised to ensure the governments flagship policy doesnt go off-track. The local authority will no longer be the body responsible for maintaining the school. It is therefore essential that governors understand their new practical responsibilities and the legal framework under which they must make their decisions. In short, governors must understand their responsibilities as directors under law and trustees under charity law.

Duties as a charity trustee

There are three main duties and responsibilities governors have under charity law:
  • duty of compliance - governors must ensure they act only to further the academy trusts objects, i.e. advance education. They must also ensure compliance with all relevant laws, the trusts Articles of Association and all regulatory requirements such as filing accounts with Companies House
  • duty of prudence - governors must ensure that the academy trust remains solvent and keeps up-to-date financial records. They must not act in a way which puts the reputation or the assets of the academy at risk. Charities assets must only be used to further their charitable objects
  • duty of care - governors must exercise reasonable care and skill, use any personal skills or experience, and procure specialist advice when necessary.

Duties as a company director

Governors must comply with duties under the Companies Act 2006 which include:

  • duty to act within their powers i.e. in line with the provisions of the trusts Articles of Association
  • duty to promote success of the company by acting in good faith and considering all relevant factors when taking decisions
  • duty to exercise independent judgement though governors can and should take expert advice or recommendations into account, the final decision must always be theirs · duty to avoid conflicts of interest · duty not to accept benefits from third parties; which arise as a result of their position as governor · duty to declare an interest in a proposed transaction or arrangement.

Getting it wrong

If a governor acts contrary to their duties as either charity trustee or company director then they could be forced to personally account for any loss sustained to the trust as a result of failing to comply with their legal duties. If their actions are sufficiently serious, they could also be disqualified as a director and prevented from continuing to act as a governor or director in the future. There could be reputational damage to the school and it could affect how the governing body is perceived by both the school and local community.

Though, extremely rare in the context of the running of a school, governors must bear in mind the potential ramifications of breaching their legal duties. Decisions around how academies are run will continue to be publicly scrutinised. Any decision which is not completely transparent and above board could have a significant, negative impact on the school.

Conclusion

Governors should already be compliant with the duties listed above. However, with the new practical duties academy governors take on, it is essential that they are aware of the new legal framework in which they must operate and know the consequences of acting in contravention of their duties. During conversion, school leaders should dedicate time to considering whether governors have the required skills to meet their new roles or whether training is required to ensure governors understand their responsibilities after conversion under company and charity law. This is important not only to ensure governors do not fall foul of their legal duties, but also to instil a spirit of trust and confidence in each other and in their local community.

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CST Inaugural Annual Conference Hilton Metropole, NEC, National Exhibition Centre, Pendigo Way, Marston Green, Birmingham, B40 1PP

Come and meet the team at CST’s Inaugural Annual Conference. Partner Nick MacKenzie will also be delivering a workshop on governance leadership.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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