Members of academy trusts (Members) owe fiduciary duties when exercising their powers - meaning they must act in the best interests of the trust and its charitable purposes, not in the interests of any appointing body or themselves. We explain what those duties mean in practice, how they sit alongside the obligations set out in your articles of association, and what steps your trust should take to ensure your membership arrangements reflect current legal and regulatory expectations.

What is the role of academy trust members?

The role of Members is prescribed under company law and the academy trust's articles of association (Articles). Company law provides that Members can, for example, alter the Articles, appoint the auditors and remove trustees.

The Department for Education (DfE) and the National Governance Association (NGA) have also published guidance on the role of Members. With the growing prominence of that role, there's increasing interest in the duties that Members owe and how those duties should shape governance in practice.

Do Members owe fiduciary duties?

Academy trusts are exempt charities, so charity law is directly relevant. Historically, there was uncertainty about whether Members of charitable companies owed fiduciary duties. The Charity Commission took the view in its 2004 guidance (RS7) that Members' rights relating to the administration of a charitable institution are fiduciary in nature but acknowledged that this position had not been tested in court. 

Parliament addressed the point for charitable incorporated organisations (CIOs) in section 220 of the Charities Act 2011, which requires each Member of a CIO to exercise their powers in the way that they decide, in good faith, would be most likely to further the purposes of the CIO. However, academy trusts are companies limited by guarantee, not CIOs, and the question remained open for them.

What did the Supreme Court decide?

The Supreme Court's judgment in Lehtimäki v The Children's Investment Fund Foundation (UK) [2020] UKSC 33 resolved this uncertainty. The court confirmed that a Member of a charitable company limited by guarantee who holds a power in their capacity as a member does owe fiduciary duties when exercising that power. Where a Member exercises a power that affects the charity's property or its furtherance of charitable purposes, that Member must act in the best interests of the charity, not in their own personal interest or in the interests of any appointing body.

What does this mean for academy trusts?

For academy trusts, the key question is: for what purpose have Members acquired their rights and powers? If it's for the interests of the academy trust and/or its beneficiaries (the students), for example to promote effective governance, then that indicates a fiduciary relationship. And where there is a fiduciary power there will be a corresponding fiduciary duty. The scope of those duties will depend on the particular power being exercised in any given case.

Charity Commission guidance and the model Articles

The Charity Commission's current guidance on charity membership, informed by the Supreme Court's decision, confirms that members of charitable companies may owe fiduciary duties when exercising certain powers, particularly those with a material effect on the charity's assets or purposes. Members should understand this position and how it applies to the powers they hold.

What do the model Articles say?

Many academy trusts will have adopted the DfE's model Articles, which include at Article 16A a provision that: "In exercising their rights under these Articles and the Companies Act 2006, the Members shall not do anything or take any action which would cause the Academy Trust to contravene its Objects." This is a narrower obligation than the fiduciary duties confirmed by the Supreme Court, but it provides a clear contractual baseline that all Members should be aware of.

It's worth noting that the statutory duty on CIO members under section 220 of the Charities Act 2011 is broader than Article 16A. It requires members to exercise their powers in the way they decide, in good faith, would be most likely to further the CIO's purposes. While academy trusts aren't CIOs, the Supreme Court's ruling means their Members are likely to owe duties of a similar nature and scope.

DfE expectations for Members

The DfE's Academy Trust Handbook sets out detailed expectations for Members. The DfE expects a significant degree of separation between Members and the board, and has placed increasing emphasis on Members' powers, including their ability to "take direct action to secure effective governance." 

The DfE's governance handbook also includes specific guidance on the role of Members (see pages 48-51 of the 2019 version), and the National Governance Association has published helpful guidance clarifying the role of Members in academy trusts.

The Handbook sets out requirements around Members' independence from trustees, limits on the number of trustees who can simultaneously be Members, and expectations around Members' engagement with the academy trust's charitable objects. You should review your Articles and membership arrangements against the current Handbook requirements.

What should your trust do?

Members of academy trusts operate within a clear legal framework. In particular:

• Members must exercise their powers in the best interests of the Academy Trust and its charitable purposes, not in the interests of any nominating or appointing body.
• Where the trust has adopted the DfE's model Articles, Members must not do anything or take any action which would cause the academy trust to contravene its Objects.
• As a minimum, you should put in place a letter of appointment for Members setting out the nature of the role, the required level of commitment, and a statement reflecting Members' obligation to exercise their powers in good faith to further the objects of the trust.

If you haven't recently reviewed your governance arrangements, including your Articles, Member appointments and induction processes, we'd recommend doing so as a priority. Our education team can help you put the right framework in place.