What you need to know about Academy governance

Governance structure

In recent years, the Department for Education (DfE) and Ofsted have increasingly focused on the importance of governing bodies in running a successful school. By converting to academy status, you have the opportunity to consider your governance structure and how this can work most effectively for your school.

Academy Trust

One of the first steps in the conversion process is to establish an academy trust. An academy trust is a charitable company limited by guarantee. It will be registered at Companies House, but, as an exempt charity it does not need to be registered with the Charity Commission. The Secretary of State for Education is the Principal regulator.

The DfE has produced model Memorandum and Articles of Association that are required to establish an academy trust. There are different versions depending on the category of your school and whether you are converting as a stand alone academy or in a group.

Role of the governing body

The DfE published a new Governors’ Handbook in May 2014. This sets out the core strategic functions that governors should focus on. These are:

• ensuring a clear vision, ethos and strategic direction;
• holding your head teacher to account for the educational performance of your school;
• overseeing the financial performance of your school.

Directors’ duties

In an academy, governors have new responsibilities as company directors and charity trustees. However, as you will see, many of these responsibilities (such as the duty to act in the best interests of the academy) will be familiar as they overlap with your existing duties as governors.

The duties of directors include the following:

• To act within the academy’s powers – to act in accordance with the company’s Articles of Association and Funding Agreement
• To promote the success of the company – to act in the academy’s best interests (success is achieving the academy’s charitable objects)
• To exercise independent judgment – governors elected by a particular body are not representatives of that body, so although they can inform the governing body of the views of that body they have to make decisions on their own
• To exercise reasonable care, skill and diligence – be careful and well informed about the company’s affairs. If you have any special skills or experience, use them
• To avoid conflicts of interests and those of the company
• To declare interests in proposed transactions or arrangements – to not take part in Board discussions and to not vote on those matters in accordance with the Articles of Association
• Not to accept benefits from third parties – unless they cannot reasonably be regarded as giving rise to a conflict of interest

Charity trustees’ duties

Governors are also charity trustees as the academy is established as a charitable company. As a charity trustee of the academy trust, you have a number of duties:

• A duty to comply with the Articles of Association and charity law – to ensure the charity is using its resources for charitable purposes (to “advance for the public benefit education in the United Kingdom”).
• A duty to act in the best interests of the charity – to avoid any conflict of interests.
• A duty to act reasonably in all matters – to use reasonable care and skill in your work as a charity trustee. If you have special skills or knowledge, you will be subject to a higher duty in respect of your area of expertise. Charity trustees must consider whether it is appropriate to get professional advice.
• A duty to act prudently – to ensure the academy remains solvent; to ensure safeguards are put in place to protect the charity’s property and funds.
• A duty not to profit – charity trustees are under a duty not to benefit financially from their position (unless authorised in the Articles of Association).

As a company director and charity trustee, this new role brings potential liabilities but these should not generally be a concern to a governor who is acting in good faith. The Articles of Association allow the academy trust to indemnify a governor against claims brought against them in their capacity as a director. You should ensure that your academy takes out directors’ indemnity insurance.

Articles of Association

The objects of the academy are set out in the Articles of Association. These are “to manage and develop a school offering a broad and balanced curriculum.” In the case of faith schools, the objects will also include a requirement to offer a curriculum with a religious character in accordance with the principles, practices and tenets of the Church.

The Articles of Association provide that the income and property of the academy is to be used solely towards the promotion of the objects and may not be paid to any member of the trust. No governor may receive any reward or payment for services to the trust (other than any staff governors under their terms of employment) unless certain procedures are observed.

The governing body

Members

In an academy there is a new layer of governance that existing governing bodies may not be familiar with. There will be members who, if the academy was operating for profit, would effectively be shareholders. There must be at least three members, although the DfE prefers five members, so that passing a special resolution does not require unanimity.

The chair of governors will always be a member. Other potential appointments may be the vice chair, chairs of committees or persons appointed by any foundation or Diocese.

The role of members is limited. Members may:

• appoint and remove governors;
• receive the accounts;
• wind up the company.

The liability of the members is limited to £10 in the event that the academy trust is wound up whilst they are a member or within 12 months of the company being wound up.

Governors

There must be at least three governors and these must include the following:

• Principal
• staff governors (no more than one third, including the Principal)
• a minimum of two parent governors
• any governors appointed by the members
• any foundation governors/sponsor governors

Up to two co-opted governors may also be appointed. The governors term of office is four years (although this does not apply to the Principal). Governors may be re-appointed or re-elected. There are grounds for disqualification of governors and provisions for resignation and removal.

Proceedings

General meetings

The governors may call general meetings or may be requested to call general meetings by the members. The quorum for members meetings is at least two persons entitled to vote. Each member has one vote.

Clerk

The governors will appoint a clerk who will not be a governor or the Principal.

Chair and vice chair

Each year the governors at their first meeting will elect a chair and vice chair (this cannot be somebody who is employed by the academy).

Committees

The governors may delegate to any governor or committee, the Principal or any other office holder, such powers as they consider necessary.

Meetings of governors

There must be at least three meetings in every school year. There should be three governors or one third of the total governors (whichever is the greater) to reach the quorum.

Decisions will be by majority vote (subject to the Articles of Association) and every governor has one vote. In the event of equality, the chairman will have a casting vote.

If you wish to discuss any of the above please do contact me.