National Health Service Act 2006

Section 30

SCHEDULE 7E+WConstitution of public benefit corporations

Requirement for a constitutionE+W

1(1)A public benefit corporation must have a constitution.E+W

(2)As well as any provision authorised or required to be made by this Schedule, the constitution may make further provision (other than provision as to the powers of the corporation) consistent with this Schedule.

2 [F1(1)] The constitution must name the corporation and, if the corporation is an NHS foundation trust, its name must include the words “NHS foundation trust”.E+W

[F2(2)If the corporation is an NHS foundation trust, the constitution must specify its principal purpose (as to which, see section 43(1)).]

Eligibility for membershipE+W

3(1)The persons who may become or continue as members of a public benefit corporation are—E+W

(a)individuals who live in any area specified in the constitution as the area for a public constituency,

(b)individuals employed by the corporation under a contract of employment and, if the constitution so provides, individuals who exercise functions for the purposes of the corporation otherwise than under a contract of employment with the corporation,

(c)if the constitution so provides, individuals who have attended any of the corporation's hospitals as either a patient or the carer of a patient within a period specified in the constitution.

(2)The constitution may specify one or more areas as areas for public constituencies, each of which must be an electoral area for the purposes of local government elections in England and Wales or an area consisting of two or more such electoral areas.

(3)A person may become or continue as a member of the corporation by virtue of sub-paragraph (1)(b) only if—

(a)he is employed by the corporation under a contract of employment which has no fixed term or has a fixed term of at least 12 months, or

(b)he has been continuously employed by the corporation for at least 12 months or, where he exercises functions for the purposes of the corporation as mentioned in that sub-paragraph, he has done so continuously for such a period.

(4)Chapter 1 of Part 14 of the Employment Rights Act 1996 (c. 18) applies for the purpose of determining whether an individual has been continuously employed by the corporation, or has continuously exercised functions for the purposes of the corporation, as it applies for the purposes of that Act.

(5)The constitution may divide those who come within sub-paragraph (1)(b) into two or more descriptions of individuals.

(6)An individual providing care in pursuance of a contract (including a contract of employment), or as a volunteer for a voluntary organisation, does not come within sub-paragraph (1)(c).

(7)The constitution may divide those who come within sub-paragraph (1)(c) into three or more descriptions of individuals, one of which must comprise the carers of patients.

(8)The constitution may make further provision as to the circumstances in which a person may not become or continue as a member.

ConstituenciesE+W

4(1)Members of a public benefit corporation are referred to as follows.E+W

(2)Those who live in an area specified in the constitution as an area for any public constituency are referred to collectively as a public constituency.

(3)Those who come within paragraph 3(1)(b) are referred to collectively as the staff constituency and, if the power in paragraph 3(5) is exercised, each description of members is referred to as a class within that constituency.

(4)Those who come within paragraph 3(1)(c) are referred to collectively as the patient's constituency and, if the power in paragraph 3(7) is exercised, each description of members is referred to as a class within that constituency.

(5)A person who is a member of a constituency, or of a class within a constituency, may not while that membership continues be a member of any other constituency or class.

(6)A person who comes within paragraph 3(1)(b) may not become or continue as a member of any constituency other than the staff constituency.

5E+WThe constitution must require a minimum number of members of each constituency or, where there are classes within the constituency, of each class.

Becoming a memberE+W

6(1)An individual who is eligible to become a member of a public benefit corporation may do so on an application made to the corporation.E+W

(2)The constitution may provide for any individual who is—

(a)eligible to become a member of the staff constituency, and

(b)invited by the corporation to become a member of that constituency (and, where there are classes within the constituency, a member of the appropriate class),

to become a member of the corporation as a member of that constituency (and class) without an application being made, unless he informs the corporation that he does not wish to do so.

(3)The constitution may provide for any individual who is—

(a)eligible to become a member of the patients' constituency (otherwise than as the carer of a patient), and

(b)invited by the corporation to become a member of a specified constituency (and where there are classes within the constituency, a member of the specified class),

to become a member of the corporation as a member of that constituency (and class) without an application being made, unless he informs the corporation that he does not wish to do so.

(4)The constituency and, where applicable, class to be specified—

(a)if he is eligible to be a member of any public constituency, is that constituency,

(b)otherwise, is the patients' constituency and, where applicable, the class of which he is eligible to become a member.

[F3Council of Governors]E+W

7(1)A public benefit corporation has [F4a council of governors].E+W

(2)Only members of the corporation and persons appointed under the following provisions may become or continue as members of [F5the council] .

(3)The members of [F5the council] other than the appointed members must be chosen by election.

(4)Members of a constituency or, where there are classes within it, members of each class may elect any of their number to be a member of [F5the council].

8(1)The following may not become or continue as members of [F6the council] of governors—E+W

(a)a person who has been [F7made] bankrupt or whose estate has been sequestrated and (in either case) has not been discharged,

[F8(aa)a person in relation to whom a moratorium period under a debt relief order applies (under Part 7A of the Insolvency Act 1986),]

(b)a person who has made a composition or arrangement with, or granted a trust deed for, his creditors and has not been discharged in respect of it,

(c)a person who within the preceding five years has been convicted in the British Islands of any offence if a sentence of imprisonment (whether suspended or not) for a period of not less than three months (without the option of a fine) was imposed on him.

(2)The constitution may make further provision as to the circumstances in which a person may not become or continue as a member of [F6the council].

9(1)More than half of the members of [F6the council] of governors must be elected by members of the corporation other than those who come within paragraph 3(1)(b).E+W

(2)At least three members of [F6the council] must be elected by the staff constituency or, where there are classes within it, at least one member of [F6the council] must be elected by each class and at least three members must be elected altogether.

F9(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)At least one member of [F6the council] must be appointed by one or more qualifying local authorities.

(5)A qualifying local authority is a local authority for an area which includes the whole or part of an area specified in the constitution as the area for a public constituency.

(6)If any of the corporation's hospitals includes a medical or dental school provided by a university, at least one member of [F6the council] must be appointed by that university.

[F10(7)Any organisation specified in the constitution for the purposes of this sub-paragraph may appoint one or more members of the council (but no more than the number specified for those purposes in the constitution).]

10(1)An elected member of [F6the council] of governors may hold office for a period of three years.E+W

(2)Such a member is eligible for re-election at the end of that period.

(3)But such a member ceases to hold office if he ceases to be a member of the corporation.

[F1110AE+WThe general duties of the council of governors are—

(a)to hold the non-executive directors individually and collectively to account for the performance of the board of directors, and

(b)to represent the interests of the members of the corporation as a whole and the interests of the public.]

[F1210BE+WA public benefit corporation must take steps to secure that the governors are equipped with the skills and knowledge they require in their capacity as such.]

[F1310CE+WFor the purpose of obtaining information about the corporation's performance of its functions or the directors' performance of their duties (and deciding whether to propose a vote on the corporation's or directors' performance), the council of governors may require one or more of the directors to attend a meeting.]

11E+WThe corporation may pay travelling and other expenses to members of [F6the council] of governors at rates decided by the corporation.

12E+WThe constitution must provide for the chairman of the corporation or (in his absence) another person to preside at meetings of [F6the council] of governors.

13(1)The constitution must provide for meetings of [F6the council] of governors to be open to members of the public.E+W

(2)But the constitution may provide for members of the public to be excluded from a meeting for special reasons.

14(1)The constitution must make provision as to—E+W

(a)the conduct of elections for membership of [F6the council],

(b)the appointment of persons to membership,

(c)the practice and procedure of [F6the council],

(d)the removal of a member from office.

(2)The constitution may make further provision about [F6the council].

DirectorsE+W

15(1)A public benefit corporation has a board of directors.E+W

(2)The constitution must provide for all the powers of the corporation to be exercisable by the board of directors on its behalf.

(3)But the constitution may provide for any of those powers to be delegated to a committee of directors or to an executive director.

16(1)The board consists of—E+W

(a)executive directors, one of whom is the chief executive (and accounting officer) and another the finance director,

(b)non-executive directors, one of whom is the chairman.

(2)One of the executive directors must be a registered medical practitioner or a registered dentist (within the meaning of the Dentists Act 1984 (c 24)); and another must be a registered nurse or a registered midwife.

(3)A person may not be appointed as an executive director if he is within paragraph 8(1).

(4)A person may be appointed as a non-executive director only if—

(a)he is a member of a public constituency or the patients' constituency, or

(b)where any of the corporation's hospitals includes a medical or dental school provided by a university, he exercises functions for the purposes of that university,

and he is not within paragraph 8(1).

17(1)It is for [F14the council] of governors at a general meeting to appoint or remove the chairman and the other non-executive directors.E+W

(2)Removal of a non-executive director under sub-paragraph (1) requires the approval of three-quarters of the members of [F14the council] .

(3)It is for the non-executive directors to appoint or remove the chief executive.

(4)It is for a committee consisting of the chairman, the chief executive and the other non-executive directors to appoint or remove the executive directors.

(5)The appointment of a chief executive requires the approval of [F14the council] of governors.

18(1)It is for [F15the council] of governors at a general meeting to decide the remuneration and allowances, and the other terms and conditions of office, of the non-executive directors.E+W

(2)The corporation must establish a committee of non-executive directors to decide the remuneration and allowances, and the other terms and conditions of office, of the executive directors; but the constitution may make provision for those matters to be decided pending the establishment of such a committee.

[F1618AE+WThe general duty of the board of directors, and of each director individually, is to act with a view to promoting the success of the corporation so as to maximise the benefits for the members of the corporation as a whole and for the public.]

[F1718B(1)The duties that a director of a public benefit corporation has by virtue of being a director include in particular—E+W

(a)a duty to avoid a situation in which the director has (or can have) a direct or indirect interest that conflicts (or possibly may conflict) with the interests of the corporation;

(b)a duty not to accept a benefit from a third party by reason of being a director or doing (or not doing) anything in that capacity.

(2)The duty referred to in sub-paragraph (1)(a) is not infringed if—

(a)the situation cannot reasonably be regarded as likely to give rise to a conflict of interest, or

(b)the matter has been authorised in accordance with the constitution.

(3)The duty referred to in sub-paragraph (1)(b) is not infringed if acceptance of the benefit cannot reasonably be regarded as likely to give rise to a conflict of interest.

(4)In sub-paragraph (1)(b), “third party” means a person other than—

(a)the corporation, or

(b)a person acting on its behalf.]

[F1818C(1)If a director of a public benefit corporation has in any way a direct or indirect interest in a proposed transaction or arrangement with the corporation, the director must declare the nature and extent of that interest to the other directors.E+W

(2)If a declaration under this paragraph proves to be, or becomes, inaccurate or incomplete, a further declaration must be made.

(3)Any declaration required by this paragraph must be made before the corporation enters into the transaction or arrangement.

(4)This paragraph does not require a declaration of an interest of which the director is not aware or where the director is not aware of the transaction or arrangement in question.

(5)A director need not declare an interest—

(a)if it cannot reasonably be regarded as likely to give rise to a conflict of interest;

(b)if, or to the extent that, the directors are already aware of it;

(c)if, or to the extent that, it concerns terms of the director's appointment that have been or are to be considered—

(i)by a meeting of the board of directors, or

(ii)by a committee of the directors appointed for the purpose under the constitution.]

[F1918D(1)Before holding a meeting, the board of directors must send a copy of the agenda of the meeting to the council of governors.E+W

(2)As soon as practicable after holding a meeting, the board of directors must send a copy of the minutes of the meeting to the council of governors.]

[F2018E(1)The constitution must provide for meetings of the board of directors to be open to members of the public.E+W

(2)But the constitution may provide for members of the public to be excluded from a meeting for special reasons.]

Initial directors of former NHS trustsE+W

19(1)This paragraph applies, where the application for authorisation is made under section 33, to the exercise of the powers mentioned in paragraph 17 to appoint the initial non-executive directors and the initial chief executive.E+W

(2)The power to appoint the initial chairman of the corporation must be exercised by appointing the chairman of the NHS trust, if he wishes to be appointed.

(3)The power to appoint the other initial non-executive directors of the corporation must be exercised, so far as possible, by appointing any of the non-executive directors of the NHS trust (other than the chairman) who wish to be appointed.

(4)A person appointed in accordance with sub-paragraph (2) or (3) must be appointed for the unexpired period of his term of office as chairman or non-executive director of the NHS trust; but if, on any such appointment, that period is less than 12 months, he must be appointed for 12 months.

(5)The power to appoint the initial chief executive of the corporation must be exercised by appointing the chief officer of the NHS trust, if he wishes to be appointed.

(6)Sub-paragraphs (a) and (b) of paragraph 16(4) do not apply to the appointment of any initial non-executive director in pursuance of this paragraph; and paragraph 17(5) does not apply to the appointment of the initial chief executive of the corporation in pursuance of sub-paragraph (5).

Register of members etcE+W

20(1)A public benefit corporation must have—E+W

(a)a register of members showing, in respect of each member, the constituency to which he belongs and, where there are classes within it, the class to which he belongs,

(b)a register of members of [F21the council] of governors,

(c)a register of interests of the members of [F21the council] of governors,

(d)a register of directors,

(e)a register of interests of the directors.

(2)The constitution may make further provision about the registers including, in particular, admission to, and removal from, the registers.

21E+WThe constitution must make provision for dealing with conflicts of interest of members of [F22the council] of governors and of the directors.

22(1)A public benefit corporation must make the following documents available for inspection by members of the public free of charge at all reasonable times—E+W

(a)a copy of the current constitution,

F23(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)a copy of the latest annual accounts and of any report of the auditor on them,

(d)a copy of the latest annual report,

F24(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F25(f). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F26(g)a copy of any order made under section 65D, 65J, 65KC, 65L or 65LA,

(h)a copy of any report laid under section 65D,

(i)a copy of any information published under section 65D,

(j)a copy of any draft report published under section 65F,

(k)a copy of any statement provided under section 65F,

(l)a copy of any notice published under section 65F, 65G, 65H, 65J, 65KA, 65KB, 65KC or 65KD,

(m)a copy of any statement published or provided under section 65G,

(n)a copy of any final report published under section 65I,

(o)a copy of any statement published under section 65J or 65KC,

(p)a copy of any information published under section 65M.]

(2)Any person who requests it must be provided with a copy of or extract from any of the above documents.

(3)The corporation is also to make the registers mentioned in paragraph 20 available for inspection by members of the public, except in circumstances prescribed; and, so far as the registers are required to be available—

(a)they must be available free of charge at all reasonable times,

(b)a person who requests it must be provided with a copy of or extract from them.

(4)If the person requesting a copy or extract under this paragraph is not a member of the corporation, the corporation may impose a reasonable charge for doing so.

AuditorE+W

23(1)A public benefit corporation must have an auditor.E+W

(2)It is for [F27the council] of governors to appoint or remove the auditor at a general meeting of [F27the council].

[F28(3)An auditor may be [F29an individual or a firm] —

F30(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F30(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

[F28(4)A person appointed as auditor must be—

(a)eligible for appointment as a statutory auditor (see Part 42 of the Companies Act 2006),

[F31(aa)eligible for appointment as a local auditor (see Part 4 of the Local Audit and Accountability Act 2014), or]

F32(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)a member of [F33a] body of accountants approved by the regulator for the purposes of this paragraph.]

F34(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6)The corporation must establish a committee of non-executive directors as an audit committee to perform such monitoring, reviewing and other functions as are appropriate.

[F35(7)In this paragraph—

• F36...

• “firm” has the same meaning as in [F37section 1261(1) of the Companies Act 2006].]

AccountsE+W

24[F38(1)A public benefit corporation must keep proper accounts and proper records in relation to the accounts.E+W

(1A)[F39NHS England] may with the approval of the Secretary of State give directions to the corporation as to the content and form of its accounts.]

(2)The accounts must be audited by the corporation's auditor.

(3)But the Comptroller and Auditor General may examine—

(a)the accounts,

(b)[F40the records] relating to them, and

(c)any report of the auditor on them.

(4)If trustees are appointed under section 51, the Comptroller and Auditor General may also examine—

(a)the accounts kept by the trustees,

(b)any records relating to them, and

(c)any report of an auditor on them.

[F41(4A)The auditor must, in carrying out functions in relation to the accounts—

(a)comply with the code of audit practice applicable to the accounts that is for the time being in force (see Schedule 6 to the Local Audit and Accountability Act 2014), and

(b)have regard to guidance issued by the Comptroller and Auditor General under paragraph 9 of that Schedule (as it has effect by virtue of paragraph 10(6) of that Schedule).

(4B)The auditor of the accounts must comply with any directions given by the Secretary of State as to arrangements to monitor the standard of the work of auditors in the performance of audits under this paragraph (including arrangements to inspect that work).

(4C)The arrangements mentioned in sub-paragraph (4B) may include arrangements made by [F42NHS England] or by any other person the Secretary of State considers appropriate.]

F43(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25(1)A public benefit corporation must prepare in respect of each financial year annual accounts in such form as [F44NHS England] may with the approval of [F45the Secretary of State] direct.E+W

[F46(1A)[F47NHS England] may with the approval of the Secretary of State direct a public benefit corporation—

(a)to prepare accounts in respect of such period or periods as may be specified in the direction;

(b)that any accounts prepared by it by virtue of paragraph (a) are to be audited in accordance with such requirements as may be specified in the direction.]

(2)In preparing its annual accounts [F48or in preparing any accounts by virtue of sub-paragraph (1A)(a)], the corporation must comply with any directions given by [F49NHS England] with the approval of [F50the Secretary of State] as to—

(a)the methods and principles according to which the accounts must be prepared,

(b)the [F51content and form of] the accounts.

(3)In determining the form and content of the annual accounts[F52, or of any accounts to be prepared by it by virtue of sub-paragraph (1A)(a),] [F53NHS England] must aim to ensure that the accounts present a true and fair view.

(4)The corporation must—

(a)lay a copy of the annual accounts, and any report of the auditor on them, before Parliament, and

(b)F54... send copies of those documents to [F55NHS England] [F56within such period as [F55NHS England] may direct].

[F57(4A)The corporation must send to [F58NHS England] within such period as [F58NHS England] may direct—

(a)a copy of any accounts prepared by the corporation by virtue of sub-paragraph (1A)(a), and

(b)a copy of any report of an auditor on them prepared by virtue of sub-paragraph (1A)(b).]

(5)The constitution must provide for the functions of the corporation under this paragraph to be delegated to the accounting officer.

(6)In this paragraph and paragraph 27 “financial year” means—

(a)the period beginning with the date on which the corporation is authorised under section 35 and ending with the next 31st March, and

(b)each successive period of twelve months beginning with 1st April.

Annual reports and forward plansE+W

26(1)A public benefit corporation must prepare annual reports and send them to [F59NHS England].E+W

[F60(1A)The reports must, in particular, review the extent to which the public benefit corporation has exercised its functions in accordance with the plans published under—

(a)section 14Z52 (joint forward plans for integrated care board and its partners), and

(b)section 14Z56 (joint capital resource use plan for integrated care board and its partners).]

[F61(1B)The reports must, in particular, review the extent to which the public benefit corporation has exercised its functions consistently with NHS England’s views set out in the latest statement published under section 13SA(1) (views about how functions relating to inequalities information should be exercised).]

(2)The reports must give—

(a)information on any steps taken by the corporation to secure that (taken as a whole) the actual membership of any public constituency and (if there is one) of the patients' constituency is representative of those eligible for such membership,

[F62(aa)information on any occasions in the period to which the report relates on which the council of governors exercised its power under paragraph 10C,]

[F63(ab)information on the corporation's policy on pay and on the work of the committee established under paragraph 18(2) and such other procedures as the corporation has on pay,

(ac)information on the remuneration of the directors and on the expenses of the governors and the directors,]

(b)any other information [F64NHS England] requires.

[F65(2A)Before imposing a requirement under sub-paragraph (2)(b) that [F66NHS England] considers is sufficiently significant to justify consultation, [F66NHS England] must consult such persons as it considers appropriate.]

(3)It is for [F67NHS England] to decide—

(a)the form of the reports,

(b)when the reports must be sent to it,

(c)the periods to which the reports are to relate.

27(1)A public benefit corporation must give information to [F68NHS England] as to its forward planning in respect of each financial year.E+W

F69(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F70(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F71Annual meeting of membersE+W

27A(1)A public benefit corporation must hold an annual meeting of its members.E+W

(2)The meeting must be open to members of the public.

(3)At least one member of the board of directors of the corporation must attend the meeting and present the following documents to the members at the meeting—

(a)the annual accounts,

(b)any report of the auditor on them,

(c)the annual report.

(4)Where an amendment is made to the constitution in relation to the powers or duties of the council of governors of a public benefit corporation (or otherwise with respect to the role that the council has as part of the corporation)—

(a)at least one member of the council of governors must attend the next meeting to be held under this paragraph and present the amendment, and

(b)the corporation must give the members an opportunity to vote on whether they approve the amendment.

(5)If more than half of the members voting approve the amendment, the amendment continues to have effect; otherwise, it ceases to have effect and the corporation must take such steps as are necessary as a result.]

Meeting of [F72council] of governors to consider annual accounts and reportsE+W

28[F73(1)]The following documents must be presented to [F74the council] of governors of a public benefit corporation at a general meeting—E+W

(a)the annual accounts,

(b)any report of the auditor on them,

(c)the annual report.

[F75(2)Nothing in sub-paragraph (1) prevents the council of governors from holding a general meeting more than once a year.]

[F76Combined meetings of members and governorsE+W

28AE+WA public benefit corporation may hold a meeting which combines a meeting under paragraph 27A with a meeting under paragraph 28.

Instruments etcE+W

29(1)The constitution must make provision for the authentication of the fixing of the corporation's seal.E+W

(2)A document purporting to be duly executed under the corporation's seal or to be signed on its behalf must be received in evidence and, unless the contrary is proved, taken to be so executed or signed.

[F77Power to make provision about voting E+W

30(1)Regulations may amend this Chapter so as to add, vary or omit provision relating to voting by members of the council of governors of a public benefit corporation that is an NHS foundation trust, by its directors or by its members.E+W

(2)The power under sub-paragraph (1) is exercisable only in relation to provision in this Chapter that was inserted, or otherwise provided for, by Part 4 of the Health and Social Care Act 2012.]]