9. Glossary

Accrued accounts

Accounts prepared using the accruals basis allocate the costs or income of a particular activity according to when the liability is incurred or when there is entitlement or certainty about income. This is not necessarily the date on which money is received or paid out. Accounts prepared using the accruals basis must be prepared in accordance with the methods and principles of the Accounting and Reporting by Charities: Statement of Recommended Practice (the 2005 Charities SORP). See the Charity Accounting page for further details.

Administrative receivership

The situation in which a receiver is appointed to a body to take over responsibility for that body’s property. The
receiver secures the body’s assets and may realise those assets and/or manage the affairs of the body in order to settle the body’s outstanding debts.

Charity trustee

A person who has the general control and management of the administration of a charity. A charity may refer to its charity trustees in a number of ways including management committee members, directors and board members.

Corporate body

A legal entity which results from one or more persons acting together as a group and on whom corporate status has been confirmed by law. The entity has a separate legal identity from the individual members’ identities. Corporate bodies have, on the whole, the same status as a natural person. For example, the corporate body has many of the same rights, protections, privileges, responsibilities and liabilities as a natural person would under the law. It can enter into contracts, employ staff, incur debts, own property, sue and be sued.

Creditor

A person to whom money is owed.

Debtor

A person who owes money.

To expend (property)

To spend or use up.

Governing document

The document which establishes a body and states its charitable purposes. Depending on the legal form of the body, the governing document may be referred to as a constitution, Articles of Association, trust deed or rules.

Heritable property

Land and buildings.

Industrial and provident society

A registered society within the meaning of the Industrial and Provident Societies Act 1965 (c.12). Industrial and provident societies are registered with the Financial Services Authority (FSA).

Insolvent

The state of being unable to pay debts owed as and when they fall due.

Legal entity

An entity which is recognised by the law; this may be a natural person or a corporate body.

Legal personality

A legal status enabling a body other than a natural person to enter into certain legal transactions such as contracts.

Liquidation

The process by which a company (or part of a company) is brought to an end, and the assets and property of the company are redistributed.

Natural person

A human being as distinguished from a corporate body.

Quorum

The minimum number or proportion of persons with voting rights (members, charity trustees or their proxies if applicable) that must be present or represented at a meeting to make the proceedings of that meeting valid.

Receipts and payments accounts

A simple form of accounting that consist of a summary of all monies received and paid via the bank and in cash by the charity during its financial year, along with a statement of balances. See the Charity Accounting page for further details.

Resolution

A formal decision made at a meeting, typically after taking a vote.

To restore (a body to a register)

To legally recreate a dissolved body with the effect that it is deemed to have continued in existence as if it had not been dissolved.

Sequestration

Sequestration is the Scottish legal term for bankruptcy and is the process for the recovery of unpaid or overdue debts. During sequestration, the whole of the estate (including funds and other assets) of a person who is insolvent is removed from their control. The estate legally transfers to the Trustee in Bankruptcy whose duty it is to realise the estate for the benefit of the creditors. Following sequestration, the debtor no longer has any duty to pay any of the debts accumulated up to the date of the sequestration.

Solvent

The state of being able to pay debts owed as and when they fall due.

Special resolution

A special resolution is a resolution which must be passed in a particular manner in line with the requirements of the applicable legislation. References to special resolutions in this guidance mean:

• In the case of companies, a special resolution as defined in section 283 of the Companies Act 2006
• In the case of industrial and provident societies, a special resolution as defined in section 52(3) of the Industrial and Provident Societies Act 1965 (c.12).

Succession

The action or process of inheriting property etc.