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Section 42: Constitutional limitations: companies that are charities

Companies Act 2006 · 2006 c. 46View on legislation.gov.uk

Part 4: A company's capacity and related matters

Sections 39 and 40 (company's capacity and power of directors to bind company) do not apply to the acts of a company that is a charity except in favour of a person who—

does not know at the time the act is done that the company is a charity, or
gives full consideration in money or money's worth in relation to the act in question and does not know (as the case may be)—
that the act is not permitted by the company's constitution, or
that the act is beyond the powers of the directors.

Where a company that is a charity purports to transfer or grant an interest in property, the fact that (as the case may be)—

the act was not permitted by the company's constitution, or
the directors in connection with the act exceeded any limitation on their powers under the company's constitution,

does not affect the title of a person who subsequently acquires the property or any interest in it for full consideration without actual notice of any such circumstances affecting the validity of the company's act.

In any proceedings arising out of subsection (1) or (2) the burden of proving—

that a person knew that the company was a charity, or
that a person knew that an act was not permitted by the company's constitution or was beyond the powers of the directors,

lies on the person asserting that fact.

In the case of a company that is a charity the affirmation of a transaction to which section 41 applies (transactions with directors or their associates) is ineffective without the prior written consent of—

in England and Wales, the Charity Commission;
in Northern Ireland, the Department for Social Development.

This section does not extend to Scotland (but see section 112 of the Companies Act 1989 (c. 40)).

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This legislation text comes from legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. These source and reuse terms cover the legislation text, not Remedy's commentary.

Reuse reviewed 21 August 2026 under Open Government Licence v3.0.