In what circumstances can a Multi-Academy Trust pay a Director?
In order to answer this question it is important to note that the Multi - Academy Trust (MAT) is an exempt charity and Directors are Charity Trustees who are bound by company law and also charity law. The law does not allow a profit to be made by a Director for simply completing their duties; the Director needs to be doing something outside of the usual Director role.
The general rule is that a Director may not:
- buy any goods or services from the MAT;
- sell goods/services or any interest in land to the MAT;
- be employed or receive remuneration from the MAT (unless he is the Executive Principal, Principal or Business Manager and the procedure below is followed); or
- receive any other financial benefit from the MAT unless the procedure below is followed or the Directors obtain the prior written approval of the Charity Commission.
Providing certain conditions (as described below) are followed, a Director can:
- receive a benefit from the MAT in the capacity of a beneficiary of the MAT;
- be employed by the MAT (as Executive Principal, a Principal or Business Manager) or enter into a contract for the supply of goods and services to the MAT (other than as a Director);
- receive interest on money lent at a rate not exceeding 2% per annum below the base rate or 0.5%, whichever is higher; or
- receive rent for premises if the amount and the terms of the lease are reasonable and proper.
The conditions which must be followed are:
- the remuneration paid does not exceed an amount which is reasonable in all the circumstances;
- the Director is absent from the part of the meeting where their employment, remuneration, contract, benefits and performance of the contract (unless present as an employee) are discussed;
- the Director must not vote on the matter and is not counted in the quorum at the meeting;
- save in relation to employing the Executive Principal, Principals or any Staff Director, the other Directors are satisfied that it is in the interests of the MAT to employ or to contract with that Director rather than someone else who is not a Director. The Directors must balance the advantage of employing the Director against the disadvantages of doing so i.e. the loss of the Director's services as a result of dealing with the Director's conflict of interest;
- the reason for the decisions must be recorded by the Directors in the minute book; and
- the majority of Directors in office have not received payments/benefits.