Case study: Potanin v Charity Commission – the Commission’s powers and officers’ duties

In Vladimir Potanin v the Charity Commission, the First Tier Tribunal has dismissed an appeal by the billionaire Russian founder of a charity against the Commission’s decision to remove him from the charity’s governance after he was sanctioned by the UK Government. 

The Foundation and the sanctioning of Mr Potanain

Mr Potanin registered the Potanin Foundation as a charity with the Commission in 2005. Under its governing document, he was designated as its “founder” with wide powers, including to appoint and remove trustees, change the governing document and choose his successor as founder. As founder, he was also the charity’s sole member, but was not a trustee or directly involved in its day-to-day running. 

Following the Russian invasion of Ukraine in February 2022, it quickly became apparent that the charity faced severe difficulties in operating due to the risk of Mr Potanin being sanctioned, which duly occurred in the UK in June 2022. As he held all the voting rights, and therefore the power to appoint trustees, he was deemed to “control” the charity for the purposes of sanctions legislation, meaning the trustees were prohibited from dealing with its assets. 

The Charity Commission’s response 

The charity sought guidance from the Commission in April and was advised to submit a serious incident report. In the wake of the sanctioning decision, the Commission opened a statutory inquiry and appointed an interim manager. It also exercised its power under sections 76 and 79 of the Charities Act 2011 to remove Mr Potanin from his position as founder, on the basis that he was an officer of the charity and his failure to resign amounted to misconduct or mismanagement in the administration of the charity. This then enabled the Commission to use its separate power under section 83 to remove him as sole member. Mr Potanin appealed the decision, arguing he was not an officer, and therefore the Commission had no power to remove him. 

The tribunal’s decision 

The tribunal focussed on the Commission’s power of removal under section 79, which applied only to a “trustee, charity trustee, officer, agent or employee”, rather than a member. It concluded that the purpose of the section was “to enable the Commission to remove individuals whose position within a charity gives rise to a risk of harm to its property or administration”, even if they did not hold formal office. It therefore agreed with the Commission that the term “officer” (which was not defined in the section) should be interpreted more broadly than its company law meaning to include Mr Potanin’s “office” as “founder”. 

The tribunal also decided that misconduct or mismanagement should be interpreted broadly. Mr Potanin’s failure to resign from the charity amounted to misconduct or mismanagement, as he should have been aware of the severe impact on the charity if he remained as founder and sole member when it was foreseeable he could be sanctioned. In both roles, he owed a “single‑minded” fiduciary duty to further the charity’s objects, which extended to resigning.

Key takeaways 

The case highlights several important points for charities, particularly foundations with individual founders:

• The case has notable parallels with the Dot Com Children’s Foundation case which we reported on in January 2026. That case involved the disqualification by the Commission of the two founders of a charity who, although they were formally employees rather than trustees, were held to be “de facto” trustees due to their controlling influence in the charity. The two cases together confirm the breadth of the Commission’s powers to remove or disqualify individuals responsible for misconduct or mismanagement. The Potanin case demonstrates that members with distinct roles or significant rights in a charity could be deemed to be “officers” as far as the power of removal is concerned.
• The case also highlights that individual founders of charities and settlors of charitable trusts who retain a role in the charity (whether as trustees, members or other roles with similar powers) owe a fiduciary duty to the charity’s objects, to the exclusion of their own interests – even to the extent of resigning from the charity if that would be in the best interests of its objects.
• Finally, the case is a reminder of the severe impact that sanctions can have on charities. The definition of “owned or controlled” in sanctions legislation extends to members of a charitable company with majority voting rights and/or the power to appoint trustees – with potentially disastrous results for a charity whose members are at risk of being sanctioned.