We now know what the short-term holds for public procurement at the end of the Brexit transitional period.
“To merge or not merge” that is the question – well it is at least a question that most charities ask at some point in their development as they look to the future and how best to achieve their charitable purposes.
“Mergers” can take many forms: collaborative working, an asset transfer from one charity to another, the creation of a new charity, joining a group of companies as a subsidiary etc. The right format for the merger will depend on the parties involved, the reasons for the merger and the aims of the merger. However, key to every merger are the people. You can never underestimate the importance of communication and relationships. Charities are, after all, made up of individuals who are often passionate about “their” charity. It can become personal when a merger involves a name change, a new logo, a different focus. The success of a merger rarely depends on the legal structure but always depends on the time spent building relationships, communicating, creating a shared ethos, vision and a way of working that respects each charity’s history and USP.
However, (as any good lawyer would say!) there can also be legal challenges on a merger, some of which were highlighted in the Law Commission Report: Technical Issues in Charity law published last year. These challenges include:-
- the legal structure to use: contractual, a new charity, the transfer of assets from one charity to the other’ becoming a subsidiary etc.;
- can a Pre-Merging Declaration be used to transfer a charity’s property;
- whether registering the merger on the Charity Commission’s Register of Mergers will ensure that all legacies left to a closing charity pass to the “merged” charity. (The Law Commission has recommended reforms to the Charities Act 2011 to ensure this is the case, as case law has shown that it will not always be so); and
- what happens to permanent endowment? How will this be held as it cannot become the property of a corporate charity, such as a charitable company? Instead, it has to continue to be held on its permanent endowment trusts, perhaps with the corporate charity becoming the sole trustee. In addition, any sole trustee of permanent endowment property has to have “trust corporation status”. The Law Commission identified the difficulty of obtaining this (it can invoke an application to the Lord Chancellor) and has recommended the process is simplified.
But mergers can, ultimately, lead to new creative ways of working and whilst the journey there might be bumpy the hope is that it will lead to a brighter future for all the charities involved.
If you would like any more information about mergers, please contact Edwina Turner.
Daniel Brewer from Resonance talks about his journey into investing in enterprise with a social purpose, and discusses what the landscape looks like for social businesses post Covid-19.
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For part 3 in this series of short podcasts, Chris Lloyd-Smith interviews senior associate Madhur Sharma on how she has been coping during these unprecedented times.
On 26 November 2020 further changes to the 'Building Regulations: Fire safety - Approved Document B' will take effect.
Last week, the NHF published its final version of its new Code of Governance and made some important changes from the previous draft that will impact on those housing associations looking to adopt it.
As the end of 2020 beckons, we take a look at what progress the Sterling market has made in its preparations for the end of the London Interbank Offered Rate (LIBOR) on 31 December 2021.
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For part 2 in this series of short podcasts, Chris Lloyd-Smith interviews senior associate Lisa Whitehouse on how she has been coping during these unprecedented times.
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