Next in our series of ebriefings on the Government’s Green Paper: Transforming public procurement; looking at the Chapter 4 proposal to change the basis of contract awards.
“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.
The Academies Financial Handbook is updated annually by the Department for Education and the Education and Skills Funding Agency; it contains a number of governance requirements for academy trusts.
Supreme Court publishes key decision for those working in the UK’s gig economy.
The 'Chocolate Snowman Appeal' is an amazing initiative that Anthony Collins Solicitors' (ACS) employees take part in every year.
The Building Safety Bill (the Bill) is said to be the most significant and wide-ranging change to the regulatory environment for higher risk building (HRBs) for over 45 years.
On 4 November 2020, the Restriction of Public Exit Payments Regulations 2020 (the Regulations) came into force; exit payments for the public sector were capped at £95,000.
The case was brought by the Official Receiver who sought disqualification orders under section 6 of the Company Directors Disqualification Act 1986 (CDDA 1986) against the seven trustees of Kids Company and its CEO. It illustrates well the tension between the role of a fulltime paid CEO of a large charity and the role of its board as voluntary trustees/directors.
At the end of 2020, The Charity Governance Code was updated or 'refreshed' as it is termed on its website.
Anthony Collins Solicitors is today (Thursday 11 February) revealing the scale of its social impact during 2020.
In their first podcast of this series, current and future trainees will discuss their journey and route to securing a training contract at Anthony Collins Solicitors.
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