When considering a merger, trustees should give some thought as to what the structure of the new charity will be – if indeed there is to be a new charity. This will need to take into account whether both (or either) of the parties involved are membership organisations, unincorporated associations, a company limited by guarantee, CIO or a Royal Charter body,[1] or where there are trading subsidiaries.
Of interest to those involved in charity governance.
Introduction
When considering a merger, trustees should give some thought as to what the structure of the new charity will be – if indeed there is to be a new charity. This will need to take into account whether both (or either) of the parties involved are membership organisations, unincorporated associations, a company limited by guarantee, CIO or a Royal Charter body,[1] or where there are trading subsidiaries.
This guidance covers the legislative issues around charities regulated by the Charity Commission in England and Wales.
Purpose of this guidance
For charities established by an Act of Parliament, s.173 of the 2011 Charities Act allows for the courts or the Charity Commission to make a ‘scheme’ to alter the charity’s provisions. In this situation, the Home Secretary gives effect to the scheme by the use of a statutory instrument laid before Parliament. Charity Commission guidance or advice from an appropriate specialist would be most advisable in this instance.
Having a clear idea as to the eventual structure of the merged charity will have some bearing on the pre-merger discussions and preparatory work for the transfer of assets. For example, the decision to establish a single new charity may be to neutralise any perception that one charity is being ‘taken over’ by another or that the financial liabilities of one charity need to be completely absorbed by the other. Another reason may be to form a charity with a constitution that is most adaptable for mission delivery or membership-based activities.
This document includes:
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