Charities Bill [HL]

House of Commons

Session 2005 - 06
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Other Bills before Parliament

Charities Bill [HL]

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
120

69I
Conversion: supplementary
(1)
If the Commission grants an application for conversion, it shall—
(a)
register the CIO to which the application related in the
register of charities, and
(b)
send to the appropriate registrar (see section 69G(11) above)
5
a copy of each of the resolutions of the converting company
or registered society referred to in section 69G(5)(a) and (c)
above, and a copy of the entry in the register relating to the
CIO.
(2)
The registration of the CIO in the register shall be provisional only
10
until the appropriate registrar cancels the registration of the
company or registered society as required by subsection (3)(b).
(3)
The appropriate registrar shall—
(a)
register the documents sent to him under subsection (1)(b),
and
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(b)
cancel the registration of the company in the register of
companies, or of the society in the register of friendly
societies,

and shall notify the Commission that he has done so.
(4)
When the appropriate registrar cancels the registration of the
20
company or of the registered society, the company or registered
society is thereupon converted into a CIO, being a body corporate—
(a)
whose constitution is that proposed in the application for
conversion,
(b)
whose name is that specified in the constitution, and
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(c)
whose first members are the members of the converting
company or society immediately before the moment of
conversion.
(5)
If the converting company or registered society had a share capital,
upon the conversion of the company or registered society all the
30
shares shall by virtue of this subsection be cancelled, and no former
holder of any cancelled share shall have any right in respect of it after
its cancellation.
(6)
Subsection (5) does not affect any right which accrued in respect of a
share before its cancellation.
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(7)
The entry relating to the charity’s registration in the register shall
include—
(a)
a note that it is constituted as a CIO,
(b)
the date on which it became so constituted, and
(c)
a note of the name of the company or society which was
40
converted into the CIO,

but the matters mentioned in paragraphs (a) and (b) are to be
included only when the appropriate registrar has notified the
Commission as required by subsection (3).
(8)
A copy of the entry in the register shall be sent to the charity at the
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principal office of the CIO.

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
121

(9)
The conversion of a charitable company or of a registered society into
a CIO does not affect, in particular, any liability to which the
company or registered society was subject by virtue of its being a
charitable company or registered society.
69J
Conversion of community interest company
5
(1)
The Secretary of State may by regulations make provision for the
conversion of a community interest company into a CIO, and for the
CIO’s registration as a charity.
(2)
The regulations may, in particular, apply, or apply with
modifications specified in the regulations, or disapply, anything in
10
sections 53 to 55 of the Companies (Audit, Investigations and
Community Enterprise) Act 2004 or in sections 69G to 69I above.
69K
Amalgamation of CIOs
(1)
Any two or more CIOs (“the old CIOs”) may, in accordance with this
section, apply to the Commission to be amalgamated, and for the
15
incorporation and registration as a charity of a new CIO (“the new
CIO”) as their successor.
(2)
Such an application is referred to in this section and section 69L
below as an “application for amalgamation”.
(3)
Subsections (2) to (4) of section 69E above apply in relation to an
20
application for amalgamation as they apply to an application for a
CIO to be constituted, but in those subsections—
(a)
“the applicants” shall be construed as meaning the old CIOs,
and
(b)
references to the CIO are to the new CIO.
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(4)
In addition to the documents and information referred to in section
69E(2) above, the old CIOs shall supply the Commission with—
(a)
a copy of a resolution of each of the old CIOs approving the
proposed amalgamation, and
(b)
a copy of a resolution of each of the old CIOs adopting the
30
proposed constitution of the new CIO.
(5)
The resolutions referred to in subsection (4) must have been
passed—
(a)
by a 75% majority of those voting at a general meeting of the
CIO (including those voting by proxy or by post, if voting
35
that way is permitted), or
(b)
unanimously by the CIO’s members, otherwise than at a
general meeting.
(6)
The date of passing of such a resolution is—
(a)
the date of the general meeting at which it was passed, or
40
(b)
if it was passed otherwise than at a general meeting, the date
on which provision in the CIO’s constitution or in regulations
made under paragraph 13 of Schedule 5B to this Act deems it
to have been passed (but that date may not be earlier than
that on which the last member agreed to it).
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(7)
Each old CIO shall—

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
122

(a)
give notice of the proposed amalgamation in the way (or
ways) that in the opinion of its charity trustees will make it
most likely to come to the attention of those who would be
affected by the amalgamation, and
(b)
send a copy of the notice to the Commission.
5
(8)
The notice shall invite any person who considers that he would be
affected by the proposed amalgamation to make written
representations to the Commission not later than a date determined
by the Commission and specified in the notice.
(9)
In addition to being required to refuse it on one of the grounds
10
mentioned in section 69E(3) above as applied by subsection (3) of this
section, the Commission shall refuse an application for
amalgamation if it considers that there is a serious risk that the new
CIO would be unable properly to pursue its purposes.
(10)
The Commission may refuse an application for amalgamation if it is
15
not satisfied that the provision in the constitution of the new CIO
about the matters mentioned in subsection (11) is the same, or
substantially the same, as the provision about those matters in the
constitutions of each of the old CIOs.
(11)
The matters are—
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(a)
the purposes of the CIO,
(b)
the application of property of the CIO on its dissolution, and
(c)
authorisation for any benefit to be obtained by charity
trustees or members of the CIO or persons connected with
them.
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(12)
For the purposes of subsection (11)(c)—
(a)
“benefit” means a direct or indirect benefit of any nature,
except that it does not include any remuneration (within the
meaning of section 73A below) whose receipt may be
authorised under that section, and
30
(b)
the same rules apply for determining whether a person is
connected with a charity trustee or member of the CIO as
apply, in accordance with section 73B(6) and (7) below, for
determining whether a person is connected with a charity
trustee for the purposes of section 73A.
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69L
Amalgamation: supplementary
(1)
If the Commission grants an application for amalgamation, it shall
register the new CIO in the register of charities.
(2)
Upon the registration of the new CIO it thereupon becomes by virtue
of the registration a body corporate—
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(a)
whose constitution is that proposed in the application for
amalgamation,
(b)
whose name is that specified in the constitution, and
(c)
whose first members are the members of the old CIOs
immediately before the new CIO was registered.
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(3)
Upon the registration of the new CIO—

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
123

(a)
all the property, rights and liabilities of each of the old CIOs
shall become by virtue of this subsection the property, rights
and liabilities of the new CIO, and
(b)
each of the old CIOs shall be dissolved.
(4)
Any gift which—
5
(a)
is expressed as a gift to one of the old CIOs, and
(b)
takes effect on or after the date of registration of the new CIO,

takes effect as a gift to the new CIO.
(5)
The entry relating to the registration in the register of the charity
constituted as the new CIO shall include—
10
(a)
a note that it is constituted as a CIO,
(b)
the date of the charity’s registration, and
(c)
a note that the CIO was formed following amalgamation, and
of the name of each of the old CIOs.
(6)
A copy of the entry in the register shall be sent to the charity at the
15
principal office of the new CIO.
69M
Transfer of CIO’s undertaking
(1)
A CIO may resolve that all its property, rights and liabilities should
be transferred to another CIO specified in the resolution.
(2)
Where a CIO has passed such a resolution, it shall send to the
20
Commission—
(a)
a copy of the resolution, and
(b)
a copy of a resolution of the transferee CIO agreeing to the
transfer to it.
(3)
Subsections (5) and (6) of section 69K above apply to the resolutions
25
referred to in subsections (1) and (2)(b) as they apply to the
resolutions referred to in section 69K(4).
(4)
Having received the copy resolutions referred to in subsection (2),
the Commission—
(a)
may direct the transferor CIO to give public notice of its
30
resolution in such manner as is specified in the direction, and
(b)
if it gives such a direction, must take into account any
representations made to it by persons appearing to it to be
interested in the transferor CIO, where those representations
are made to it within the period of 28 days beginning with the
35
date when public notice of the resolution is given by the
transferor CIO.
(5)
The resolution shall not take effect until confirmed by the
Commission.
(6)
The Commission shall refuse to confirm the resolution if it considers
40
that there is a serious risk that the transferee CIO would be unable
properly to pursue the purposes of the transferor CIO.
(7)
The Commission may refuse to confirm the resolution if it is not
satisfied that the provision in the constitution of the transferee CIO
about the matters mentioned in section 69K(11) above is the same, or
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Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
124

substantially the same, as the provision about those matters in the
constitution of the transferor CIO.
(8)
If the Commission does not notify the transferor CIO within the
relevant period that it is either confirming or refusing to confirm the
resolution, the resolution is to be treated as confirmed by the
5
Commission on the day after the end of that period.
(9)
Subject to subsection (10), “the relevant period” means—
(a)
in a case where the Commission directs the transferor CIO
under subsection (4) to give public notice of its resolution, the
period of six months beginning with the date when that
10
notice is given, or
(b)
in any other case, the period of six months beginning with the
date when both of the copy resolutions referred to in
subsection (2) have been received by the Commission.
(10)
The Commission may at any time within the period of six months
15
mentioned in subsection (9)(a) or (b) give the transferor CIO a notice
extending the relevant period by such period (not exceeding six
months) as is specified in the notice.
(11)
A notice under subsection (10) must set out the Commission’s
reasons for the extension.
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(12)
If the resolution is confirmed (or treated as confirmed) by the
Commission—
(a)
all the property, rights and liabilities of the transferor CIO
shall become by virtue of this subsection the property, rights
and liabilities of the transferee CIO in accordance with the
25
resolution, and
(b)
the transferor CIO shall be dissolved.
(13)
Any gift which—
(a)
is expressed as a gift to the transferor CIO, and
(b)
takes effect on or after the date on which the resolution is
30
confirmed (or treated as confirmed),

takes effect as a gift to the transferee CIO.
Winding up, insolvency and dissolution
69N
Regulations about winding up, insolvency and dissolution
(1)
The Secretary of State may by regulations make provision about—
35
(a)
the winding up of CIOs,
(b)
their insolvency,
(c)
their dissolution, and
(d)
their revival and restoration to the register following
dissolution.
40
(2)
The regulations may, in particular, make provision—
(a)
about the transfer on the dissolution of a CIO of its property
and rights (including property and rights held on trust for the
CIO) to the official custodian or another person or body,

Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
125

(b)
requiring any person in whose name any stocks, funds or
securities are standing in trust for a CIO to transfer them into
the name of the official custodian or another person or body,
(c)
about the disclaiming, by the official custodian or other
transferee of a CIO’s property, of title to any of that property,
5
(d)
about the application of a CIO’s property cy-près,
(e)
about circumstances in which charity trustees may be
personally liable for contributions to the assets of a CIO or for
its debts,
(f)
about the reversal on a CIO’s revival of anything done on its
10
dissolution.
(3)
The regulations may—
(a)
apply any enactment which would not otherwise apply,
either without modification or with modifications specified
in the regulations,
15
(b)
disapply, or modify (in ways specified in the regulations) the
application of, any enactment which would otherwise apply.
(4)
In subsection (3), “enactment” includes a provision of subordinate
legislation within the meaning of the Interpretation Act 1978.
Miscellaneous
20
69O
Power to transfer all property of unincorporated charity to one or more
CIOs

Section 74 below (power to transfer all property of unincorporated
charity) applies with the omission of paragraph (a) of subsection (1)
in relation to a resolution by the charity trustees of a charity to
25
transfer all its property to a CIO or to divide its property between
two or more CIOs.
69P
Further provision about CIOs

The provisions of Schedule 5B to this Act shall have effect with
respect to CIOs.
30
69Q
Regulations
(1)
The Secretary of State may by regulations make further provision
about applications for registration of CIOs, the administration of
CIOs, the conversion of charitable companies, registered societies
and community interest companies into CIOs, the amalgamation of
35
CIOs, and in relation to CIOs generally.
(2)
The regulations may, in particular, make provision about—
(a)
the execution of deeds and documents,
(b)
the electronic communication of messages or documents
relevant to a CIO or to any dealing with the Commission in
40
relation to one,
(c)
the maintenance of registers of members and of charity
trustees,
(d)
the maintenance of other registers (for example, a register of
charges over the CIO’s assets).
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Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
126

(3)
The regulations may, in relation to charities constituted as CIOs—
(a)
disapply any of sections 3 to 4 above,
(b)
modify the application of any of those sections in ways
specified in the regulations.
(4)
Subsections (3) and (4) of section 69N above apply for the purposes
5
of this section as they apply for the purposes of that.”
2
After the Schedule 5A inserted in the 1993 Act by Schedule 6 to this Act,
insert the following Schedule—
“Schedule 5B
Section 69P

Further provision about Charitable Incorporated Organisations
10
Powers
1     (1)
Subject to anything in its constitution, a CIO has power to do
anything which is calculated to further its purposes or is
conducive or incidental to doing so.
      (2)
The CIO’s charity trustees shall manage the affairs of the CIO and
15
may for that purpose exercise all the powers of the CIO.
Constitutional requirements
2
A CIO shall use and apply its property in furtherance of its
purposes and in accordance with its constitution.
3
If the CIO is one whose members are liable to contribute to its
20
assets if it is wound up, its constitution binds the CIO and its
members for the time being to the same extent as if its provisions
were contained in a contract—
(a)
to which the CIO and each of its members was a party, and
(b)
which contained obligations on the part of the CIO and
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each member to observe all the provisions of the
constitution.
4
Money payable by a member to the CIO under the constitution is
a debt due from him to the CIO, and is of the nature of a specialty
debt.
30
Third parties
5     (1)
Sub-paragraphs (2) and (3) are subject to sub-paragraph (4).
      (2)
The validity of an act done (or purportedly done) by a CIO shall
not be called into question on the ground that it lacked
constitutional capacity.
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      (3)
The power of the charity trustees of a CIO to act so as to bind the
CIO (or authorise others to do so) shall not be called into question
on the ground of any constitutional limitations on their powers.