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
119

Conversion, amalgamation and transfer
69G
Conversion of charitable company or registered industrial and
provident society
(1)
The following may apply to the Commission to be converted into a
CIO, and for the CIO’s registration as a charity, in accordance with
5
this section—
(a)
a charitable company,
(b)
a charity which is a registered society within the meaning of
the Industrial and Provident Societies Act 1965.
(2)
But such an application may not be made by—
10
(a)
a company or registered society having a share capital if any
of the shares are not fully paid up, or
(b)
an exempt charity.
(3)
Such an application is referred to in this section and sections 69H and
69I below as an “application for conversion”.
15
(4)
The Commission shall notify the following of any application for
conversion—
(a)
the appropriate registrar, and
(b)
such other persons (if any) as the Commission thinks
appropriate in the particular case.
20
(5)
The company or registered society shall supply the Commission
with—
(a)
a copy of a resolution of the company or registered society
that it be converted into a CIO,
(b)
a copy of the proposed constitution of the CIO,
25
(c)
a copy of a resolution of the company or registered society
adopting the proposed constitution of the CIO,
(d)
such other documents or information as may be prescribed
by regulations made by the Secretary of State, and
(e)
such other documents or information as the Commission
30
may require for the purposes of the application.
(6)
The resolution referred to in subsection (5)(a) shall be—
(a)
a special resolution of the company or registered society, or
(b)
a unanimous written resolution signed by or on behalf of all
the members of the company or registered society who
35
would be entitled to vote on a special resolution.
(7)
In the case of a registered society, “special resolution” has the
meaning given in section 52(3) of the Industrial and Provident
Societies Act 1965.
(8)
In the case of a company limited by guarantee which makes an
40
application for conversion (whether or not it also has a share capital),
the proposed constitution of the CIO shall (unless subsection (10)
applies) provide for the CIO’s members to be liable to contribute to
its assets if it is wound up, and for the amount up to which they are
so liable.
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Charities Bill [HL]
Schedule 7 — Charitable incorporated organisations
Part 1 — New Part 8A of and Schedule 5B to 1993 Act
120

(9)
That amount shall not be less than the amount up to which they were
liable to contribute to the assets of the company if it was wound up.
(10)
If the amount each member of the company is liable to contribute to
its assets on its winding up is £10 or less, the guarantee shall be
extinguished on the conversion of the company into a CIO, and the
5
requirements of subsections (8) and (9) do not apply.
(11)
In subsection (4), and in sections 69H and 69I below, “the appropriate
registrar” means—
(a)
in the case of an application for conversion by a charitable
company, the registrar of companies,
10
(b)
in the case of an application for conversion by a registered
society, the Financial Services Authority.
(12)
In this section, “charitable company” means a company which is a
charity.
69H
Conversion: consideration of application
15
(1)
The Commission shall consult those to whom it has given notice of
an application for conversion under section 69G(4) above about
whether the application should be granted.
(2)
The Commission shall refuse an application for conversion if—
(a)
it is not satisfied that the CIO would be a charity at the time
20
it would be registered,
(b)
the CIO’s proposed constitution does not comply with one or
more of the requirements of section 69B above and any
regulations made under that section, or
(c)
in the case of an application for conversion made by a
25
company limited by guarantee, the CIO’s proposed
constitution does not comply with the requirements of
subsections (8) and (9) of section 69G above.
(3)
The Commission may refuse an application for conversion if—
(a)
the proposed name of the CIO is the same as, or is in the
30
opinion of the Commission too like, the name of any other
charity (whether registered or not),
(b)
the Commission is of the opinion referred to in any of
paragraphs (b) to (e) of section 6(2) above (power of
Commission to require change in charity’s name) in relation
35
to the proposed name of the CIO (reading paragraph (b) as
referring to the proposed purposes of the CIO and to the
activities which it is proposed it should carry on), or
(c)
having considered any representations received from those
whom it has consulted under subsection (1), the Commission
40
considers (having regard to any regulations made under
subsection (4)) that it would not be appropriate to grant the
application.
(4)
The Secretary of State may make provision in regulations about
circumstances in which it would not be appropriate to grant an
45
application for conversion.
(5)
If the Commission refuses an application for conversion, it shall so
notify the appropriate registrar (see section 69G(11) above).

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

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
15
(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
25
(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.
35
(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
122

(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.
25
(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).
45
(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
123

(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—
20
(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.
25
(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.
35
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—
40
(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.
45
(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
124

(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
45

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

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.
20
(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,