OG1 D5 - DRAFT ORDER TO AUTHORISE A TRANSFER OF A CHARITY’S PROPERTY TO ANOTHER CHARITY

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OPERATIONAL GUIDANCE

ORDERS AND SCHEMES

DRAFT ORDER TO AUTHORISE A TRANSFER OF A CHARITY’S PROPERTY TO ANOTHER CHARITY

OG 1 D5 - 22 July 2002

Purpose

This draft Order is suitable for use when the trustees wish to transfer the charity’s property to another charity.

Functional responsibility

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Regulatory Framework

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	OG 201 provides guidance on the small charities provisions. Section 5 of OG 1 A1 provides additional guidance on when trustees can take advantage of a s.26 Order.
	This form of Order (D5) may be used when trustees approach us to authorise the trustees of a charity to transfer its property to another charity. The effect of any such transfer should not be to alter the purposes for which the property of the original charity may be used, or to cut across any express prohibition in an Act of Parliament or in the trusts of that charity. Due consideration should be given to the inclusion in any such Order of directions relating to the preservation of any permanent endowment of the transferor charity.
	If trustees ask for inclusion of a vesting direction in relation to property other than land, caseworkers should seek legal advice.
	However, the objects of the transferor and transferee charities will rarely be worded in exactly the same way. Insignificant differences in wording can be ignored: what matters is that the purposes of the transferor and transferee charities should be substantially the same.
	If you consider that the trustees should be required to follow a more stringent procedure than is laid down in the charity's constitution for normal business when exercising the power to transfer its property to another charity, then note clause 6 which is intended as guidance for use or adaption where appropriate in particular circumstances – see OG 1 B1 section 5 for further information.

	THE CHARITY COMMISSIONERS FOR ENGLAND AND WALES
	Made under section 26 of the Charities Act 1993

	dated the

	for the charity known as

ORDER
1.	In this Order:
	"the governing document " means [ ].
	"transferring trustees" means the trustees of "the transferring charity".
	"receiving trustees" means the trustees of "the receiving charity".
	"the transferring charity" means the charity known as [ ].
	"the receiving charity" means the charity known as [ ].
2.	Being satisfied that it is expedient in the interests of the charity that the trustees of the transferring charity should be empowered to do so, the Commissioners authorise the trustees, within 6 months of the date of this Order to take a decision to transfer the whole of the charity’s property to [where the receiving charity is a corporate body, insert name of charity]. [where the receiving charity is not a corporate body, insert the trustees of the named receiving charity].
3.	If the Trustees decide, under the authority of this Order, to transfer the property of the transferring charity [to the receiving charity][to the trustees of the receiving charity], then:
	(a)	The Official Custodian for Charities shall cease to hold the land belonging to the transferring charity in trust for that charity [use only if the existing charity has land vested in the OC];
	(b)	the land belonging to the transferring charity [shall be vested in the receiving charity; or
		[shall be vested in the trustees of the receiving charity in trust for the receiving charity] or
		[shall be vested in XYZ Ltd, the custodian trustee of the receiving charity, in trust for the receiving charity] or
		[shall be vested in the Official Custodian for Charities in trust for the receiving charity] or
		[shall be vested in A and B who are the trustees duly appointed to hold the property of the receiving charity in trust for the receiving charity] (use only if the charity has land);
	(c)	the property transferred to the [trustees of the] receiving charity shall be held and applied by [the trustees of] the receiving charity for the purposes of that charity;
	(d)	that part of the property of the transferring charity which is permanent endowment shall continue to be permanent endowment notwithstanding its transfer to the [trustees of the] receiving charity (use only if there is permanent endowment).
[Caseworkers should use their discretion when to insist that the transferring trustees send us a set of final accounts for the transferring charity or whether a certified statement confirming that the all the property of the transferring charity has been passed to the receiving charity is sufficient. Both options are set out below.]
4.	The Commissioners direct that the transferring trustees must:
	(1)	promptly send to the Commission and to the trustees of the receiving charity a written record of the decision by which they exercised the power bestowed on them by clause 2 of this Order; and
	Option 1
	(2)	inform the Commission when the transfer has been carried out and submit to the Commission a set of final accounts for the transferring charity, covering the period between the end of the last financial year of that charity in respect of which a statement of accounts or accounts and statement has or have been prepared, and the date of the transfer.
	Option 2
	(2)		inform the Commission when the transfer has been carried out and submit a certified statement confirming that all the property of the transferring charity has been passed to the receiving charity.
5.	The Commissioners direct that the trustees of the receiving charity must keep with its governing document the written record referred to in clause 4(1).
6.	[If we wish to impose specific requirements as to the formalities to be imposed when the trustees of the transferring charity exercise the power to transfer the property of the charity under clause 2 then these should appear here. Option 1 is suitable where the charity has no members. Option 2 is suitable for a charity with a membership. Please delete these clauses if we are content to allow the transferring charity’s normal constitutional arrangements for decision making to apply. Please also delete whichever of the following provisions are inappropriate in the particular circumstances and/or include your own tailor made provisions.]
	Option 1
	The Commissioners hereby direct that a decision to transfer the property of the charity under the power contained in clause 2 of this Order shall only be validly made if:
	(a)	the decision to exercise the power is taken at a meeting of the trustees of the transferring charity of which at least 10 clear days written notice has been given to each of the trustees. Provided that the trustees may dispense with such notice if all the trustees (whether or not present at the meeting) agree in writing to do so before the meeting or before the trustees consider the issue at the meeting;
	(b)	full details of the proposed transfer of the property of the charity are sent to each trustee with the notice of the meeting;
	(c)	the trustees of the transferring charity decide to effect the transfer by a majority of at least [two-thirds/three –quarters] of the trustees present and eligible to vote.
	Option 2
	If the charity has a membership structure, it may be desirable to provide for the exercise by the trustees of the transferring charity of the power to transfer its property set out in clause 2 of this Order to be subject to approval by a meeting of members. The words "for example" in (b) and (c) should be removed once you have agreed the numbers required for a quorum and for voting.
The following clauses may be used:
(a)	the decision by the trustees to exercise the power is approved at a meeting of the members of the transferring charity; of which at least 21 clear days’ written notice has been given to the members, the notice stating the business to be considered;
(b)	there shall be a quorum when at least (for example) one tenth of the members of the charity for the time being or ten members of the charity, whichever is the greater, are present at any such meeting;
(c)	the transfer of the property of the charity is approved by (for example) a two-thirds majority of the members present and voting at the meeting.

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