Valentine Goodman Estate Charity. Report on Merger with Great Easton Poors Charity

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1 Valentine Goodman Estate Charity Report on Merger with Great Easton Poors Charity Instruction and Background 1. We are instructed to advise trustees of the Valentine Goodman Estate Charity in respect of the proposed merger with the Great Easton Poors Charity. Prior to this we were in the process of advising Valentine Goodman as to incorporation as a charitable incorporated organisation. The proposed merger is now to be combined with that project so that the merged successor charity will be a CIO. 2. The Great Easton Poors Charity is a charitable trust, comprising one parcel of agricultural land on the outskirts of the village of Great Easton. It does not have a known governing document, the land is not registered with the Land Registry and the charity is not registered with the Charity Commission. Income from renting the field is applied for the poor of the area and sometimes for other charitable purposes. There is a second, adjacent, field known as the Clerk s Land which we are told is administered as part of the Great Easton Charity. It is not clear whether this second parcel of land is within the ownership of the Great Easton Charity or not. Due Diligence 3. Caution is important for any charity contemplating merger. Accordingly, the trustees of both these charities should look carefully at the assets and business of the other so as to be sure what the merger entails. This should include the governing documents and accounts (to the extent available, in Great Easton s case) to ensure the proposed merger partner is not insolvent and has no major liabilities. Each charity must also undertake some consideration as to the ongoing activities or other obligations of the other charity. Due diligence needs to be undertaken at a level proportionate to the proposed merger, so the trustees are well informed. 4. In terms of legal matters, staff, contracts and other common areas to consider are presumably irrelevant here. The major issues are likely to be in relation to land and the governing documents of each charity. 5. As to land, that of the Valentine Goodman Charity is already registered with the Land Registry, so the trustees of the Great Easton Charity should know the full extent and any restrictions which apply to that. 6. The land of the Great Easton Charity is currently being registered, so at the point of merger Valentine Goodman should also know exactly what that land comprises.

2 7. As to the governing documents, a scheme dated 14 May 1912 governs Valentine Goodman (subject to a later minor amendment). Important provisions are as follows. 7.1 Clause 2 states the land of the charity is vested in the Official Custodian for Charities (as that office is now called). In fact this has changed in recent years: the LR titles show the charity itself is now the registered proprietor. 7.2 Clauses 25 to 28 contain supplementary provisions relating to property: dealing with allotments, leases, etc. Importantly, none of these provisions states any of the land is held as permanent endowment (ie. to be held in perpetuity. Unless the Will of Valentine Goodman is to hand and states otherwise, then the trustees are entitled to deal with the property as they wish within the scope of their objects. 7.3 Clauses 29 to 32 contain the purposes for which the assets and income of the Charity are to be applied. In broad terms, it is divided into eight parts and applied by local trustees in the various parishes which the Charity covers. The purposes are expressed at length but the overall effect is the objects are for the benefit of the poor, sick, elderly and others in need. 7.4 We have been told the Will of Valentine Goodman contains specific provisions directing the purpose for his charitable gift, although these are not reflected in the scheme. His Will states he bequeathed 800 to be laid out in hand and the profits thereof given to the most indigent poorest, aged, decrepit, miserablest, paupers, viz six from Easton, four from Medbourn, four from Hallaton and two from Blaston; and if any part of the money is employed for easing town levies or not according to the intent of the testator then the gift should cease and the money be employed for the redemption of Turkish captives (Turkish / Barbary pirates captives who might be redeemed by ransom). There is no obligation on the trustees to honour these exact terms but the objects are nevertheless compliant, being for the benefit of the poor, sick, elderly and others in need. 8. As noted above, the Great Easton Charity has no known governing document. We have been provided with a summary of the charity s origins, which includes extracts from an 1840 Report of the Inclosure Commissioners concerning charities: As to Poor s Land, the parish is in possession of eight acres, three rods and seventeen perches of pasture land situated in Easton Magna called Poor s Close allotted to the trustees of the poor of Great Easton for the time being under an award of Inclosure Commissioners dated 3 March The land concerned was stated to be under sole management of the Overseers of the Poor who until the last seven or eights years were in the habit of distributing the rent among the poor in money or fuel, frequently have always applied the rents in binding out apprentices and paying for subscription to the Leicestershire Infirmary. In future a portion of the income will be applied for the provision of fuel for the poor. Another report of the accounts of the Overseers of the Poor dated 1752 from the Leicestershire

3 Records Office makes reference to the same land of the same dimensions, being pasture land allotted to the poor at the Inclosure dated 3 March 1810 and that the Overseers of the Poor distribute the rent in money or fuel but lately has spent it on binding apprentices and subscription to the Leicester Infirmary. 9. In the absence of any other evidence it seems clear the Great Easton Charity is a charitable trust with the land held on trust to apply the rent for the benefit of poor of the locality together with other charitable purposes. 10. We are not told who act as trustees for the Charity but as the Parish Council is the modern successor to the Overseers of the Poor we presume the Parish Council fulfils this role. 11. An obvious and known element which needs to be considered in the merger is that the Great Easton Charity benefits that parish whereas Valentine Goodman benefits that as well as three other parishes. The Great Easton Charity s land will need to be ring-fenced in the merger to ensure benefits from that land continue to be provided to the parish of Great Easton unless the trustees consider it is appropriate to widen the scope to include the other parishes. If that change is wanted, we will advise further as certain criteria need to be satisfied in order to do this. The Future Charitable Incorporated Organisation 12. The proposed name of the new charity is to be Valentine Goodman & Great Easton Poors Charity Estates. Although rather a lengthy name, it is felt quite strongly the identity of both charities needs to be reflected in full in the combined charity. 13. The object of the new CIO will need to accommodate the objects of both the existing charities. If this cannot be done in a way which closely resembles both the current charities objects then the possibility arises that some of the assets of the combined charity will have to be ring-fenced for specific purposes within the more general purposes of the CIO. These will then be restricted funds. Ideally this should be avoided as it is an administrative and governance burden to manage, however it remains to be seen whether this can be achieved. The most obvious point in this regard is the area of benefit of the Great Easton charity as mentioned above. 14. It is proposed the objects of the CIO should be generally for the relief of the poor of the areas covered by both charities currently; and poor to be understood in the modern, broad sense of the term, relating both to financial hardship as well as poor health, poor ability / mobility, old age, youth, poor prospects in life, rural isolation and other issues. We anticipate this will be possible. 15. The specific issue as to the lack of governing document for the Great Easton Charity need not be a barrier to merger. It is possible these days for the

4 trustees of a charitable trust to amend its objects by way of a trustees resolution without the consent of the Charity Commission so long as the income of the charity is no more than 10,000 a year and so long as none of the property owned by the charity has permanent endowment restrictions. The trustees can therefore change the objects and vote in favour of the proposed merger (which in the absence of a governing document could be interpreted as a change of objects) without the need to approach the Charity Commission, if these criteria apply. If the trustees want to change the objects to be wider than Great Easton as mentioned above then further criteria apply. 16. It goes without saying both charities must be clear as to their trustees proper appointments and that they are fully constituted so as to be able to form a quorum to approve resolutions for the merger. This is rather difficult to be sure about in the case of the Great Easton Charity of course given the lack of governing document but so long as there are at least two trustees or the Parish Council is acting as trustee, our view is the matter can proceed. Certainly, once the trustees have persuaded the Land Registry to register their land, then the merger of the charities can go ahead on the same footing, ie engaging the same trustees who authorised the land s registration. 17. Trustees of two charities which are contemplating merger should always consider whether to have separate legal advice. We are currently advising the trustees of Valentine Goodman and we understand legal advice available for the Great Easton Charity. Should they therefore feel the need for separate advice in relation to the merger they can have recourse to those advisors. Merger Process 18. The process for the merger from this point should be as follows: Great Easton Charity completes registration of its land with the Land Registry; 18.2 Trustees of both charities agree in principle to merge; 18.3 Both charities to undertake due diligence as necessary (see above); 18.4 CIO constitution prepared, incorporating name and objects as above; 18.5 Application to the Charity Commission to register that CIO; 18.6 Transfer, via Land Registry forms, of both charities property to the CIO; 18.7 The transfer of other assets (eg cash), obligations or rights of either charity should be considered and transferred; this may be effected simply by resolutions but depending on what is involved other mechanisms may need to be considered; 18.8 The trustees of the current Valentine Goodman and Great Easton Charities should resolve either to wind up those charities or combine

5 them with the CIO by a uniting direction, involving the Charity Commission as necessary. The existing charities might need to be kept in existence if legacies are likely, as those can sometimes fail as regards defunct charities. 19. We would be pleased to advise further and otherwise await instructions on the matters in this report. Hewitsons LLP October 2015 Ref: CHK/