Charities Bill [HL]

moved Amendment No. 61:"Page 46, line 20, at end insert—"    ““save that the requirement for a transferor charity to cease to exist shall not apply where that transferor charity holds property subject to permanent endowment trusts”” The noble Lord said: This amendment follows other amendments concerning the issue of merger provisions and permanent endowment trusts. Again, we are grateful to the Charity Law Association for its thoughts on the matter. Under the present drafting, charities will be able to make use of the new statutory merger provisions only in circumstances in which all the transferor charities cease to exist. In Committee last time, we tabled an amendment to remove the requirement that to use the new merger provisions, the transferor or transferors must cease to exist. We pointed out a number of instances in which it may be necessary to keep a transferor in existence. We accept the point made by the Minister that opening the merger provisions to all types of partial merger could muddy the waters. However, in the case of a transferee with permanent endowment, it is impossible for the transferor charity to cease to exist. When the point was discussed in Committee on the   previous occasion, the noble Lord, Lord Bassam, stated that the Charity Law Association’s point was,"““misconceived, because if permanent endowment was involved, the transferee would simply become the trustee of the permanent endowment trust, and the transferor could be removed from the register””.—[Official Report, 16/3/05; col. GC 540.]" Unfortunately, those comments do not describe the legal reality. The ““permanent endowment trust””, of which on merger the transferee becomes trustee, is the transferor. As currently drafted, these provisions will exclude charities with permanent endowment which wish to merge. While recognising that it may be inappropriate to make the merger provisions available in all circumstances where transferors continue to exist, it seems equally inappropriate to us to exclude those cases where it is impossible for the transferor to cease to exist unless it can successfully make use of the provisions in Clause 41. Given that the reason for rejecting this aspect of our argument last time was based on what we now consider was a misunderstanding of the legal technicalities, I   hope that the Government will reconsider their position. I beg to move.