Charities Bill [HL]

When we debated this on the previous occasion, I said that the noble Lord’s point relating to mergers 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. So the transferor would cease to exist and therefore the merger provisions in the Bill would thus be open to it. Having given further thought to the issue, I can see the noble Lord’s argument that for the purposes of this discussion, a permanently endowed charity cannot ““cease to exist””. But I still do not think that there is any need to amend the Bill. If the endowed charity has not ceased to exist, it will not need to use the gift protection provisions in Section 75E. A change in the administration of a permanently endowed charity will not affect its right to receive a subsequent gift in augmentation of the endowment, and here I refer noble Lords to the case of Re Faraker in 1912. The provisions in new Section 75E are designed to protect the interests of unendowed charities in gifts which take effect after they have ceased to exist as the consequence of a merger with another charity. In the case of a permanently endowed charity, a merger is simply a change in its administration. In this context, provisions relating to re-vesting of property already exist in Section 40 of the Trustee Act 1925 and Section 83 of the Charities Act 1993. Again, the purpose of the vesting declaration provision in new Section 75D is to extend the scope of the provisions which already apply when new trustees are appointed, to the situation where the re-vesting is required, not as the result of a change in trusteeship, but as the result of the transferor charity ceasing to exist as the consequence of a merger. Again the provision can have no application to permanently endowed charities. The kernel of our argument is simply this: it is inappropriate and unnecessary for Clause 42 to apply to permanently endowed charities. We therefore do not consider it necessary to amend the Bill.