Charities Bill [HL]

I am grateful to the noble Lord, Lord Phillips, for the amendment and his Anglo-Saxon interpretation of why it might be necessary. He recognised that the Government have responded in part to some of his concerns by including in the new Section 75C certain amendments to the 1993   Act via Clause 42 of the Bill, where a new provision exists requiring the Charity Commission to be notified, when one charity is merged with another, of the arrangements that have been made with respect to the discharge of any liabilities of any charity that ceases to exist as a result of the transfer. The noble Lord’s amendment would supplement the provision by making the charity’s trustees ““jointly and severally”” liable if the terms of the notification are false or the arrangements for the discharge of the liabilities are in the noble Lord’s words ““inappropriate””. The effect of the noble Lord’s amendment would in practice be confined to corporate charities. That is because the charity trustees of an unincorporated charity are and would remain under the Bill responsible for liabilities that they had incurred on behalf of the charity, if the charity ceased to exist leaving liabilities outstanding. A corporate charity is normally solely responsible for the liabilities that it incurs; its directors are not personally responsible for those liabilities. If such a charity were to be dissolved, leaving liabilities outstanding, the effect of the amendment would therefore be to transfer those liabilities from the defunct charity as a corporate body to the charity’s directors. At present, outstanding creditors of a dissolved company would, in order to obtain satisfaction of the debts owed to them, need to have the company restored to the companies register with a view to its being wound up; they would not have a direct claim against those who were directors prior to dissolution. That applies to charities as to other companies. The noble Lord may consider that process to be cumbersome, but it is a general requirement under company law, and the Government believe that the issues would need to be examined as part of the wider company law reform discussions that are currently in train. There is, in the Government’s view, no reason to single out corporate charities for different treatment. It is for that reason that I invite the noble Lord to reconsider his position and understand what we are trying to say by way of explanation. I hope that he will feel able to withdraw his amendment.