Charities Bill [HL]

moved Amendment No. 86:"Page 46, line 21, leave out from ““above”” to end of line 22 and insert ““shall be given by the transferor charity or charities concerned within 28 days of the relevant charity merger””" The noble Lord said: My Lords, Amendments Nos. 86, 87 and 88 stand in my name. I am grateful to the noble Lord, Lord Hodgson, for having added his name to Amendment No. 87. I crave the indulgence of the House for what is an extremely technical set of amendments to an extremely technical set of new clauses inserted into the Charities Act 1993 by Clause 43 of the Bill. They all relate to mergers; that is, where two or more charities decide that they want to pool their resources either by creating a new charity into which they all transfer their assets or where one of them is the surviving charity and the other one or more charities transfer all their assets into it. The provisions created by the Bill are in many ways admirable and to be desired. One aspect of the arrangements is that if the merging charities make what are called in proposed new Section 75D ““pre-merger vesting declarations””, so long as they comply with the provisions of that clause there will be an automatic transfer of all the assets of the charities concerned—what is called ““automatic vesting””. That is a most dramatic thing to happen in English law, under which the transfer of any assets is a laborious business and that of charity assets is extremely laborious, for the obvious reason that it is in the public interest to protect charity assets. We and noble Lords on the Conservative Benches are anxious that those arrangements work in the way in which the Government undoubtedly intend them to. The concern that the three amendments address is that a creditor of one of the charities merging could wake up one morning and find that the assets against which his or her claim might normally be met are no longer with the charity concerned. Indeed, creditors might find that the charity against which they have a claim—it may be a straightforward debt—no longer exists. Between them, the amendments are designed to tighten up the merger provisions. Amendment No. 86 fills a gap in the legislation. New Section 75C is all about the register of charity mergers and starts by saying:"““The Commission shall establish and maintain a register of charity mergers””." If you put a cold towel around your head and study the provisions, you will find that the register is voluntary; that is to say, no charity engaged in a relevant merger is obliged to notify the Charity Commission. That is most obvious in subsection (5) of new Section 75C, which says:"““A notification under subsection (3) above may be given in respect of a relevant charity merger at any time after””." The subsection then refers to the transfer of property of the charity concerned. That in itself is misleading, because an automatic vesting is not a transfer but a vesting of property—I shall return to that point. It is essential that we tighten up those arrangements for the benefit of creditors, bearing in mind that no charity doing a proper and honourable job will want to disadvantage creditors. The first requirement of Amendment No. 86 is that it is compulsory, not voluntary, for those involved in a relevant charity merger to notify the Charity Commission so that it can keep its register up to date. The amendment would make it compulsory to give notice,"““within 28 days of the relevant charity merger””" rather than at some indeterminate time, which could mean a year or two later. The other two amendments are in a separate group, so the only other thing that I need say at this juncture is that, under those arrangements, an automatic vesting of all the assets of the charities concerned can take place without notification being given to the Charity Commission. For reasons that I have briefly sketched, that seems wrong in principle and contrary to the public interest. It is a matter that ought to be rectified. I beg to move.