Future Reforms in Merging Third Sector Entities and Charitable Trusts
Explore the evolution and potential reforms in merging Third Sector entities and Charitable Trusts, delving into timelines, key issues, and implications of mergers across different entity types, with a focus on modernizing the sector for the future.
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Presentation Transcript
SOME THOUGHTS ON FUTURE REFORMS MERGING THIRD SECTOR ENTITIES David McLay
TIMELINE I WAS DREAMING (IN 2003) 2005-2008 Charities registration 2009-10 Financial Reporting 2012 Charity Definition and other reforms
TIMELINE IN 2012 STILL DREAMING Charity registration cases aplenty Financial reporting reforms soon (?) Law Commission Trusts Project (stage 2 Charitable Trusts Act) to commence in near future (Stage 1 began in March 2009) NZLC IP19 ( Nov 2010) , para. 1.7
MERGERS IN THE THIRD SECTOR Until registration under Charities Act was completed, the scale of the charitable sector within the Third Sector was the subject of speculation Mergers and demergers were anticipated (in 2005-08)
KEY ISSUES IN MERGERS Charitable Trusts Act 1957 has charitable scheme procedure in Part 3 (and Part 4 for voluntary contribution schemes) Although Part 3 schemes are usually amending charitable trusts and rectifying drafting errors Issues of time and of scope, as well as archaic statutory language and structure
TIME ISSUE High Court originating application cannot be filed until Attorney General s Report has been received No time limit for most charitable schemes Exceptions in: Anglican Church Trusts Act 1981 (s.15(2), 90 days) Methodist Church of New Zealand Trusts Act 2009 (s. 12(2), 90 days) Presbyterian Church Property Amendment Act 1996, (s.14(1), 90 days) Roman Catholic Bishops Empowering Act 1997 (s. 18(2), 90 days) What about a general exception?
MERGERS OF DIFFERENT ENTITY TYPES Re Tuhoe Charitable Trust Board [2012] NZHC 1952 permitted amalgamation (under a charitable scheme) of part of a M ori Trust Board with two charitable trusts Part 15 of Companies Act 1993 should enable schemes of arrangement including other Third Sector entities, but the 1993 drafting seemed to exclude that possibility
JUDICATIVE MODERNISATION BILL From 1 March 2017, Part 15 applies to an association (s. 235) Section 2 defines association to mean a body corporate (other than a body corporate that may be put into liquidation under or in accordance with the Act under which it is incorporated or registered) Schedule 11 applies
REFORM NEEDED Cumbersome processes in Charitable Trusts Act A new process possibly could involve approval by an administrative tribunal, although there are often affected third parties so that Court approval is desirable
