School incorporations and modernisation of governing instruments

Most independent schools are now incorporated. This is normally by royal charter, special act of parliament or as a company limited by guarantee.
 
Incorporation is important, not least because it affords broad protections to governors from personal liability in contracts and tort and for certain types of compliance offence. But it would not, of course, relieve charity trustees/governors of their duties or personal liabilities in the event of a breach of trust or some other wrongdoing.
 
Incorporation involves much more than simply creating a limited company and transferring a school's undertaking to it. It is a complete review, overhaul and modernisation of the school's constitution and it can bring a number of additional benefits, for example:
 
  • An expanded range of powers will help to protect governors from the risk of liability for ultra vires acts.
  • The governing body can be restructured if, for example, a reduction in its size would be beneficial or the governors have found it difficult to find suitable candidates to fill nominated positions.
  • It can greatly simplify the execution of formal legal documents.
  • Bursary and scholarship funds can be consolidated under a special scheme.
  • Property of the charity, wrongly classified as permanent endowment in some cases, can sometimes be re-classified.
  • Governors will not be burdened with personal liabilities to third parties when they retire from the governing body.
  • The incorporation process can also reveal latent problems of which the governors may not have been aware.

Recent examples we have encountered and been able to put right, include:

  • A major school whose playing fields were on the verge of being registered as common land.
  • Defects in title to land belonging to the charity for several schools.
  • Obtaining release of land from permanent endowment restrictions so that it could be redeveloped advantageously for a number of schools.
  • Discovering assets of the charity of which the school had not previously been aware.
  • Action to protect the school's intellectual property rights in its name and logo by registration of a trade mark.
  • Identifying and improving on unsatisfactory terms of bank loans.

Work experience/case studies:
During the last five years we have helped more than 50 schools to incorporate or else bring their governing instruments up-to-date.
 
They include - Abingdon School; Blundell's School; Bristol Grammar School; Bromsgrove School; Chigwell School; Clifton College; Dauntsey's School; Framlingham College; Gresham's School; King's School, Worcester; North London Collegiate School; Royal Ballet School; St Albans School; Sedbergh School; Sherborne School; Taunton School; Wakefield Grammar School Foundation; Warwick Schools.
 
In the course of this and much other similar work we have established excellent relationships with the Charity Commission and we have designed company and charity forms appropriate to independent schools that are known and trusted by the Commission.
 
For an informal discussion without obligation, about incorporating your school or updating its charter, memorandum & articles or scheme, please contact us.