Circuit mergers guidance
The composition of Circuits, and changes thereto, is covered in SO 501 of the CPD. It is important to read SO 501 as this sets out the process for obtaining approval for a Circuit merger.
The starting point is for a decision to be taken as to whether to transfer the assets and liabilities of each Circuit to an existing Circuit – whose name will most likely be changed, or to set up a brand new Trust (with the name of the new Circuit name) into which the assets and liabilities of all the Circuits involved in the merger will be transferred.
Assuming that an existing Circuit is to be used as the “vehicle” for creating the new Circuit, then that Circuit will need to pass Resolutions which will involve changing the name, appointing new Trustees, receiving the assets and liabilities of the other Circuits, changing the name of the Bank Accounts, appointing new cheque signatories, appointing a Treasurer for the new Circuit and appointing an Independent Examiner or Auditor, if the threshold for such an appointment has been passed.
For the remaining Circuits, Resolutions will need to be passed by the Members, who are the Trustees, approving the transfer of the Trust’s assets and liabilities to the newly named Circuit and approving the closing down of that Trust and at a given date.
If any or all of the Circuits involved in the merger, are Registered Charities, then it will also be necessary to inform the Charity Commission of the closure of those Trusts, i.e. those Circuits involved and of the change of name and appointment – and possibly retirement – of new Trustees.
Suggested Resolutions for the existing Circuit to put to its Members.
It is proposed that the name of the existing Circuit of the Methodist Church in the South East District of The Methodist Church, be changed to the new name Circuit, with effect from 1st September 201x.
The Trustees of the XYZ Methodist church, have informed the Secretary/Members of the existing Circuit of their decision to transfer to the A N Other Circuit in the South East District of The Methodist Church, with effect from 1st September 201x. The Members of the existing Circuit note this decision. As Managing Trustees for the Manse, whose address is.................................they also approve the transfer of responsibility as Managing Trustees to the Managing Trustees of the A N Other circuit. The Manse is stated in the accounts of the existing Circuit at its Insurance value as £............; there will be no proceeds received by the existing Circuit as a result of this transfer.
The Trustees of the existing Circuit note that the Trustees of the remaining Circuits have passed Resolutions agreeing to the transfer of their assets and liabilities to the existing Circuit, with effect from 1st September 201x. A Summary of these assets and liabilities is set out in Schedules ***** and will be attached to the Minutes of this Meeting.
SO 501 places the emphasis on the District Policy Committee to consult the Circuit Meetings and Church Councils involved and to formulate a draft recommendation to the Synod by obtaining resolutions from each Circuit and local church.
These must be reported to Synod.
The Synod then makes its own recommendation to Conference, reporting the resolutions received by the District Policy Committee. A mission policy statement would be desirable to set the proposal in context giving the rationale behind the recommendation.
Should Conference approval be obtained, the actual merger can then begin (subject to SO 501(7)). It will be prudent to liaise regularly with the Conference Office at Methodist Church House, and to seek the advice of a legal professional where necessary.
In accordance with SO 501(6), upon making any change in the composition of Circuits the Conference may give consequential directions, in particular as to transitional arrangements, including directions as to the making of appointments to circuit committees and offices.
Once the new Circuit comes into being, the new Circuit Meeting will become managing trustees of all Circuit property i.e. manses etc and all Circuit funds. One set of Annual Accounts will be required.
You should consult with the Conference Office to discuss the necessary changes in respect of charity registration. If you are in doubt in respect of the legal aspects of merging charities, always seek professional legal advice before taking any decision.
The Conference Office needs to be informed, as do the and Trustees for Methodist Church Purposes (once the final report and recommendations are agreed, first, then approved by Conference).
Care must be taken that bank accounts for the new merged Circuit are set up in good time to take care of standard payments such as assessment, electricity bills for the manses etc.
Informing the Payroll Team
They must be made aware of the closure and any changes to the contact details of the Treasurer of the combined Circuit and the nominated CFB or bank account for cash collections.
Circuit Model Trust Fund
The annual allowance per Circuit from the Circuit Model Trust Fund may be multiplied by the number of Circuits merging i.e. three in the first year of amalgamation.
The following information is from the Charity Commission website
Links to the Charity Commission website documents quoted below
General guidance from the Charity Commission about merging two charities is found here: https://www.gov.uk/guidance/how-to-merge-charities
For information about changing a charity’s name, see the following link:
The Charity Commission has provided this Checklist of 20 questions which trustees should consider prior to a merger: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/398566/Checklist_for_mergers.pdf
You should contact the Charity Commission if you need their advice on any aspect. In order to consider a proposal, the Commission will need to ask you certain questions. Below is the information they will need from you:
Background and contact details
- Name, registered number(s), a contact name and telephone number for all the charities involved.
- Will a working name be required? If yes, please provide details.
- How are the charities’ objects compatible?
- How would each charity further its charitable objects by merging? Highlight similarities and overlaps in activities or services to beneficiaries.
Decision making and advice;
- Have the trustees of all the charities involved in the merger made a collective decision to proceed? If so, please confirm and provide details.
- Have the trustees followed the charity’s governing document in making their decision?
- Do any of the charities involved in the merger have members? If yes, have the provisions of the governing document relating to members and voting been followed?
- Have all the charities involved begun formal due diligence exercises? Has this raised any major issues?
- Have the charities concerned taken professional advice? If yes, has this raised any issues?
- Is legal authority from the Charity Commission required in order for the merger to proceed?
To change your charity’s name, click on the following link and follow the step-by-step process: https://www.gov.uk/change-your-charitys-name
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