New merger register is launched

Thousands of dormant charities could be removed from the Charity Commission's register when a new register of mergers is launched this month.

Merged charities often retain a shell of the former organisations so that they are able to claim legacies left to one of the original charities. But new merger provisions, brought in under the second commencement order of the Charities Act, will allow charities going through qualifying mergers or incorporations to record the process on a new register of mergers maintained by the commission.

The provisions will allow them to wind up the original organisations but still benefit from legacies to them.

"All the administration involved in keeping a shell of a charity running is significant: you need trustees and you file annual reports," said Nicola Evans, senior associate at law firm Bircham Dyson Bell. "The new register will make it easier for charities to wind these shells up and keep records of transferring charities."

The register, which will record the names of merging charities, the names of the new entities and the dates when mergers took place, will be open to all charities that have previously gone through qualifying mergers.

However, registration is not compulsory unless a charity adopts a vesting declaration - another provision of the act that aims to simplify the transfer of assets from one charity to another.

Cancer Research UK, which was created in 2002 with the merger of the Cancer Research Campaign and the Imperial Cancer Research Fund, has already said that it does not plan to wind up the shells of the two charities from which it was formed.

"The new charity merger provisions mean that legacies left to charities before a merger has taken place can be transferred to the new charity," said Diane Scott, director of legal at Cancer Research UK.

"But there are some types of property that cannot be automatically transferred by virtue of the new act, such as property requiring third-party consent. As a result, we do not envisage winding up either the Imperial Cancer Research Fund or the Cancer Research Campaign at this stage."

However, Paul Marriott, chief executive of the Depaul Trust, which last month merged with fellow homelessness charity Catalyst NE, said the two charities would sign up to the register of mergers.

Some 2,300 charities contacted the commission about mergers between 1 July 2006 and 31 October 2007.

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