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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3670
Experience:  Solicitors 2 years plus PQE
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I work for a committee run preschool which will close in July

Customer Question

I work for a committee run preschool which will close in July as no one wishes to stay on the commitee. I am the manager and together with my deputy we have registered our selves as a CIC company to continue the preschool. The commitee are 100 per cent for this and want to give / donate the preschools assets to our company.
As the committee run preschool is a charity and we are a CIC we have been told that this is not possible. Is there away around this law, can the charity use the money befor closure for the good of the CIC preschool in the future?
We feel its time someone took on the charity commission and helped them recognise that CIC companies are they way forward.
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you for your question and welcome.

My name is AJ and I will assist you.

Does the Pre School have any creditors? What do its assets comprise of?

Kind regards

AJ
Customer: replied 3 years ago.
The assets are the preschool toys and equipment and around £4000. They have no debts.
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

If there are no debts then there should not be a problem transferring the assets to a new CIC company.

Presumably the assets were held on trust for the benefit of the pupils of the play school. When you dissolve the old play school you should ideally get the existing trustees (or committee members) to provide written consent that the assets can be donated or turned over to the new CIC company.

You will also probably need to pass a resolution of the shareholders of the new CIC company approving such a donation on the basis that you will be a director of the CIC and you will have had a connection to the old playschool making this donation.

I look forward to hearing from you.

Kind regards

AJ
Customer: replied 3 years ago.
The charity commission says this is not possible. Do you have evidence or know of someone who can prove it is?
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

On the basis of pure company law it is possible.

It may not be possible if the existing playschool is a registered charity? Is that the case?

Kind regards

AJ
Customer: replied 3 years ago.
Yes it is a charity that is the whole problem and why I am looking to find away around it.
Customer: replied 3 years ago.

the preschool is a registered charity, however as we are a like for like organisation and a non profit making company, I feel their must be some way of them transfering the assets over.

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

Are the assets only the school equipment? You do not intend on using the name or anything?

As a possibility you could consider licensing use of the assets from the old charity for a nominal yearly sum?

This would probably need clearance from the Charity Commission as well but it is a way of taking benefit of the assets without having to transfer ownership?

Kind regards

AJ
Customer: replied 3 years ago.
That would not be possible as the preschool charity as it is now will close in July. As the committee no longer want to run it.
Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

I am company law expert with some charities law experience.

I am going to opt out and open the question to other experts with additional charities law experience.

Kind regards

AJ