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Private & Confidential. Not for distribution. ©DWF LLP Title needs degree sign (°) added from the Insert/Symbol menu. This needs to be added at 28pt compared to the 24pt title. Academies Governance: Ive signed up; what am I in for? Academy Network Conference 10 th October 2013 Kevin Jaquiss DWF LLP Direct Dial:
Private & Confidential. Not for distribution. ©DWF LLP Running a company may be new, but neednt be something to unduly worry about This presentation will cover: –the basics of how companies work –directors duties –academy trust structures Looking at some of the areas we commonly find cause confusion De-mystifying the process 2 Dont panic!
Private & Confidential. Not for distribution. ©DWF LLP … a charitable company limited by guarantee a charity –exempt from registering with the Charity Commission but still a charity a company –registered with Companies House, subject to the Companies Act and in most respects is the same as any other company – it has a constitution, members & directors limited by guarantee –members instead of shareholders 3 An academy trust is…
Private & Confidential. Not for distribution. ©DWF LLP Articles of Association A companys constitution is called its articles of association These need to be approved by DfE during the conversion process and are lodged at Companies House when company is registered Can only be changed with consent of members They set out what the company can and cannot do Company must act in accordance with the articles of association, and cannot do things they do not permit
Private & Confidential. Not for distribution. ©DWF LLP Members and directors Companies have members and directors They can be the same people but arent the same thing Members: –ultimately own the company –have little day to day involvement in operation of the company –have certain powers and their consent is needed for some big decisions Directors –collectively are the board –exercise all the powers of the company that arent reserved for the members –Responsible for running the academy (but will delegate this to academys management team)
Private & Confidential. Not for distribution. ©DWF LLP The Board The people on the board are company directors Model articles confusingly refer to them as governors and, because academy trust is a charity, they are also sometimes referred to as trustees In the context of an academy board, these terms are often used interchangeably In eyes of the law though they are company directors and subject to provisions of Companies Act 2006
Private & Confidential. Not for distribution. ©DWF LLP Board composition Articles will set out parameters for the composition of the Board – academy trusts need to bear this in mind and not simply re-create old governing body unless the articles permit this Is considerable room for negotiation with DfE over the composition of the board: –Department requires that there are parent directors; –Model articles expect (but dont insist) there are staff directors; –No more than one third of the board can be academy trust employees –Model articles state that other directors will be appointed by the members
Private & Confidential. Not for distribution. ©DWF LLP Directors duties Directors duties are set out in the Companies Act 2006 Principal duties are to: –act within powers –promote success of company –exercise independent judgment –avoid conflicts of interest –not to accept benefits from third parties
Private & Confidential. Not for distribution. ©DWF LLP Conflicts of Interest Model articles of association reflect the Companies Act. They state that a director who: – has or can have any direct or indirect duty or personal interest – which conflicts or may conflict with his duties as a director must disclose that fact to the directors as soon as he becomes aware of it. also A director must absent himself from any discussions of the directors in which it is possible that a conflict will arise between his duty to act solely in the interests of the Academy Trust and any duty or personal interest.
Private & Confidential. Not for distribution. ©DWF LLP Directors potential liabilities Often a concern for school governors considering joining an academy board HOWEVER, circumstances in which directors can be held personally liable are very limited. Provided that directors: –discharge their directors Companies Act duties; –act in good faith; and –generally take care the risk of incurring personal liability is negligible This is particularly the case in academies where reporting obligations of the funding agreement provide extra safeguard against insolvency
Private & Confidential. Not for distribution. ©DWF LLP Structures Single academy trust –academy trust acts for just one school Multi academy trust –Academy trust acts for 2 or more schools –Can do this by using just one company for all schools; or –Creating a separate company for each school and an overarching umbrella parent company too
Private & Confidential. Not for distribution. ©DWF LLP Structures – Board and local governing bodies Common in a multi academy trust for each school to have its own local governing body The academy trusts board delegates some of its powers to the local governing body – how many of its powers it delegates is up to the board In legal terms though the local governing body is a sub-committee of the academy trust board, not a wholly autonomous organisation as it was prior to conversion
Private & Confidential. Not for distribution. ©DWF LLP Trading companies DfE sometimes require academy trusts establish these Academy trust itself may want to establish one Usually used by academies that have sports or similar facilities that are used by the wider community Means of insulating the academy trust from liabilities associated with the trading company
Private & Confidential. Not for distribution. ©DWF LLP Conclusion Robust governance is key to the efficiency of an any organisation Make it happen, dont just let it happen to you Dont sleepwalk through the process – make sure you understand whats happening and its implications If youre not clear, ask your advisers, its what theyre there for!
Private & Confidential. Not for distribution. ©DWF LLP Questions?
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