28 January 2010

Charity Commission Direct
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[ ] 2010 / By Email:

Dear Sirs

D R A F T

The Academy of Medical Royal Colleges (No. 1056565)

The Academy has conducted a governance review over the past 24 months and as a result has adoptednew Articles of Association. Enclosed with this letter are:

(A)The new Articles of Association, adopted subject to obtaining the Charity Commission’s consent, pursuant to Section 64 of the Charities Act 1993, to the regulated alterations;

(B)The previous Memorandum and Articles of Association of the Academy;

(C)The minutes of the meeting where the Special Resolution was passed adopting the new Articles, subject to obtaining the Charity Commission’s consent to the regulated alterations.

The Academy requests the Commission grant its consent, pursuant to Section 64 of the Charities Act 1993, to making the regulated alterations detailed in this letter, and as set out in the new Articles of Association enclosed.

New governance structure

The new governance structure is a significant departure from the existing arrangements, and the new Articles include changes made to update the Articles following implementation of the Companies Act 2006 and the Charities Act 2006, and deliver structural changes to the governance of the Academy.

There has been extensive consultation among the members of the Academy and all the members have indicated their consent to these structural changes by letter in advance of the resolution formally adopting the new Articles.

Previously, the members of the Academy were the Presidents of the Medical Royal Colleges and a number of the Colleges’ Faculties, and these individuals also served as the charity trustees of the Academy. The new Articles now provide for the following:

(i) the members of the Academy to be the Medical Royal Colleges and a number of Faculties (initially there will be 21 members initially), each of which will be represented at general meetings of the Academy by their President (or equivalent);

(ii)the Trustee body will become much smaller, and will include a mix of representatives of the Medical Royal Colleges and Faculties and independent members (including medically and non-medically qualified individuals);

(iii)a Council comprising the Head Officers of the Medical Royal Colleges and their Facultieswould meet regularly to prepareand consider papers on healthcare and would also prepare the strategy of the Academy, which would be considered and approved by the Trustees on an annual basis.

Under the new structure the Trustees would have the general management and control of the Academy and would take responsibility for issues of governance, approving the Academy’s strategy, finance and risk management but would delegate much of the day to day work of the Academy to the Council and the Academy’s staff. However, the Trustees would of course retain the general oversight of the Academy’s work.

The Academy believes that the proposed new arrangements are beneficial because they will provide for:

  • A Board of Trustees with a mixture of representatives from the Royal Colleges and Faculties and independent members (both medically and non-medically qualified); and
  • A Council, which will include nominated representatives of the member organisations, which will focus on medical and healthcare policy issues.

Regulated Alterations

No changes have been made to the Academy’s objects, but there have been a number of other changes requiring the Charity Commission’s consent, as follows:

Trustee payments / benefits:Article 5 Benefits to Members and Trustees

Article 5 is similar to Clause 4 of the Memorandum of Association but inserts a number of new powers authorising benefits to Trustees inparticular circumstances. The reason why it is considered to be in the Academy’s best interests to insert these new powers is set out below.

(i) Article 5.1.2 (receipt of interest at a reasonable rate on money lent to the Academy)

The Trustees consider the addition of this power to be beneficial to the Academy as although there are no plans for a Trustee to loan money to the Academy, the Academy wishes to have the flexibility to borrow from Trustees at a reasonable rateif, at any time in the future, it is considered to be in the Academy’s best interests to do this.

(ii) Article 5.1.4 (receipt of benefits in the capacity of beneficiaries)

The Academy wishes to ensure any benefits Trustees may receive as beneficiaries of the Academy are authorised within the Articles. Clearly, institutions with which (some of) the Trustees are associated will benefit from the work of the Academy. There may also be circumstances in which Trustees could be said to benefit directly or indirectly as beneficiaries, and the Academy wishes to ensure any such benefits are duly authorised by the Articles.

(iii) Article 5.3 (power for a Trustee to enter into a contract with the Academy to supply goods or services)

This Article is highly similar to the power in Section 73A of the Charities Act 1993 enabling a charity to engage a trustee to provide services and goods related to the provision of services. However, this Article refers to “goods and services”in place of “services and goods connected with the supply of services”. The Academy considers this clause to offer the Academy flexibility to take advantage of a Trustee’s skills where appropriate, and this clause also replaces the professional charging clause, in Clause 4(c) of the Academy’s Memorandum.

(iv) Article 5.2.3 (receipt of an indemnity in respect of liabilities properly incurred) and Article 18.

The Trustees of the Academy are currently entitled to an indemnity from the Academy; subject to section 310 of the Companies Act 1986 (see Article 11). The wording of the indemnity provision has been updated to reflect the new Companies Act 2006. To the extent the Commission considers this is a regulated alteration the Trustees request the Commission provides its consent to this amendment.

Amending the dissolution provisions: Article 22 Dissolution

The dissolution clause is currently set out in Clause 7 of the Memorandum of Association. This clause has been modernised and slightly amended. In particular the provision permitting a transfer of assets in expectation of dissolution to a charity that restrict the distribution of income to an extent at least as great as the Academyhas been removed and replaced with a provision permitting the assets to be transferred to any charity or charities with the same or similar objects to the Academy.

The Academy considers it is in the best interests of the Academy to provide greater flexibility in the event of dissolution, especially as there may only be a relatively small number of charities with similar objects and the Academy wishes to have the flexibility to ensure in the event of dissolution it is able to provide any remaining assets to a charity it considers most capable of advancing the Academy’s objects.

We look forward to hearing from you.

Yours faithfully

1FARDM1-1485403.3