Firm stand on union changes

March 8, 1996

Given the importance of the issues raised in "Students wary of plan to turn union into firm" (THES, February 23), I should like to clarify some aspects relating to the recommendation that the University of Central England Student Union be incorporated as a company limited by guarantee. The National Union of Students regards this as serious and worrying for the officers of student unions generally.

It is strikingly clear on the face of the report by the university's student union review group that it did not take specialist or professional legal advice on the legal status of the student union, or apparently on the relationship of that to the change in structure that it is proposing or on the change itself. There are a number of apparent misunderstandings, anomalies and inconsistencies in the report.

The review group made the assumption that the student union is an "integral part of the university as a whole with a responsible and accountable role for its executive". It indicated that such responsibility and accountability is in some way owed to the university, without explaining why that should be, and at the same time apparently ignoring the fact that such responsibility and accountability is owed to the students as the members of the student union under the terms of its constitution, which is a contract between the members.

It also notably failed to make it clear that in law the student union is a charity, almost certainly exempt under the terms of relevant provisions of the Charities Acts, and so its officers, as charity trustees, will ordinarily be personally liable for breaches of trust under Charity Law.

The change from unincorporated association status to incorporation recommended by the report would not change the position as regards the personal liability of the officers. Their burden would be increased because they would have to comply with important provisions of the Companies Act 1985, Business Names Act 1985, Insolvency Act 1986, Company Directors Disqualification Act 1986 and the Companies Act 1989.

A recently published report commissioned by the National Council for Voluntary Organisations and the Charity Law Association makes clear that existing structures and provisions under company law are generally not suitable for charitable bodies and they really require an entirely new structure and provisions.

Meanwhile, the report of the review group at the University of Central England does not make it clear what the problem is for which it is proposing incorporation as the solution. It is believed that at another institution incorporation is being proposed as a means of further distancing the student union from its parent institution. That is not the purpose at UCE. There the purpose is to make the incorporated student union a subsidiary of the university corporation, but it is not at all clear how that could be achieved if the student union is incorporated as a company limited by guarantee and not by shares, as has been proposed.

Even if the student union were incorporated and the university had "the equivalent of a golden share in the company", as proposed, there would, according to the report, "need to be a financial memorandum laying down the relationships between the university and the Student Union Company".

There could of course be such a memorandum now without waiting for, or perhaps requiring, incorporation, and that could be annually reviewed and endorsed on behalf of both the university and the student union. There are several important immediate questions to be resolved with the Charity Commission as regards the students' union's existing charitable status, and those should be addressed and resolved in the case of every student union before incorporation is even completed.

The NUS will be obtaining counsel's opinion on relevant specific questions, with a view to holding a full seminar or conference on the whole issue for student unions and their parent institutions.

Jim Murphy President National Union of Students

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