Schools applying for Academy Status
Legal process of forming an Academy
The agreements we typically advise on are:
Forming the Academy
The academy or academies are formed by the discussion, creation and registration (at Companies House) of the Memorandum and Articles of Association of a new (charitable) guarantee company. This is the legal 'person' which 'is' the new academy. The new company runs the school and owns all its property. There will be quite a lot to discuss here particularly in relation to the very practical (and maybe political) issues surrounding the identification and appointment of governors/directors including staff and parent governors.
Once the form of the documentation is settled we can use our on-line connection to company formation agents to form and register the new company(ies) within 24 hours.
Funding Agreement
In many ways this is the most important document as without its terms being acceptable the whole project is unlikely to proceed. It forms the basis for the long term relationship with the academy's new funder, the Department for Education ('DfE'). It is also probably the document which is least likely to need legal input. We would advise if requested but would not be surprised if a converting school fully negotiated this solely with financial rather than legal advice.
There are DfE basic pro-forma versions tailored to single or multi academy schemes. For Options Two and Three there will be separate funding agreements for each academy whereas for Option One there will be a single agreement but with supplements for each of the schools.
Commercial Transfer Agreement
The Commercial Transfer Agreement ('CTA') is the agreement dealing with the transfer of assets and liabilities from the governors of the old school or schools to the new academy or academies. It has the Local Education Authority ('LEA') as an extra party and the Department for Education ('DfE') requires a converting school to try to agree terms with the Local Education Authority. Our experience is that an LEA will seek to amend the document, very substantially, so as to override a statutory provision that says all liabilities of a defunct governing body fall on the local authority. The LEA will probably seek to make the Commercial Transfer Agreement put these liabilities on the new academy(ies).
Depending on circumstances, the final settlement of the Commercial Transfer Agreement may be a much more time consuming exercise than the other documentation. This has certainly been the case for other schools in our experience.
Land ownership documentation
When the Secretary of State for Education signs the Funding Agreement, an order will be made in relation to land ownerships. Depending on the pre-conversion category of school, the Secretary of State will either require relevant freeholds to be transferred; or require that the freehold owner of the school or schools - the Local Education Authority - grants the new academy(ies) 125 year leases of the relevant school sites. The leases are fairly standard documents and the basic conveyancing process should be straightforward. There are different arrangements for church schools.
It is worth noting that although the basic lease term is 125 years it can be brought to an end if the relevant Funding Agreement is terminated.
Miscellaneous Supplemental Declaration
There may be other matters necessitating supplemental documentation. Some will comprise ‘novation agreements’ where the current governing body has contracts with third parties for the supply of services or facilities and those contracts have to be ‘novated’ by fresh agreements under which the new academy or academies take the place of the old governing bodies to ensure that there is a continuance of relevant services and facilities. We would need to investigate and discuss where such agreements would be necessary.
For further information about the legal process of converting to an academy contact Christopher Wacher on 01227 763939.
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