At our meeting at the end of October I promised to share my correspondence with Paul Cowie, the chief executive of the Rural Design Centre, which in partnership with CAN is leading on the solar panel NCEL project engaging with Northumberland village halls. Please find it below.
Paul responded very speedily to answer a number of queries which I have received over the previous months from members clearly interested in adopting solar panels with battery storage. If members have any further questions I would be very happy to forward them. Just let me know.
George Courtice
November 18th 2024
Good afternoon Paul
Fiona Knox suggested I speak to you about a few queries some of our members have brought to my attention about NCEL. I could find no telephone number on your web site so decided to email you. I apologise for the delay since the NNVHC meeting on October 30th but I have been away for a week.
Like Andy Dean, my first reaction was “what’s not to like” from the point of view of a village hall committed to looking for alternative forms of energy consumption and the associated benefits to the climate crisis.
Having spoken to a few member halls which were at one stage contemplating partnering up with NCEL, a number of questions arose. The first area of concern relates to clause 5 titled Powers in your Registration as a new Co-operative back in September 2023. I had hoped that these rules may have changed in the last 12 months but Fiona recently sent me what appears to be the same document.
5 Powers
a) To borrow money from its Members and others in order to further its objects,
providing that the amount outstanding at any one time shall not exceed
£10,000,000.
(b) To mortgage or charge any of its property, including the assets and
undertakings of the Society, present and future, and to issue loan stock,
debentures and other securities for money borrowed or for the performance of
any contracts of the Society or its customers or Persons having dealings with
the Society.
Given that village halls are regulated by the Charity Commission, their management committees are naturally very reluctant to enter agreements which in any way might put their assets at risk. Reference to “borrowing money from its Members” and “to mortgage..any of its property” was drawn to my attention. Can you confirm that your Members would not, in any circumstances, be liable for any losses should things go wrong – the borrowings are not repaid or the mortgage company forecloses on NCEL?
Could it be that NCEL has no intention of exercising either of these powers described in 5a or 5b?
I have been reassured on several occasions that the liability of members is limited to their £1 share. But in the event that NCEL’s liabilities cannot be met, and ceases trading, is there a danger that the solar panels on the roofs of halls, leased to NCEL for up to 20 years, might be viewed as NCEL’s assets and removed?
Finally I see that in the preamble to your current invitation to apply for membership makes no mention of unincorporated bodies. see attached. This is important because community buildings in rural Northumberland are overwhelmingly unincorporated.
Eligibility
Membership of the Society is open to incorporated organisations and individuals involved in the ownership and/or operation of community buildings in Northumberland.
But your Rule 9 goes on to make it clear that unincorporated organisations are eligible. It would be unfortunate if potential members only read the preamble.
I look forward to hearing from you.
best wishes George
George Courtice
Secretary, NNVHC
http://www.nnvhc.org.uk
Dear George,
Thank you for your email and query. I can confirm the rules have not changed since the Community Benefit Society was formed.
It may help to provide some context to the formation of NCEL. During the early stages of forming NCEL the team were helped by Co-operatives UK. They provided the template rules which were adopted by NCEL when it was constituted. Since NCEL was constituted all bar one of the directors are trustees of the member community buildings. There is one independent director, Melanie Thomspon-Glenn from Newcastle University. All decisions about what NCEL does and does not do are therefore decided by the representatives of the community buildings.
I can confirm the NCEL is a separate legal entity, and the liability of members is limited in the same way as with limited companies. Members of a CBS are only liable up to the nominal value of the shares they hold in the society, i.e., £1. The only circumstances where members would be directly liable would be if they acted Ultra Vires or in a fraudulent way. NCEL holds directors’ liability insurance to cover any liability of the directors acting in the normal course of their office.
In terms of rule five there is no intention to borrow any money from Members now or in the future. This may be something the members will want to review in the future and delete if they feel it is not needed.
It is likely that at some point in the future NCEL may wish to borrow money on commercial terms. This may involve offering the assets of NCEL as security. Again, this is a decision for the board of directors who represent the community buildings at the time. At the moment NCEL is very successful in securing grant funding for all its activity and therefore there is no immediate need to borrow money on commercial terms.
We did consider including provisions for dealing with the equipment in the event the NCEL becomes insolvent in the legal agreements. However, at the point they would take effect, the insolvency of NCEL, it was considered any attempt to predetermine what happened to the assets would be set aside by the administrator or receiver. Therefore, in practice it is likely any administrator or receiver will look to sell the equipment to the community building at its residual value at the time of insolvency.
You are correct in that the equipment remains property of NCEL at all times and therefore there is a risk that in the event of NCEL becoming insolvent the equipment will be removed and sold. Before they sign any legal agreements, NCEL pays for the Community Building Trustees to have independent legal advice which explains the legal implications of the situation including the issue of insolvency of NCEL. If they feel they cannot accept the risk there is no obligation on the trustees to proceed.
Thank you for flagging the inconsistency in the membership rules. I’ll review these and make sure they all align and convey the same message.
I’d be happy to chat and discuss any of the issues outlined above in more detail.
Kind regards
Paul
Paul Cowie
Chief Officer
Rural Design Centre
North Northumberland Village Halls Consortium 