18 April 2009 - Finance Council Minutes

[Sean Hewitt]

AM stated that Chess Centre Limited is independent of the ECF

That is what the row is all about. In the days of the BCF, all the reporting indicated that the Permanent Invested Fund and hence Chess Centre Limited "belonged" to the BCF.

The chess community was led to believe that the ECF had inherited the assets and liabilities of the BCF which would include the PIF and CCL. It is now asserted this isn't so. Isn't this an issue for the Governance and Finance Committees to resolve sooner rather than later? Particularly if the BCF still "owns" around two hundred thousand pounds in assets, it means the BCF AGM should be given rather more attention than the 10 minutes that reports suggest.

But was this information pointed out at the meeting (after Sean's question at the time...) or is this extra level of detail just a point that has been added afterwards?

Carl - the draft minutes were changed at my insistence as they previously made no mention of Alan Martin's response to my question. I am pleased that they now appear to reflect his current position, although they don't actually reflect what he actually said at the meeting.

[E Michael White]

Which say the ECF's role is:

3.9. To maintain and increase a fund, known as the “Permanent Invested Fund”, to be permanently invested in the name of trustees in accordance with an approved trust deed.

And if that led to any doubts...

3.9 is a bit silly it may be appropriate sometimes to reduce the fund. For example if membership drops dramatically subscriptions may not cover fixed costs, in which case releasing some money from the PIF to finance a project to wind up the office could be beneficial longer term.

3.9 should really be changed to reflect that.

[Chris Majer]

Martin Regan wrote:

AM appears not have read the Articles of the company of which he is a director - the ECF. Which say the ECF's role is:

3.9. To maintain and increase a fund, known as the “Permanent Invested Fund”, to be permanently invested in the name of trustees in accordance with an approved trust deed.

And if that led to any doubts...

3.12. In furtherance of the above objects but not further or otherwise the Company shall have the following powers:-

3.12.1. To acquire part of or the entire undertaking of the British Chess Federation.

The CCL is owned by the PIF which in turn in controlled by the BCF which in turned is controlled by the ECF. If AM thinks he and Gerry have been given independent control of £35,000 of the ECF's money, he is utterly wrong.

Actually Martin it is you that are wrong. The ECF articles refer to an ECF PIF fund.
There is of course no ECF PIF as yet. The text in the ECF Memo & Arts was to give the ECF the power to create one.

The existing PIF is a BCF PIF. These assets were excluded from the transfer of BCF assets to ECF. CCL accounts are of course presented to BCF Council meetings not ECF Council meetings.

ECF, BCF and CCL are separate legal entities. The directors of CCL have control of CCL funds though of course are responsible to their shareholders – the BCF PIF trustees,

[David Sedgwick]

The existing PIF is a BCF PIF. These assets were excluded from the transfer of BCF assets to ECF.

Why were they excluded?

Was it made clear to Council in 2005 that significant powers would remain with the supposedly residual BCF?

[Chris Majer]

Sean wrote:

Carl - the draft minutes were changed at my insistence as they previously made no mention of Alan Martin's response to my question. I am pleased that they now appear to reflect his current position, although they don't actually reflect what he actually said at the meeting.

Actually there were a few other minor amendments in addition to Sean’s request for an insertion.

Sean was sent the text of what was going to be included in the draft minutes in advance of publication and I thought he was satisfied. I consulted my Board colleagues before coming up with the text included. While I do not recollect what Alan said, the text that Sean suggested lacked the precision of expression that Alan normally uses. Perhaps Sean can advise whether he thinks getting the exact text of Alan’s statement important. In the meantime perhaps the ECF should be investing in a recorder if it essential to record the exact text of statements at the meeting.

[Carl Hibbard]

In the meantime perhaps the ECF should be investing in a recorder if it essential to record the exact text of statements at the meeting.

Slightly beneath you Chris (a rare occurrence...) but if "something" was said by Alan then it should have been included - well at the least the gist of his statement anyway even if not word for word?

[John Upham]

I have obtained further clarification on these matters as follows :

1. When ECF acquired the undertaking of BCF the PIF was excluded. - see document below
2. There is no ECF PIF - the provision in the ECF Memo & Arts was to give the ECF the power to create one.
I anticipated that when the present Trust Deed expired it might then be appropriate for the BCF to transfer the funds to ECF to be put in a new trust but that is a matter for BCF at the time.
3. ECF does not control BCF. They are 2 legally separate entities which have similar but different members
Regards


THIS AGREEMENT is made the sixteenth day of July Two thousand and five

BETWEEN:

(1) British Chess Federation an unincorporated association whose office is at The Watch Oak, Chain Lane, Battle, East Sussex TN33 0YD acting by its President Gerard Francis Walsh (‘the Transferor’) and

(2) English Chess Federation whose registered office is at The Watch Oak, Chain Lane, Battle, East Sussex TN33 0YD (registered in England no 5293039 ) (‘the Transferee’)

WHEREAS

The Transferee has agreed with the Transferor with effect from 22nd October 2005 (‘the Transfer Date’) to acquire as a going concern all of the undertaking and assets of the Transferor (‘the Assets’) and to assume all of its liabilities and obligations (‘the Liabilities’)



NOW IT IS AGREED as follows:

1 Transfer

The Transferor agrees to transfer with full title guarantee and the Transferee agrees to acquire as a going concern with effect from close of business on the Transfer Date the Assets

2 Completion

2.1 Completion of the sale shall take place on the Transfer Date when the Transferor shall deliver to the Transferee all physical assets agreed to be transferred

2.2 Risk and property in and title to the Assets shall pass to the Transferee on the Transfer Date

2.3 The Vendor shall on or as soon as practicable after the Transfer Date deliver to the Purchaser all transfers assignments and novations (if necessary) of the Assets together with any relevant documents of title necessary to give effect to this agreement

3 The Liabilities

Subject to the consent where necessary of other contracting parties (which the parties to this agreement shall use all reasonable endeavours to obtain) the Transferee shall as from the Transfer Date assume perform and discharge all the Liabilities. If it proves impossible to obtain any such consent in relation to any of the Liabilities the Transferee will assume perform and discharge such Liability as agent for and on behalf of the Transferor

4 Employees

The Transferee agrees and acknowledges that the contracts of employment of all the employees of the Transferor at the Transfer Date shall not be terminated but shall continue to have effect as if originally made between the employees and the Transferee in accordance with and save as may be otherwise provided by the Transfer of Undertakings (Protection of Employment) Regulations 1981

5 Further assurance

The Transferor will do such acts and things and execute such deeds and documents as may be necessary fully and effectively to vest the Assets in the Transferor



6 Permanent Invested Fund

For the avoidance of doubt it is hereby declared that the provisions of this Agreement have no effect in relation to the Permanent Invested Fund of the Transferor which is held by the Trustees thereof for and on behalf of the Transferor

7 Survival of certain provisions

In so far as any provision of this agreement shall not have been performed at completion it shall survive and remain in full force and effect notwithstanding completion

[Sean Hewitt]

Sean wrote:

Carl - the draft minutes were changed at my insistence as they previously made no mention of Alan Martin's response to my question. I am pleased that they now appear to reflect his current position, although they don't actually reflect what he actually said at the meeting.

Actually there were a few other minor amendments in addition to Sean’s request for an insertion. .

It was more than a request Chris. I found it odd that Alan Martins response to my question was missing in it's entireity and I insisted that his response was duly minuted. As I advised, if the draft had not been changed in advance then I would have brought it up and had the minutes changed at the meeting itself.

Sean was sent the text of what was going to be included in the draft minutes in advance of publication and I thought he was satisfied. I consulted my Board colleagues before coming up with the text included. While I do not recollect what Alan said, the text that Sean suggested lacked the precision of expression that Alan normally uses. Perhaps Sean can advise whether he thinks getting the exact text of Alan’s statement important.

I think the fact that, at the meeting, AM made no mention of investing the CCL money with the advice of the PIF trustees is pretty important, yes. Considering that the minutes were originally silent on the matter of his response it's now odd that they suggest that he said something which he simply did not say. I have spoken to a number of delegates present and not one recalls him saying any such thing during the meeting.

The fact is that during the meeting AM simply said that the directors felt the money was better off where it was. After the meeting he approached me privately and said the directors had received independent tax advice that there would be a large tax liability in transferring the money. I told him that, if that were true, he and his fellow director should have presented that advice at the previous meeting (the 2008 AGM) and asked Council to reconsider its decision. To be fair to AM, he acknowledged that point as perhaps a better way to have proceeded.

I don't know if anyone has actually seen the advice he referred to but my own soundings indicate that it should be possible to construct a mechanism to minimise any (if any) tax liabilty.

[John Upham]

Following this debate prompts me to suggest a book for helpful reading :


http://www.amazon.com/Arguing-Idiots-Sm ... 1416595015

This my come in useful for the October 17th AGM...

I would also draw your attention to http://news.bbc.co.uk/1/hi/wales/north_east/8270460.stm

and you may wish to considers parallels between Dick / Richard and BCF / ECF

[Chris Majer]

Martin wrote:

Chris,

You are nearly right (or rather Mr Anderton is) but you miss the point entirely.

Council did not agree to what you now say is the reality.You have moved the goalposts.

Council told the management board in 04 that:

Council believes in principle that the BCF should become a Company Limited by Guarantee with a structure guaranteed to replicate so far as possible the structure and membership rights of the existing organisation.

In 05 it was told:

The name “British Chess Federation” is to be retained in order, inter alia, to prevent passing off and in order not to invalidate any potential legacies in existing wills.

Therefore it instructed the board:

That a Company Limited by Guarantee (“the Company”) be constituted to undertake the administration of chess in England in succession to the British Chess Federation (“BCF”).

Now we are informed that ECF Council has no rights insofar as its former assets are concerned.

I note, however, that ECF Council votes in the BCF Board

I note further that one of the main reasons for becoming a limited company was for the directors to be given the protection of limited liability. As the BCF is not a limited company, its directors (ECF directors) must therefore be personally liable for an association which we are now told controls all the assets.

We appeared to have achieved the wonderful feat of defying Council's express wishes - removing the assets from the control or influence of Council and removing much of the protection from the directors that was the driving force of the change.
CM wrote:

ECF, BCF and CCL are separate legal entities. The directors of CCL have control of CCL funds though of course are responsible to their shareholders – the BCF PIF trustees

Chris,

You are nearly right (or rather Mr Anderton is) but you miss the point entirely.

Council did not agree to what you now say is the reality.You have moved the goalposts.

Council told the management board in 04 that:

Council believes in principle that the BCF should become a Company Limited by Guarantee with a structure guaranteed to replicate so far as possible the structure and membership rights of the existing organisation.

In 05 it was told:

The name “British Chess Federation” is to be retained in order, inter alia, to prevent passing off and in order not to invalidate any potential legacies in existing wills.

Therefore it instructed the board:

That a Company Limited by Guarantee (“the Company”) be constituted to undertake the administration of chess in England in succession to the British Chess Federation (“BCF”).

Now we are informed that ECF Council has no rights insofar as its former assets are concerned.

I note, however, that ECF Council votes in the BCF Board

I note further that one of the main reasons for becoming a limited company was for the directors to be given the protection of limited liability. As the BCF is not a limited company, its directors (ECF directors) must therefore be personally liable for an association which we are now told controls all the assets.

We appeared to have achieved the wonderful feat of defying Council's express wishes - removing the assets from the control or influence of Council and removing much of the protection from the directors that was the driving force of the change.

No Martin you are completely wrong you should refer to:
“Explanatory Note About Constitution of the ECF:”

http://www.englishchess.org.uk/index.ph ... &Itemid=28

A document provided to Council at the time of the transition. Amongst other things it says:

The Objects also include the maintenance of a Permanent Invested Fund – 3.9. As mentioned in 1 above the BCF will retain the Permanent Invested Fund at least until the current Trust Deed expires in 2013. The BCF in practice receives the income from the Permanent Invested Fund annually and will be able to pass this to ECF. In 2013 a decision will have to be made about the re-investment of the BCF Permanent Invested Fund and this could be by a new ECF Trust Deed under 3.9.
It was on the basis of this document that the formation of ECF went ahead. I would also point out that Robert Richmond was Finance director t the time and believed that this was the correct policy was followed with respect to the PIF..

The BCF does not organise events and so it is hard to se any cause for litigation for the BCF directors. It does not and did not then control the PIF. The whole point of the PIF being independent is that were the ECF/BCF to go bankrupt the PIF assets would not be touched.

On the point that ECF Council appoints ECF directors – I think that you have identified a procedural inexactitude and shall take advise from John Philpott.
But note that the BCF Council meeting could appoint different or additional directors to those of the ECF if it so wished.

[Chris Majer]

Chris Majer wrote:
In the meantime perhaps the ECF should be investing in a recorder if it essential to record the exact text of statements at the meeting.

Carl wrote
Slightly beneath you Chris (a rare occurrence...) but if "something" was said by Alan then it should have been included - well at the least the gist of his statement anyway even if not word for word?

Alas like the Rev Sidney Smith in contradiction of Newton I have sunk due to my levity will others have risen due to their gravity.

[Chris Majer]

Sean wrote:

I think the fact that, at the meeting, AM made no mention of investing the CCL money with the advice of the PIF trustees is pretty important, yes. Considering that the minutes were originally silent on the matter of his response it's now odd that they suggest that he said something which he simply did not say. I have spoken to a number of delegates present and not one recalls him saying any such thing during the meeting.

The fact is that during the meeting AM simply said that the directors felt the money was better off where it was. After the meeting he approached me privately and said the directors had received independent tax advice that there would be a large tax liability in transferring the money. I told him that, if that were true, he and his fellow director should have presented that advice at the previous meeting (the 2008 AGM) and asked Council to reconsider its decision. To be fair to AM, he acknowledged that point as perhaps a better way to have proceeded.

Not all of the debate gets minuted, some things are not thought significant enough to record. I think that the reason that Alan's statement was not minuted initially was because the promise to provide a paper was the outcome of the debate and thought the most important thing – you disagreed and it is has been corrected.

Incidentally I am grateful to receive questions/suggested improvements to the minutes in advance so that time on the day can be utilised efficiently as possible.

[John Philpott]

Chris Majer wrote

But note that the BCF Council meeting could appoint different or additional directors to those of the ECF if it so wished.

I do not believe that this is the case under the BCF Constitution as it currently stands. The relevant clauses are:

5.1 which states "The Management Board shall manage the affairs of the Federation under the direction of Council."

5.2 which states "The Management Board shall consist of the Officers."

3.3 which defines "he Officers" as "the Directors (with the exception of any Director who elects in writing not to so serve and in that event the Board of English Chess Federation shall appoint replacement Directors) and the Secretary of English Chess Federation, for the time being, including the President thereof, who shall also be the President of the Federation".

[Peter Rhodes]

... and I thought it was exciting being on the Finance Committee at the Students Union, discussing whether to take away the clubs and societies grant from the "Islamic Students Association" because their support for Hizb'ut Tahrir contravened the Students Union Consitution !!

My student activist days were tame compared to ECF

[Simon Spivack]

Our politicians have a long way to go.

http://www.telegraph.co.uk/news/obituar ... chant.html

Ours can't even spell Sydney Smith.

Alas like the Rev Sidney Smith in contradiction of Newton I have sunk due to my levity will others have risen due to their gravity.

Brother, you and I are exceptions to the laws of nature. You have risen by your gravity, and I have sunk by my levity.'

Also:

You must not think me necessarily foolish because I am facetious, nor will I consider you necessarily wise because you are grave.

Returning to Piers Merchant and chess. When the scandal was at its height, I rang to recruit a player for a match. I spoke to his wife. She informed me that he was out. Quick as a flash I responded: "Of course, he's out chasing girls with Piers Merchant. I should have known not to ring!" I knew she wouldn't believe me. The next time I rang, her first words to me were: "he's never heard of Piers Merchant". I am afraid we both giggled. My player should have become a judge.