The Pharmaceutical Journal
Vol 268 No 7197 666
11 May 2002

Who owns the Society's assets?

We understand that the Society as a corporate body is the beneficial owner of its assets. Do the current members of the Society own any part of its assets, individually or collectively?

The Society, as a corporation, is the legal and beneficial owner of all of its assets, except any which are held on specific trusts. Assets on special trusts are held by the Society as trustee and can be applied only according to the terms of the relevant trusts. Any assets held on charitable trusts, and in particular any that are permanently endowed, would be subject also to charity law and to the jurisdiction of the Charity Commission. As a legal entity the corporation is separate from its members, who (subject to what follows) have no claim on the assets of the corporation, either individually or collectively.

If the Society were to be dissolved, to whom would the assets belong?

Although the provisions of insolvency legislation relating to the winding-up of unregistered companies are likely to apply to the Society, case law indicates that the court may be less likely to exercise its discretion to grant a winding-up order in the case of a chartered body set up for a public purpose. However, applying general corporate principles, if the Society were to be wound up, its creditors (which would include a member who was owed a debt personally) would have call upon its assets.

If, having satisfied all debts and liabilities, there was any residual property not held in special trusts, this would be distributable to the members only if expressly permitted under the Society's Charter. This contains no such provision. Although Paragraph 3 of Byelaw XIV refers to a Council power to order disposal of property and funds, this could not be legally exercised so as to apply those funds otherwise than to the objects of the Society, with which the private benefit of members would be incompatible.

To introduce a power of distribution, it would be necessary to amend the charter. This however would require the approval by Order in Council under Article 20, and it is inconceivable that the Privy Council (for which read Government Ministers of the day) would recommend allowance of such a proposal. In these circumstances, any residual property would arguably be bona vacantia, and would pass to the Crown. The Crown, however, has power — and could be asked — to waive its rights in favour of some other disposal, for example, transfer to another body with objects similar to those of the Society.

Is ownership of the assets linked to specific professional or regulatory functions that the Society undertakes by virtue of its powers and duties under legislation or under its Charter such that were the Society to cease particular functions, this would necessitate the transfer of part of the Society's assets to another body which would then undertake those functions that the Society had ceased to fulfil?

Unless money is given to the Society on specific trusts or for particular purposes, it has no obligation to do anything with its income except to apply it in pursuance of any or all of its objects. As I understand it, the Society's income derives from retention and other fees and trading, and it is not funded by the Government to undertake its regulatory roles. In these circumstances, if the Society ceased to undertake a particular regulatory or professional function I can see no basis on which it could be called upon to transfer any of its assets to another body. It would, however, need to assess the extent to which elements of its retention fee income could be sustained in such circumstances.