Office of Public Sector Information

Part VI Reorganisation of Endowments

104 Register of educational endowments

(1)[F1It shall be the duty of the Secretary of State] to keep a register of all educational endowments, which shall contain such information as may be prescribed, and shall be open to public inspection at all reasonable times.

(2)Except as hereinafter provided, it shall be the duty of the governing body of every educational endowment F2, to furnish the [F3Secretary of State] with such information about the endowment as may be prescribed by regulations made by the Secretary of State [F4in such manner as may be so prescribed].

(3)This section shall not apply to a university endowment, to a theological endowment, or to the Carnegie Trust, and regulations made under this section may exempt any endowment or class of endowments from any of the provisions of this section.

105 Schemes for reorganisation of educational endowments

(1)Subject to the provisions of this section, [F1an education authority, whether upon an application made to them or not, may, if they think fit,] prepare draft schemes for the future government and management of educational endowments, which schemes may provide—

(a)for altering the purposes to which such endowments are applied or applicable and the conditions and provisions regarding such application;

(b)for the application of the capital or income of such endowments to such educational purposes, mental oor physical, moral or social, as the [F2education authority think] fit having regard to the public interest and to existing conditions, social and educational: Provided always that the capital of any such endowment shall not be expended except on a purpose to which capital may properly be devoted;

(c)for grouping, amalgamating, combining or dividing any such endowments;

(d)for altering the constitution of the governing body of any such endowment, or uniting two or more existing governing bodies or establishing new governing bodies with such powers as shall seem necessary, and for incorporating any governing body, whether old or new, and for dissolving any governing body whose endowment is transferred to another governing body; and

(e)for altering the powers as to the investment of the funds of any such endowment.

[F3Provided that in considering whether to exercise, in relation to any endowment, the power conferred upon them by this subsection an education authority may have regard to whether the exercise of the power would prejudice the proper discharge by them of their functions under this Act apart from this section or their functions as local authority under any enactment.]

(2)It shall be the duty of the [F4education authority] in reorganising any endowment in pursuance of the powers conferred by this Part of this Act to have special regard—

(a)to the spirit of the intention of the founders as embodied either—

(i)in the original deed constituting the endowment where it is still the governing instrument, or

(ii)in the scheme approved under any Act, or in any provisional order affecting the endowment;

(b)to the interest of the locality to which the endowment belongs;

(c)to the possibility of effecting economy in administration by the grouping, amalgamation or combination of any two or more endowments; and

(d)to the need for continuing the provision from endowments of competitive bursaries at universities, central institutions, colleges of education or other educational institutions of a similar character.

(3)In every scheme which abolishes or modifies any privileges or educational advantages to which a particular class of persons is entitled, whether as inhabitants of a particular area or as belonging to a particular class in life or otherwise, the [F4education authority] shall have regard to the educational interests of such class of persons:

(4)The powers of the [F4education authority] under this section shall not extend—

(a)to a university endowment, or

(b)to the Carnegie Trust, or

(c)to a theological endowment, or

(d)to a new endowment; [F5, or

(e)to an endowment which relates in whole or in part to an educational establishment not managed by the education authority who would, but for this paragraph, be empowered under this section to exercise in relation to that endowment the functions conferred by this section, or

(f)to an educational endowment having no limitation either as to the area in which any educational establishment to which it relates is situated or as to the area in which any of its beneficiaries are required under its governing instrument to reside or with which they are so required to have some other connection.]

[F6Provided that tis subsection shall not apply to an endowment which falls within paragraph (e) above solely by reason of the inclusion among its purposes of the award of prizes, bursaries or similar benefits to persons who attend or have attended educational establishments or other institutions not managed by an education authority.]

[F7(4A)The Court of Session shall have power, on the petition of—

(a)the governing body of any endowment to which subsection (4) above applies or, in the case of the Carnegie Trust, the Trustees;

(b)in relation to an endowment to which paragraph (e) of that subsection applies and which relates only in part to an educational establishment not managed by the education authority referred to in that paragraph, the education authority, in respect of the part of the endowment in relation to which they would, but for the said paragraph (e), be empowered under this section to exercise the functions conferred by this section,

to give effect to draft schemes for the future government and management of the endowment or, as the case may be, the Trust, which schemes may provide for any of the purposes set out in paragraphs (a) to (e) of subsection (1) above and, in exercising the power conferred on it under this subsection, the Court shall have special regard to the matters specified in paragraphs (a) to (d) of subsection (2) above.

(4B)Where a petition under subsection (4A) above relates to an endowment to which paragraph (e) of subsection (4) above applies and which relates only in part to an educational establishment not managed by the education authority referred to in that paragraph the Court of Session shall, before making an order under the said subsection (4A)—

(a)where the petition was presented by any body referred to in paragraph (a) of the said subsection (4A), cause the petition to be served on the education authority;

(b)where the petition was presented by an education authority under paragraph (b) of the said subsection (4A), cause the petition to be served on the governing body of the endowment to which the petition relates.

(4C)The governing body of an endowment in relation to which an education authority are empowered under this section to exercise the functions conferred by this section may, if the authority refuse to exercise their power under subsection (1) above in relation to the endowment on the ground that such exercise would prejudice the proper discharge by them of their functions under this Act apart from this section or their functions as local authority under any enactment, present a petition to the Court of Session, and subsections (4A), (4B) and (4D) of this section shall apply to such a petition.

(4D)Nothing in the M1Trustee Investments Act 1961 shall affect the power of the Court under subsection (4A) above to confer wider powers of investment than those conferred by that Act or affect the extent to which the power of the Court under that subsection is to be exercised.]

(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F8

(6)After 30th June 1976 any reference in a scheme made or approved under Part VI of the Act of 1946 or under Part VI of the Act of 1962 (reorganisation of educational endowments)—

(a)to a certificated teacher shall be construed as a reference to a teacher registered under the M2Teaching Council (Scotland) Act 1965;

(b)to a children’s committee shall be construed as a reference to a social work committee established under section 2(1) of the M3Social Work (Scotland) Act 1968;

(c)to the Scottish Counties of Cities Association or to the Association of County Councils in Scotland shall be construed as a reference to the Convention of Scottish Local Authorities.

[F9(7)In this section, “education authority” means, in relation to an educational endowment, the education authority for the area in which any educational establishment to which the endowment relates is situated or, where the endowment relates to no particular such establishment, the education authority for the area in which the beneficiaries of the endowment are required under its governing instrument to reside or with which they are so required to have some other connection.]

106 Sale of land belonging to educational endowments

(1)Where it appears to the [F1Court of Session] to be desirable that a scheme under this Part of this Act should make provision for the sale of any land forming an endowment or part thereof and for the application of the proceeds of sale in accordance with the provisions of the scheme, but that such provision cannot be made by reason of the third proviso to section 2 of the M1School Sites Act 1841 (which provides that if any land granted in accordance with the provisions of that section ceases to be used for the purposes mentioned in that Act, the land shall revert to the grantor), or by reason of any condition of a similar nature relating to the land in any Act, deed or other instrument, [F1the Court may order] that the said proviso or condition shall not have effect in relation to the land:

(a)that the person to whom the land would revert in accordance with the said proviso or condition cannot after due inquiry be found; or

(b)that, if that person can be found, he has consented to relinquish his rights in relation to the land under the said proviso or condition, and that, if he has consented so to do in consideration of the payment of a sum of money to him, adequate provision can be made for the payment to him of that sum out of the proceeds of the sale of the land.

(2)A scheme under this Part of this Act relating to any endowment which includes land in respect of which an order has been made under subsection (1) above may make provision for the payment out of the proceeds of the sale of the land of any sum which is payable to any person in consideration of the relinquishment of his rights in relation to the land under the said proviso or condition.

(3)For the purposes of this section, any land conveyed under section 2 of the M2School Sites Act 1841, or held under a condition of the nature referred to in subsection (1) above, other than land forming the site or part of the site of an educational establishment under the management of an education authority or of any building ancillary to such an educational establishment, shall be deemed to be an educational endowment or part thereof notwithstanding anything in the third proviso to that section or in the said condition.

107 Educational endowments applicable in part to non-educational purposes

(1)Where an endowment is an educational endowment [F1to which the powers conferred by section 105 of this Act extend], and part of it is applicable or applied to other charitable purposes, the scheme shall be in conformity with the provisions of subsections (2) to (6) below (except so far as the governing body of such endowment assent to the scheme departing therefrom).

(2)The proportion of the endowment or annual income for the time being derived therefrom which is applicable to such other charitable purposes shall not be diverted by the scheme from such purposes unless in the opinion of the [F2education authority having power to exercise, in relation to that endowment, the functions conferred by section 105 of this Act]—

(i)there are no persons who are entitled to benefit out of such part of the endowment; or

[F3(ii)the purposes of such part of the endowment have become obsolete or useless.]

(3)The proportion of the endowment or annual income for the time being so applicable to such other charitable purposes shall be deemed to be the proportion which, in the opinion of the [F4education authority], is the proportion which has according to the average of [F5the five most recent years for which accounts are available] been appropriated as regards capital or applied as regards income to such purposes, or if that proportion differs from the proportion which ought to have been so appropriated or applied according to the express directions of the instrument of foundation or the decree of any competent court or the statutes or regulations governing such endowment, the proportion applicable to such other charitable purposes shall be the proportion which ought, according to the express directions of such instrument, or such decree or such statutes or regulations, to have been appropriate or applied to such other charitable purposes.

(4)If the proportion applicable to other charitable purposes amounts to or exceeds one half of the whole of the endowment, the governing body of such endowment existing at the date of the scheme shall, so far as regards its non-educational purposes, remain unaltered by the scheme.

(5)Where the governing body remains so unaltered, that body shall pay or apply for educational purposes such proportion as under the former provisions of this section is applicable to those purposes, or such less sum as may be fixed by the [F6education authority].

(6)When any portion of the endowment or the annual income of such portion has been accumulated and not applied to any purpose, the [F6education authority] shall determine whether, and in what proportion, such portion or income is to be considered for the purposes of this section as having been appropriated or applied for educational purposes or for other charitable purposes.

(7)Subject to the foregoing provisions of this section, the [F6education authority] shall have power by any scheme to deal with any such endowment, and with the governing body thereof, in the same manner in all respects as if it were an endowment applied wholly to educational purposes.

108 Non-educational endowments

(1)Where the governing body of any endowment (not being an educational endowment) are of opinion that it is expedient that the endowment should be [F1reorganised] on any of the following grounds, that is to say:—

(a)that there are no persons entitled to benefit out of the endowment; or

(b)that the purposes of the endowment have failed altogether or have become obsolete or useless or prejudicial to the public welfare, or are otherwise sufficiently provided for, or are insignificant in comparison with the magnitude of the endowment, or are not substantially beneficial to the class of person for whom the endowment was originally intended; or

(c)that it is impossible, owing to the inadequacy of the endowment or to the impracticable character of the founder’s intentions, to carry these intentions into effect,

the governing body may [F2present a petition to the Court of Session to give effect to a draft scheme for the future government and management of the endowment and thereafter such endowment may be dealt with in all respects as if it were included amongst those specified in section 105(4) of this Act.]

[F1108A Courts’ power to give effect to reorganisation scheme on petition of Lord Advocate]

Where the Lord Advocate is of opinion on any such ground as is specified in [F2section 108 of this Act] that a scheme should be [F3made] for the future government and management of any endowment F4, he may present a petition to the Court of Session for such a scheme, and on any such petition the Court shall have power to [F3make] a scheme for the future government and management of the endowment and for the application of the capital or income of the endowment to any purposes, as nearly as may be analogous to those contained in the governing instrument, as the Court shall think fit.

109 Provisions regarding interests of individuals

(1)Where at 3rd August 1928, any individual held a vested interest in any office, place, employment, pension, compensation allowance, bursary or emolument under or arising out of an endowment being dealt with in a scheme, [F1made under this Part of this Act, the education authority or, as the case may be, the Court] shall in such scheme save or make due compensation for the said vested interest.

(2)Every interest, right, privilege or preference which any person may acquire or may have acquired since 3rd August 1928, in or relative to any endowment, or in the governing body thereof, or as member of any such governing body, or in or relative to any office, place, employment, pension, compensation allowance, bursary or emolument in the gift of any such governing body, shall be subject to the provisions of any scheme made under this Part of this Act.

110 Provisions as to beneficiaries and teachers

(1)In [F1preparing a draft] scheme for any endowment, the [F2education authority] shall—

(a)provide that in making a selection from amongst those eligible for the benefits of the endowment, due regard shall be paid to [F3educational need], diligence, attainment and promise as ascertained in such manner as the [F2education authority] shall determine, and

(b)[F4unless in any particular case they consider it inexpedient to do so,] provide for extending to both sexes the benefit of the endowment.

(2)[F5Every scheme for an educational endowment] shall make provision for the application in the case of the dismissal of a registered teacher of the provisions of section 88 of this Act, with the substitution of the governing body for the education authority, and with any other necessary modifications.

(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F6

(4)Any such scheme—

[F7(a)given effect to by the Court of Session; or

(b)prepared by an education authority with respect to a school other than one which has been transferred to them under section 16 or provided under section 17(2) of this Act,]may contain provision for the removal of any religious test or qualification applicable to teachers.

111 Accounts and audit of educational endowments

(1)It shall be the duty of the governing body of every educational endowment administered under a scheme made by the Court of Session which provides for the audit of the accounts of that endowment F1, or administered under a provisional order made under the Act of 1878, or under a scheme made under the Act of 1882, the Acts of 1928 to 1935, Part VI of the Act of 1946, Part VI of the Act of 1962 or under this Part of this Act, other than any such endowment to which section 106(1) of the M1Local Government (Scotland) Act 1973, applies, to comply with the following provisions of this section.

(2)The governing body of every endowment to which this section applies shall keep proper accounts and other records in relation to the functioning of that body, and shall prepare in respect of each financial year a statement of account F1

(3)The accounts of every endowment to which this section applies shall be audited each year by an auditor appointed by the governing body F1; [F2and no person shall be appointed auditor as aforesaid unless he is eligible for appointment as a company auditor under section 25 of the Companies Act 1989.]

(4)(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F3