School Companies Regulations 2002

JurisdictionUK Non-devolved
CitationSI 2002/2978

2002 No. 2978

EDUCATION, ENGLAND

The School Companies Regulations 2002

Made 26th November 2002

Laid before Parliament 12th December 2002

Coming into force 20th January 2003

The Secretary of State for Education and Skills, in exercise of the powers conferred upon him by sections 12 and 210(7) of the Education Act 20021hereby makes the following Regulations:

1 Preliminary

PART 1

Preliminary

S-1 Citation and commencement

Citation and commencement

1. These Regulations may be cited as the School Companies Regulations 2002 and shall come into force on 20th January 20032.

S-2 Interpretation

Interpretation

2.—(1) In these Regulations–

“the 2002 Act” means the Education Act 2002;

the 1998 Act” means the School Standards and Framework Act 19983;

“the constitution of a school company” means the company’s memorandum and articles of association;

“executive director” means a director who provides services to the company for remuneration or other benefits whether or not under a contract of service;

“a further education institution” means—

(a) an institution which has been designated by order of the Secretary of State under section 28 of the Further and Higher Education Act 19924; or

(b) an institution conducted by a further education corporation as defined by section 17(1) of the Further and Higher Education Act 1992;

“a higher education institution” means—

(a) an institution conducted by a higher education corporation as defined by section 90(1) of the Further and Higher Education Act 1992;

(b) a university; or

(c) an institution which has been designated by order of the Secretary of State as eligible to receive funding from a higher education council under section 129 of the Education Reform Act 19885;

“non-executive director” means a director who does not provide services to the company for remuneration or other benefits;

“a relevant local education authority” means a local education authority which maintains any schools whose governing bodies are members of the school company;

“a school company” means a company to which these Regulations apply in accordance with Regulation 4;

“supervising authority” means the local education authority designated in accordance with Part 4 of these Regulations to supervise a school company.

(2) For the purposes of these regulations a school is “subject to special measures” if–

(a)

(a) a report of an inspection of the school has been made under either Part 1 of the School Inspections Act 19966or section 65 or 83 of the Learning and Skills Act 20007in which the person making it stated that in his opinion special measures were required to be taken in relation to the school; and

(b)

(b) either that person was a member of the Inspectorate or the report stated that the Chief Inspector agreed with his opinion; and

(c)

(c) the report has not been superseded by any subsequent report in which the person making it stated that in his view special measures were not required to be taken relation to the school.

(3) For the purposes of these regulations a school “has serious weaknesses” if–

(a)

(a) a report of an inspection of the school has been made under Part 1 of the School Inspections Act 1996 in which the person making it stated that in his opinion the school had serious weaknesses; and

(b)

(b) that report has not been superseded by a subsequent report stating that in the opinion of the person writing the report the school either, no longer has serious weaknesses, or stating that special measures are required to be taken in relation to the school.

S-3 Definition of “an agreement under the private finance initiative”

Definition of “an agreement under the private finance initiative”

3.—(1) For the purposes of these Regulations “an agreement under the private finance initiative” means an agreement to which paragraph (3) or (4) of this regulation applies.

(2) In this regulation–

“asset” means–

(a) any tangible asset, including any land, building or equipment; or

(b) any computer software;

“works” means the construction, enhancement, replacement or installation of an asset.

(3) This paragraph applies to an agreement where–

(a)

(a) consideration is received by the governing body of a maintained school under the agreement and that consideration includes–

(i) the provision or making available of an asset or the carrying out of works for the purposes of, or in connection with, the discharge of a function of the governing body; and

(ii) the provision of services for the purposes of, or in connection with, the discharge of the same function;

(b)

(b) the governing body do not give to any other person any indemnity or guarantee in respect of any liabilities of the person with whom they enter into the transaction (whether those liabilities are incurred in respect of the transaction or otherwise);

(c)

(c) the consideration given by the governing body under the transaction includes the payment of fees by instalments at annual or more frequent intervals;

(d)

(d) the fees are determined in accordance with factors which in every case include–

(i) standards attained in the performance of the services; or

(ii) the extent, rate or intensity of use of the asset, or as the case may be of the asset which is constructed enhanced, replaced or installed under the transaction; and

(e)

(e) the first instalment of fees falls to be paid after the services have started to be provided.

(4) This paragraph applies to an agreement where private finance initiative credits are given to a local authority in respect of that agreement.

S-4 Companies governed by these Regulations

Companies governed by these Regulations

4. These Regulations apply in relation to any company whose members include the governing body of a maintained school which has exercised its powers under section 11 of the 2002 Act to become a member of the company, except where–

(a) the main purpose of the members in forming the company is to enter into or facilitate agreements under the private finance initiative; and

(b) one of the company’s objects is to enter into or facilitate agreements under the private finance initiative8.

2 Restrictions on School Companies

PART 2

Restrictions on School Companies

S-5 Persons who may be admitted to membership of School Companies

Persons who may be admitted to membership of School Companies

5.—(1) The constitution of a school company must provide that the company must not admit to its membership any person who is not listed in paragraph (2) below.

(2) The following persons may be members of a school company–

(a)

(a) the governing body of a maintained school;

(b)

(b) a local authority in England;

(c)

(c) the proprietor of an independent school or the governing body of an independent school (if the governing body has legal personality), which provides full-time education for five or more pupils of compulsory school age;

(d)

(d) a company which has as a significant proportion of its business the provision of education or educational or ancillary services or goods;

(e)

(e) the governing body of a further or higher education institution (within the meaning of section 90(1) of the Further and Higher Education Act 1992) if it has legal personality;

(f)

(f) any individual who is not excluded by Schedule 1.

S-6 Restriction on entering into contracts in which a director of the company has an interest

Restriction on entering into contracts in which a director of the company has an interest

6.—(1) If the constitution of a school company permits it to enter into contracts in which a director of the company has an interest, then the constitution shall provide that the company may only enter into such a contract if:–

(a)

(a) the goods or services supplied to the company under the contract are required by the company; and

(b)

(b) the nature and level of consideration is no more than is reasonable in relation to the value of the goods or services.

(2) For the purposes of paragraph (1), a director has an interest in a contract if the following conditions are met and one of the conditions in paragraph (3) is met:–

(a)

(a) the contract is for the supply of goods or services in return for a payment or other material benefit; and

(b)

(b) the contract is not for the supply of services within the scope of the ordinary duties of the director.

(3) The conditions in this paragraph are that:–

(a)

(a) the director is a party to the contract;

(b)

(b) a firm of which the director is a partner is party to the contract; or

(c)

(c) a company or unincorporated association of which he is a member, is a party to the contract and where the company of which he is a member is limited by shares, he is a member holding more than 1% of the issued share capital of the company.

S-7 Procedure in meetings of the directors if a director has an interest in a matter to be discussed

Procedure in meetings of the directors if a director has an interest in a matter to be discussed

7. The constitution of a school company must provide that whenever a director has an interest, whether pecuniary or non-pecuniary, in a matter to be discussed at a meeting of the directors or a committee, the director concerned must:–

(a) declare an interest at the time that, or before, discussion begins on the matter;

(b) withdraw from the meeting for that item;

(c) not be counted in the quorum for that part of the meeting; and

(d) withdraw during the vote and have no vote on the matter.

S-8 Directors of School Companies and their remuneration

Directors of School Companies and their remuneration

8.—(1) The constitution of a school company must provide that at least 40% of the directors of the company at any one time shall be non-executive directors.

(2) The constitution of a school company must provide that:–

(a)

(a) there shall be a remuneration committee;

(b)

(b) the members of the remuneration committee shall all be non-executive directors;

(c)

(c) the remuneration committee shall recommend to the directors of the company the terms of service and remuneration of the...

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