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Report of the Council on amendments to Statute F, III (Property, buildings, and loans) and Statute J (University Press)

The COUNCIL begs leave to report to the University as follows.


1. The University's financial powers are set out in Statute F, III, 1 and F, III, 2. With the exception of amendments in 2005 to Statute F, III, 6 relating to distributions from the Amalgamated Fund, Statute F, III was last revised substantively in 1957. Since that time financial practice, especially in relation to the investment of substantial endowments, has evolved considerably. Today, such practice includes:

2. Universities and other higher education institutions are consequently presented with a range of transactions to fund their operations and to manage associated financial risk, which were not previously contemplated. These include:

3. At the same time, counter-parties dealing with institutions impose increasingly stringent requirements to verify the powers of the institution to enter into the proposed arrangements. This arises especially, but by no means exclusively, in the context of international arrangements.

4. Following a number of cases relating to interest rate hedging arrangements entered into by some local authorities during the 1980s, which were declared by the House of Lords to be ultra vires, banks and other financial institutions have become particularly concerned to ensure that transactions fall within the powers of the relevant institution.

5. These trends were to an extent reflected in the Trustee Act 2000, which provided trustees for the first time with a clear and broad general statutory power of investment.1 However, this general power of investment in the Trustee Act is not available in respect of the general corporate assets of institutions (such as the University) which do not hold such assets on trust.

6. Where financial powers are unclear, it may be possible to provide adequate comfort to banking or similar counter-parties by an opinion from Counsel or from lawyers acting for the institution in question. Alternatively or additionally, institutional officers or employees may expressly warrant that the relevant transaction is within the powers of the institution and has been duly authorized. In some cases charitable institutions can seek enabling orders from the Charity Commission.

7. However, these ways of addressing the 'due diligence' requirements of banking or similar counter-parties are frequently costly and time-consuming and do not always succeed in satisfying the counter-party that the institution has the relevant power. In addition, institutional officers and employees, who provide warranties as to relevant powers or authority, may face personal liability for any breach of warranty.

The position of the University

8. In the circumstances there is a need for the University to ensure that its financial powers under its Statutes are clear and comprehensive in order to enable it to have sufficient flexibility to manage its financial affairs in accordance with the current and likely future circumstances of the financial market. In addition, it is generally accepted that, as a common law corporation, the University is in principle invested with all the powers of a natural person and it is doubtful whether any benefit is gained by provisions which attempt to define or explain those powers in more detail.

9. The Council, on the recommendation of the Finance Committee, therefore proposes that Statute F, III, 1 and F, III, 2 be amended to state a clear general power on the part of the University to deal with its assets and manage its investments without limitation under its Statutes. This should ensure that the University will not find itself in a position in the future where it cannot, or cannot confidently, pursue a particular financial project for want of the relevant financial powers, or due to doubt as to their adequacy.

Cambridge University Endowment Fund

10. As part of the development of the University's investment strategy, the Finance Committee has considered wider participation in the Cambridge University Endowment Fund (CUEF), formerly known as the Amalgamated Fund. This would potentially enable Colleges in the University and, possibly, other associated institutions, to benefit from the management expertise of the Investment Office. In addition, the increased scale of the CUEF would provide mutual benefit for all participating investors.

11. This proposal would require an amendment to Statute F, III, 6, which currently restricts participation in the CUEF to endowments and funds of the University and those funds held by the University as trustee.

12. The Council accordingly proposes that the current rules governing the CUEF are removed from Statute F, III and that provisions for the collective investment of University property, with or without any other property, be enacted by Ordinance and that the future operation of CUEF would be addressed in this way.

Statutory amendment

13. An annotated proposed form of amendment to Statute F, Chapter III, which is intended to address the issues identified above is attached as the Annex to this Report.

14. The proposal involves the replacement of Chapter III in its entirety with broadly stated powers. Prescribed matters of detail, relating to financial controls and collective investment, would be dealt with by Ordinance. This approach is consistent with Government policy on the deregulation of the governance arrangements of higher education institutions.2 It means that changes to the prescribed areas can in future be made by the University without involvement of the Privy Council.

15. The proposal also includes consequential amendments to Statute E (Trust Emoluments) and Statute J (The University Press). The Press Syndicate have been consulted about the proposed amendment to Statute J and have concurred with the proposal.


16. As indicated above (para. 14), the Council will prepare Ordinances dealing as necessary with arrangements for the delegated exercise of the University's financial powers,3 as well as in relation to collective investment, for submission to the Regent House in time to enable such Ordinances to take effect upon the approval of the new Statutes by Her Majesty in Council.


17. The Council accordingly recommends:

That, subject to the approval of Her Majesty in Council, the Statutes of the University be amended as set out in the Annex to this Report and that these amendments be submitted under the Common Seal of the University to Her Majesty in Council for approval.



Proposed revised Statute F, III, Statute E, I, 7(iv), and Statute J, 3, 5, and 11.

Statute F


Chapter III


1. The University shall have all the powers of a natural person to acquire, manage, charge, deal with, and dispose of property, both real and personal, and to enter into and carry out any transaction relating to its property or otherwise in connection with the management of its affairs, so that it may exercise any power and may enter into and carry out any kind of transaction without limitation.

2. The powers in section 1 of this Chapter may be exercised at the absolute discretion of the University and shall apply to investment as well as to any other activity or function of the University.

3. The powers in section 1 of this Chapter shall apply to property, both real and personal, of which the University is trustee, save that, in the case of a trust of which the University is not sole trustee, where the trust instrument creating the trust expressly provides to the contrary and less than sixty years have elapsed since that instrument came into operation, the powers shall not so apply without the consent of the other trustees.

4. The University may enact Ordinances providing for:

(a)the exercise and delegation of the powers in section 1 of this Chapter; and/or
(b) the collective investment of any property, real or personal, held by or for the University, with or without any other property.

5. Such Ordinances shall be read with, and shall have the same force as, these Statutes to the extent that they are consistent with these Statutes, Ordinances, and any Act of Parliament.

6. In favour of any person having dealings with the University, a certificate signed by the Registrary that any Ordinances enacted under section 4 of this Chapter have been complied with shall be conclusive.

Statute E


Chapter I


Section 7(iv).

(iv) Any part of the income of a trust fund not expended in any year shall be accumulated by investment or otherwise, and any accumulation shall at the discretion of the Council either be applied as income in any one or more subsequent years or be added to the capital of the fund.

Statute J


Section 3.

3. The Press Syndicate shall have power in the name of the University and for the purposes of the University Press to exercise the powers in section 1 of Chapter III of Statute F. These powers shall apply to investment as well as to any other activity or function of the University Press. Save only insofar as the Statutes, Ordinances or regulations enacted under Statute J, 5 expressly or by necessary implication provide otherwise, these powers may be exercised at the absolute discretion of the Press Syndicate.

Section 5.

5. The Council shall have authority to impose limitations on the power of the Press Syndicate to enter into any financial commitments or to grant security on the property of the University Press.

Section 11.

11. The term property of the University Press here and elsewhere in Statutes and Ordinances shall refer to property of the University, both real and personal, held or used for the purposes of the University Press. In favour of any person having dealings with the University Press a certificate signed by the Registrary that any particular property is the property of the University Press, or that any limitations imposed under Statute J, 5 have been complied with, shall be conclusive.


Notes to the proposed amendments to Statute F, III, Statute E, I, 7(iv), and Statute J, 3, 5, and 11

Statute F, III

1. The proposed revision to Statute F, III does not contain any provision reflecting the wording of what is currently Statute F, III, 4 on the ground that this wording duplicates Statute E, I, 7(iv). The reference in Statute E, I, 7(iv) to the Financial Board needs to be changed so that it refers to the Council.

2. Sections 1 and 3: (a) the reference to real and personal property is made here and in other parts of the revisions because this is a distinction already made in Statute F, I, 2. (b) The existing Statutes are not consistent with regard to the application of section 8(1) of the Universities of Oxford and Cambridge Act 1923: the current Statute F, III, 3, 4, and 6 do not appear to address the limitation on amending trusts which are less than 60 years old while Statute E, I, 2 and 8 do.

3. Section 4: The wording of this provision will enable the establishment of a trust pool set out in regulations without the requirement for express provision in the Statutes. This will enable the basis of the pool to be revised as necessary without further Statutory amendment.

Statute J, 5

4. The opportunity has been taken to amend the existing wording of J, 5 (and make consequential amendments to J, 11) in keeping with the modernizing intent behind the other proposed amendments and to reflect modern financing techniques. In particular, consideration has been given to the practical management of HEFCE requirements regarding 'financial commitments'.

1 See section 3(1): 'Subject to the provisions of this Part, a trustee may make any kind of investment that he could make if he were absolutely entitled to the assets of the trust.'

2 See the circular letter from Bill Rammell MP to Vice-Chancellors dated 6 February 2006. The Board of Scrutiny also supported this approach in its Thirteenth Report (Reporter, 2007-08, p. 996, para. 16).

3 The starting point for any such Ordinances will be the current position under Statute, including, in particular, the provision currently incorporated in Statute F, III, 5.

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Cambridge University Reporter 05 November 2008
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