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Circular letter number 07/01
For further information contact Alice Frost, tel 0117 931 7101, e-mail a.frost@hefce.ac.uk or Liz Franco, tel 0117 931 7335, e-mail l.franco@hefce.ac.uk
Dear Vice-Chancellor or Principal
e-University: invitation to higher education institutions to become members of the holding company
1. I am writing to invite higher education institutions (HEIs) to become members of the e-University holding company.
2. If your institution wishes to become a member, please complete the attached Acceptance of Membership Form and return it to the HEFCE by 24 May.
Background
3. We consulted on a business model for the e-University in October 2000 (HEFCE 00/44a and 44b), which was subsequently approved by the HE sector (responses were published on our web-site on 13 February 2001).
4. The e-University will be established as a holding company owned by the HE sector. This holding company will oversee that the academic purpose and integrity of the enterprise are safeguarded by conferring a licence upon an operating company. The operating company, which will be a joint venture with the private sector, will undertake all activities of the e-University.
5. On 15 January we invited institutions to nominate directors and committee members for the e-University (Circular letter 02/01). We provided then the draft memorandum and articles of the holding company. The Secretary of State for Education and Employment announced the directors of the holding company on 29 March, as follows:
- Professor Bob Boucher (Vice-Chancellor, University of Sheffield)
- Sandra Burslem (Vice-Chancellor, Manchester Metropolitan University)
- Professor Sir Colin Campbell (Vice-Chancellor, University of Nottingham)
- Professor Ron Cooke (Vice-Chancellor, University of York)
- Professor Gary Crossley (Principal, Central School of Speech and Drama)
- Professor Sir Brian Fender (Chief Executive, HEFCE)
- Walter Greaves (Chair of Council, Brunel University)
- Professor Gerry McKenna (Vice-Chancellor & President, University of Ulster)
- Alfred Morris (Vice-Chancellor, University of the West of England)
- Professor Tim O'Shea (Master, Birkbeck College, London)
- Professor Sir Gareth Roberts (President, Wolfson College, Oxford and former Vice-Chancellor of the University of Sheffield)
- Dorma Urwin (Principal, University College Worcester).
6. We have also appointed an interim management team (Nick Winton, Chief Executive Officer, Dr Keith Palmer, Commercial Director, and Professor John Slater, Learning Programmes and Technology Director) to take forward the set up of the venture.
Structure and objectives of the holding company
7. Under the articles of the holding company, all HEIs directly in receipt of funding from the four UK funding bodies are entitled to become members of the company. The purpose of this structure is to ensure that the HE sector collectively has ownership of the holding company, and that each HEI has an equal stake in it.
8. The holding company is limited by guarantee and hence institutions that become members are liable to provide the notional £1 toward the assets of the company. Because it is a limited company, that notional £1 is the full extent and total of the liability of any member HEI.
9. Of course we intend and expect the e-University to be successful, but HEIs have properly asked what the impact on them would be if the venture were not successful. The status of a company limited by guarantee means that the liability of any member HEI, in the event of insolvency or wind-up of the holding company, is limited to their £1 investment. There can be no recourse to legal action beyond that against member HEIs by those with claims against the holding company. We do not envisage HEIs investing beyond the notional £1 in the e-University through the holding company. Individual institutions may enter into risk-sharing partnerships with the operating company for the provision of e-learning programmes and services, but these will be the subject of individual negotiation. We will provide grant to the holding company (from the funds provided by the Government for the project), to cover its minimal running costs and to capitalise its investment in the operating company.
10. The objectives of the holding company, set out in its memorandum, are those required to undertake the e-University venture as described in the business model. The holding company will not pursue these objectives directly, but only through entering into the joint venture to form the operating company. Under the memorandum and articles, the members of the holding company have the rights and powers that go with being members of any company limited by guarantee. The main ones are right of attendance at an annual general meeting at which the directors present the accounts; the power for a specified minimum number of members to call extraordinary general meetings to discuss any issues of concern; and the power to dismiss existing directors of the holding company board. These powers are designed to ensure that if HEIs have concerns about the operations of the holding company, or the way it is developing, they can pursue these concerns collectively.
11. The other major benefit of membership is that we expect that the holding company will receive a licence fee from the operating company, as well as profits from its share in the venture. This revenue will be used by the holding company for the benefit of the UK higher education sector, either by investing in projects of general benefit to members or by returning revenue to members in equal proportion. We are taking legal advice on the most effective method for this and will put options to the holding company board for decision.
Issues to be addressed
12. Institutions raised a number of detailed questions about the operation of the venture in the responses to our consultation, and Universities UK also wrote to us in February to highlight some of the most significant issues to be addressed. We have attached at Annex A our responses to the main issues that have been raised. It is obviously difficult for us to share with HEIs through this kind of communication some of the commercially confidential information that is revealed in negotiations with partners. The interim management team to the venture are, however, planning to offer briefings for heads of institutions in the next few months so that they can explain how the venture is shaping up. As with any company, members have to have confidence in the directors who are appointed to safeguard their interests. We have also worked with Universities UK and the Standing Conference of Principals to ensure that directors who can secure the interests of the sector have been appointed to oversee the set up of the venture.
Activities of the holding company
13. The holding company board has now been constituted in shadow form, under the chairmanship of Sir Brian Fender, to take over from the e-University Steering Group. It will:
- Finalise the memorandum and articles of the holding company (any changes will be communicated to institutions).
- Determine the brand and trademarks for the e-University ('e-University' is only the project's working title).
- Agree the terms of the licence, including the arrangements for the Committee for Academic Quality.
- Receive funds for the project from the HEFCE and agree the terms of investment in the operating company.
- Enter into a joint venture agreement with appropriate partners.
- Agree the memorandum and articles of the operating company.
- Appoint directors to the operating company. We will be providing to the board the possible candidates as directors, received in response to our invitation of 15 January.
14. The holding company will be incorporated once we have heard from institutions on membership.
15. Institutions are now invited to become members of the holding company by completing the attached Acceptance of Membership Form by 24 May and sending it to:
Alice Frost
HEFCE
Northavon House
Coldharbour Lane
BRISTOL
BS16 1QD
Yours sincerely
Brian Fender
Chief Executive
Read on-line
Annex A - Issues raised by the HE sector about the e-University
Download
Acceptance of Membership Form
[ MS Word 23K | Zipped Word 5K | Adobe PDF 5K | Zipped PDF 3K ]
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