PLCs 'controlled' by Trusts

This is a spin off from the WSRA thread

As I recall the Blubell's charity has a majority (c. 70%) stake in the Bluebell PLC and the David Clarke Trust has a big stake in the Great Central.

The SVR Charitable Trust has just a small shareholding in the PLC but the members (The 'Guarantee Company') have a significant c. 25% stake

What are the models for other lines?

Cheers

Patrick

 

The NYMHRT has a controlling stake in NYMR Plc. I'm pretty sure that the Mid Hants RPS has control of its associated PLC, too, though I stand to be corrected, and I imagine that if ther'es a PLC operating the Bo'ness line the SRPS will have control of that! So effectively, that's all most of the major lines having this form of structure.

 

The GWSR trust has a large, but I believe not a majority shareholding in our Plc. With this and a few cross-board directors thrown in, it allows the trust to donate large sums of money to the Plc for specific projects to further the trust's charitable aims; last year I believe the sum was circa £190,000.

 

Trusts are a particular legal creation, and some companies limited by guarantee (e.g. the NYMHRT) are called trusts in their title but are not trusts in a legal sense like the DCRT or the owner of the Festiniog Railway Co shares. The way you have phrased the heading/question also does not take account of a particular line's structure, as it assumes the plc is the railway. So for instance, to cite the NYMR again, the "railway" there is essentially owned by the NYMHRT and the plc has quite a narrow asset-lite commercial role.
FYI, according to its accounts, control of the Bluebell Railway PLC vests in the BRPS.

Setting aside the issue of third parties acquiring the railway, and historical factors which generally have a major impact on a railway's ownership structure, as has been discussed ad nauseam on the WSRA thread, there seem to be advantages in having several types of entity involved: e.g. charity for tax efficient handling of donations/legacies, a plc to take advantage of EIS / access to a different pot of cash, and an unincorporated society as a membership body to avoid the constraints of the Companies Act (e.g. enabling disenfranchisement of the remote members, which would have solved the WSRA voting problems).

 

Thanks, yes point taken on the

Otherwise I'd deliberately left the question open to see what models railways had.

Cheers

Patrick

 

The Bluebell Railway Preservation Society (an unicorporated members body) holds about a 75% shareholding in Bluebell Railway PLC. There is a separate charitable trust - the Bluebell Railway Trust which has no members but exists for educational and charitable purposes related to railways.

David R

 

Technically I think Dumbleton Hall loco group actually owns 75% of the South Devon railway shareholdings. Not that they ever exercise the right to interfere.

 

Many railways that came into being in the late 70's/early 80's have a Company as the operator, and holder of the ownership of the land whether freehold or by way of lease. I have been told that this was because at the time, applications for Light Railway Orders to the Ministry of Transport were looked upon more favourably if the applicant was a limited Company. Examples include the GWSR, Llangollen, Gwili, there may be others.

Some are limited by shares and some by guarantee; the latter lends itself to charitable status and the former does not although some Companies have become PLC's to aid expansion plans.

Regards

Matt

 

I would be surprised if there are any railways which do not own or lease the track bed through a limited company. Do you have any examples in mind?

 

GWSR was a Ltd but became a Plc around 2011 IIRC; a bit before my time.

 

The "l" in Plc stands for limited but I am not sure if your post was in response to mine.

 

I don't know a huge amount about these things merely noting the fact as an example.

 

can't think of any....probably because a company is the best organisation to hold a LRO/TWO with all the attendant legal rights and responsibilities.

 

K&ESR; IoWSR and W&LLR are all owned and operated by 'limited by guarantee' companies which have charitable status. These companies, which have no shareholders, are also the main membership bodies. In effect the railway is owned and operated by the membership collectively, and regulated by charity law.

Separate companies are not needed to hold the operating powers and run the trains since the charitable objectives include both owning the railway and operating trains. Wholly owned subsidiary companies may be used to run any non-charitable trading activities, e.g. catering and shops, with the profits donated to the owning charity.

 

Swanage Railway comprises The Swanage Railway Trust (SRT) and Swanage Railway Company (SRC).

SRT is a registered charity and the membership body. It owns some rolling stock and 100% of the voting shares in the SRC.
SRC is the Operating and Trading subsidiary company which holds the track bed lease, LRO/TWO and operates the railway. It also owns some rolling stock. There are other private shareholders in SRC but shares have never been publicly offered.

 

MHRPS owns around 1/2 the shares in MHR Ltd. It is by far the largest shareholder. MHR Ltd was a PLC, but ceased to be so some years ago on grounds of saving the costs of being a PLC.

 

Who (or what kind of ownership) owns the rest?

 

Is there something about the ownership of assets being deliberately kept separate from the charitable body?

I think there is also something about making sure that a controlling share is always kept thus insuring against 'hostile takeover' of the company that owns the asset?

Sorry for the confusing post, this is not my area of expertise!

 

I think in an ideal world, you would want the assets deliberately kept separate from the operating body. I can't see an issue with using a charitable body to hold the strategic assets, provided that charitable body is not itself exposed to a significant level of financial risk (which in practice means, keeping the fixed overheads as low as possible).

As I see it, in a preserved railway, it is the operating body that bears the significant financial risk, since - once they publish their timetable for the year - they commit to a certain level of expenditure without necessarily knowing whether sufficient passengers will turn up to cover the costs. That is unavoidable, but an inherent financial risk.

On the other hand, the assets typically derive their value on account of considerable volunteer input, to the extent that the replacement cost of an overhauled locomotive or carriage or station building - even if replacement were possible - would typically be way in excess of the figure on the balance sheet.

Given those two propositions, it feels sensible to me to structure in a way that protects the assets in the event of financial problems from the riskiest part of the business, which is the operator. in addition, it feels sensible to limit the unavoidable financial risk to a single body - one of the problems, as I see it, in the WSR set up (to bring this back to the OP) being that both the PLC and the Association have considerable fixed overheads and therefore ended up competing for revenue streams.

Tom

 

I didn't want in the OP to re-run the WSR debates, rather to look at models on different preserved railways.

It seems several have an operating arm with a significant member or charity shareholding but it's not universal the freehold is held by the members/charity. In some the members/charity both owns and operates the railway.

Thank you

Patrick