§ Maria Eagle
To ask the Secretary of State for Education and Employment what effect UFI Ltd's change to charitable status has had on the framework, including controls, within which the Department provides financial support. 
§ Mr. Wicks
Further to my reply dated 11 January 2000,Official Report, column 146W, in order to achieve charitable status, UfI Ltd. has split into two companies: one, the charity "UFI Charitable Trust", which wholly owns the second, its trading subsidiary "Ufi Limited", which is the operating company.866W
The controls exercised by my right hon. Friend the Secretary of State have been adjusted in the light of the new company structure.
Each company's Memorandum and Articles of Association were approved by the Secretary of State and the Department continues to exercise similar controls over the companies, although the Secretary of State's right to appoint the Chairman and between 30 and 49 per cent. of Ufi Limited's Board Directors/members is now time-limited to 31 March 2005. The Secretary of State's control over appointment of the Chairman and Directors of the charity is not time bound.
The previous Funding Agreement between the Department and Ufi Ltd. has been superseded by one with both companies which provides for a number of checks and controls on the spending of public funds. It specifies the requirement to submit an annual Financial Plan for the approval of the Secretary of State. The Funding Agreement and the Financial Plan provide the basis for financial support.
Ufi Limited will own the assets it creates (mainly intellectual property rights on learning products) and retain any receipts from the disposal of assets. The Department will take account of any income received by Ufi Limited as a result of Government investment, including asset disposal proceeds, in fixing the level of future financial support. This regime will apply only so long as Ufi Limited receives Government support.
If the Funding Agreement is terminated due to breach of contract or insolvency the intellectual property rights will pass to the Secretary of State if he so requests. The Memorandum of the charity provides that if it is wound up or dissolved the Secretary of State has a right of veto over the disposition of any remaining assets. The charity cannot dispose of any of the shares of Ufi Limited without the prior authority of the Secretary of State. The charity cannot alter the constitution of Ufi Limited in so far as this affects the Secretary of State's controls.