THE BACKGROUND
Cornwall Hill College is a leading co-educational, independent school, based on Christian principles, committed to serving it's community. It provides a curriculum that is holistic and relevant, producing independent, life-long learners. Each individual is challenged to think, investigate and grow in a positive, nurturing environment that encourages personal excellence and accountability.

Affordable schooling of a high standard, financial security and a Christian ethos along with parental representation in ownership and management are the cornerstones of our vision. The funding and financial policy strives to minimise risk to parents and the College and to ensure high economic efficiency. In this way our children's education will remain affordable in the long term whilst providing capital needed for future expansion of the College's facilities.

The founders of the College envisaged in their original masterplan that the College would be community owned within five years.

In a very short time the College had achieved most of its stated aims. Comfortable, modern and spacious teaching venues have been built and additional specialised venues such as an Art Room, Computer Centres and a Design and Technology Centre were added. Outstanding and committed teachers have been appointed, a wide range of co-curricular activities established and sports facilities were built ahead of schedule.

The College developed so quickly, however, that the projected fourth year of development was reached in the second year of the College's existence. This growth, from 380 learners in January 1998 to 800 in January 1999, created the need to implement immediately the next phase of development of facilities to satisfy the College's needs and expectations of parents. Such accelerated development required additional finance and without parental support in ownership the necessary expansion of facilities to keep pace was not possible.

In order to address this need, a series of meetings was held in the third quarter of 1998 with parents of the College. These meetings resolved to exclude any form of external ownership and to proceed with plans to acquire the College. A Finance Committee was thus formed from the parental group to refine the financial efficiency of the proposed ownership model and to proceed with the purchase of the College form the original owner.

THE DEBENTURE PLAN
The Finance Committee considered a range of alternatives for ownership of the College. In doing so, a broad spectrum of legal, tax and accounting opinion was consulted in order to ensure that parental interests were protected.

After careful assessment this committee registered a company, Cornwall Hill College, an association incorporated under Section 21 of the Companies Act (CHC), to acquire the College from its original developers. This Section 21 Company therefore became the 100% owner of the College. Funding for this acquisition and for future expansion was derived from a Debenture issue to the parents in conjunction with a financial institution.

The objectives of this Debenture plan were:

  • Not to increase the existing planned cost of education.
  • To offer a feasible Debenture scheme that would allow 100% participation by all parents of the College.
  • To provide sufficient capital for the College to offer all the required facilities that parents would expect without exposure to undue financial risk.

In order to achieve this, the Committee divided school fees into two portions:

  1. Education (i.e. operational costs); and
  2. Capital Expenditure.

The first (operational) portion of the fees is payable monthly over ten months per year, whilst the second (capital) portion is funded via a Debenture for each child at the College.

WHAT THIS MEANS FOR PARENTS

1. The Debenture is in essence a loan by the parents to the College, but need not be paid in cash.

The College has an arrangement with its bankers whereby an Acknowledgement of Debt (AOD) agreement can be signed by the parent and, instead of paying the capital sum, a monthly interest charge is added to the school fees. The College will cede the AOD to the bank in exchange for a loan to the College to the value of the AOD. It is therefore not necessary for the parent to pay the amount of the Debenture in cash, as the College can borrow the amount on behalf of the parent from the bank.

The Debenture will prevail for the period that the child attends the College. The parental AOD will be terminated at the end of the period. Where a cash payment for the Debenture has been made, the full amount will be repaid (less any outstanding amounts owing to the College) within three months of a learner leaving the College.

2.  The Governance: The Company, Cornwall Hill College (NPC), was registered to take sole ownership of the College. Members of the Company are parents who have registered as such. This body of members elects Directors to serve alongside the College Executive Principal and Phase Heads, as Directors of the Company. Parental representation in the College governance is thus assured.

THE BENEFITS OF THE CORNWALL HILL COLLEGE DEBENTURE OWNERSHIP PLAN

  • Parents share in the control of the College via a well-balanced democratic governance structure and as such they have the right to participate in policy and fee pricing decisions.
  • The risk of private equity investors profiting at the expense of parents is eliminated as there are no other investors besides the parents.
  • Finance can be raised at the best commercial rates available from reputable institutions, rather than private or JSE investment organisations.
  • Any surpluses are retained within the College and used for the improvement of facilities. This means that learners and parents can gain the benefit of the additional facilities without a corresponding increase in fees.
  • Long-term viability and capital to support the rapid growth of the College are assured.

CONCLUSION
The stated aims and vision are fully accommodated in the Debenture Ownership Plan and parents can look forward to the benefit of these.

High standards, parental ownership, representation in management, financial security and affordable schooling today, tomorrow and in the future are thus assured in the Debenture Ownership Plan. Furthermore, the capital to develop all the facilities the College will require is fully secured.
Last Updated on Thursday, 12 June 2014

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