The Scottish Charitable Incorporated Organisation (SCIO) is a new legal form that as of 1st April, is available to organisations who are applying for charitable status and for existing charities applying to change legal form. (Trusts and Unincorporated Associations can become SCIO's now, but Companies Limited by Guarantee will not be able to do so before January 2012).
As with any new legal form, there are both advantages and disadvantages to be considered. The Office of the Scottish Charity Register (OSCR) has issued a guidance note on becoming an SCIO for organisations and their advisors.
The SCIO is intended to help charities enjoy the benefits of incorporation (including limited liability) without becoming companies, therefore avoiding the complexities of company law. As SCIO's, charities will be able to undertake transactions in their own right and hold title to land and buildings, similar to a company. Importantly, liability of charity trustees is limited and neither the trustees nor the members are liable to contribute to the assets if it is wound up. Unlike charitable companies, an SCIO does not have to report to both OSCR and Companies House; instead it is administered and regulated only by OSCR.
The main disadvantage of SCIO's is that they cannot choose to convert to another legal form or amalgamate with a body which is not a SCIO. If removed from the OSCR Register a SCIO will cease to exist, unlike other legal forms which may continue to exist if charitable status is withdrawn. SCIO applicants should also be aware that members of SCIO's (and not just Trustees) are subject to certain Trustee duties under the Charities and Trustee Investment (Scotland) Act 2005.
There are certain requirements that an organisation must have in place before they can apply to become an SCIO. These include:
- Having their principal office in Scotland
- Having details of their organisational structure and procedural rules within the Constitution
- Having in place a process for withdrawal/removal of members and charity trustees
- Having in place procedures for dealing with any conflict of interest
- Having at least 2 members, which can include charity trustees
- Keeping a Register of both charity trustees and members; and
- Using and applying its property in furtherance of its charitable purposes and in accordance with its constitution.
OSCR has now made the application form and guidance note on how to apply available on their website. Along with the completed application form, an organisation must submit fully completed Charity Trustee Declaration forms, a copy of your organisations constitution or governing document, a description of your organisations existing or proposed activities and a recent statement of accounts.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.