Charities' new legal form takes full effect

Scotland's charity regulator expects continued high demand in the New Year for a charitable legal form that takes full effect from 1st January 2012.

The Scottish Charitable Incorporated Organisation (SCIO) is unique to Scottish charities and provides a high degree of protection against personal liability for trustees.  The Office of the Scottish Charity Regulator (OSCR) has been handling applications for SCIO status since April, when the new form became available for those seeking charitable status as well as some types of existing charities.

Read OSCR's guidance and download an application form here.

From 1^st January existing charitable companies and charitable industrial and provident societies will also be able to apply to OSCR to convert to SCIO form.  Currently around 20% of new applications for charitable status seek to become SCIOs, and OSCR's Head of Charity Services, Martin Tyson, predicts that demand will remain high over the coming year.

'The SCIO was keenly awaited in the charity sector and so far we have seen substantial interest from new applicants,' he said.  'We believe that interest will be reflected among existing charities that are able to apply to us to convert to SCIOs from 1^st January.  The SCIO form does offer a number of benefits, but equally it's important for those seeking conversion to consider the full requirements and satisfy themselves that the SCIO is appropriate for their organisation'.

The SCIO is a corporate body able to enter into contracts, employ staff, own property, incur debts, and to sue and be sued.  It therefore provides a high degree of protection against personal liability for its charity trustees while not subject to the same reporting and regulatory requirements as a company.  It also provides reassurance for those entering into contracts, and for creditors.

Unlike charities that are companies limited by guarantee, SCIOs report to OSCR as a single regulator.  In addition, a company limited by guarantee must produce fully accrued accounts regardless of its size, whereas a SCIO is subject to the same accounting thresholds as unincorporated charities.

OSCR has produced general guidance, available at www.oscr.org.uk, that explains the SCIO and its key requirements.  The regulator is also meeting with local support groups as part of its Outreach Programme, to outline the practicalities of the SCIO and the points to consider before applying.  The Scottish Government has also published information on the relevant Regulations at:   http://www.scotland.gov.uk/Topics/People/15300/charities

ENDS

Issued by OSCR, 9 Riverside Drive, Dundee DD1 4NY. For further information, contact Mark Simpson on 01382 220446 or email communications@oscr.org.uk

Background
1. OSCR is the independent regulator and registrar of Scotland's 23,500 charities. OSCR publishes the Scottish Charity Register at www.oscr.org.uk

2. OSCR's vision is for a flourishing charity sector in which the public has confidence, underpinned by OSCR's effective delivery of its role.

3. The Scottish Charitable Incorporated Organisation (SCIO) is a new legal form, designed exclusively for Scottish charities, which allows them to incorporate without having to become companies or industrial and provident societies. It is a corporate body which is a legal entity able to enter into contracts, employ staff, incur debts, own property, to sue and be sued.

4. The SCIO has been introduced on a phased basis.  Existing charitable companies and charitable industrial and provident societies will be able to apply to convert to SCIO form from 1 January 2012 but existing Scottish charities which are any other type of legal form, and new applicants for charitable status, have been able to apply since 1 April 2011.  This final phase of the SCIO legislation to take effect also gives SCIOs already established the ability to amalgamate with other SCIOs and to transfer their undertakings to another SCIO.

5. Further information on SCIOs and the Scottish Charitable Incorporated Organisations Regulations 2011 and Scottish Charitable Incorporated Organisations (Removal from Register and Dissolution) Regulations 2011 is available from the Scottish Government at: http://www.scotland.gov.uk/Topics/People/15300/charities

6. Companies House has published information for companies considering conversion to SCIO, at http://www.companieshouse.gov.uk/about/miscellaneous/scottishCharitableCompanies.shtml , and the Financial Services Authority, which regulates industrial and provident societies, can be contacted via http://www.fsa.gov.uk/ .

7. OSCR's recently published guidance on SCIOs is available, with further information including FAQs, at: www.oscr.org.uk