The Scottish Charitable Incorporated Organisations

The Scottish Charitable Incorporated Organisations (SCIOs) Working Group

THE SCOTTISH CHARITABLE INCORPORATED ORGANISATIONS (SCIOs) WORKING GROUP

Scottish charities can be formed using a variety of legal structures but most are constituted either as unincorporated organisations or companies limited by guarantee. Both forms can present potential difficulties for charities. Unincorporated associations, while theoretically simpler to set up and run, do not provide the benefits of limited liability or separate legal identity. This can raise issues around the employment of staff, ownership of property and prove less attractive to potential partners, funders and investors. Company status brings a significant administrative burden, not least because charities are subject to double regulation and have to report to both the Registrar of Companies and the Office of the Scottish Charity Regulator.

An alternative structure for Scottish charities was created under Chapter 7 of the Charities and Trustee Investment (Scotland) Act 2005 . The Scottish Charitable Incorporated Organisation (SCIO) is a legal form designed specifically for charities to enable them to become a corporate body without having to become a company or industrial and provident society. The SCIO will be registered and regulated by the Office of the Scottish Charity Regulator (OSCR) alone and will not be subject to the requirements of company law, as is the case for charitable companies. The provisions in the 2005 Act provide the basic framework for a SCIOs regime but the detailed operational requirements will be set out in Regulations which Scottish Ministers may make under section 64.

Similar provision has been made in UK legislation for new Charitable Incorporated Organisations (CIO) in England and Wales. The Office of the Third Sector (UK Government) and the Charity Commission published a consultation on draft subordinate CIO Regulations, which ran from 10 September to 10 December 2008. We understand that they intend the CIO to become available as a form for charities in England and Wales late in 2009.

The Scottish Charitable Incorporated Organisations (SCIOs) Working Group is a short-life panel of stakeholders with the requisite expertise and experience in charity law, accounting and governance, tasked with advising Ministers on how best to implement a regime for SCIOs that is cost-effective, as straightforward as possible and tailored to the needs of charities in Scotland.

It is anticipated that the SCIOs Working Group will present its recommendations to Ministers later in 2009. This will be followed by a consultation on policy proposals for the SCIOs regulatory framework, after which draft Regulations will be developed for further consultation. At present, we would not envisage the new form being available for use before 1 April 2010.

The Working Group has agreed that minutes of its meetings should be published on the Scottish Government website and can be accessed, along with other selected papers, through the links below:

Links:

SCIOs Working Group - Remit and membership

SCIOs Working Group - First Meeting, 2 September 2008 - New Legal forms for Charities in The United Kingdom

SCIOs Working Group - Minutes of first meeting, 2 September 2008

SCIOs Working Group paper - Scottish Charitable Incorporated Organisations (SCIOs) - Introduction and Context

SCIOs Working Group - Minutes of second meeting, 27 October 2008

SCIOs Working Group paper - OSCR Statistics for the SCIO Working Group Discussions

SCIOs Working Group - Minutes of third meeting, 15 December 2008

SCIOs Working Group paper - Minutes of Sub-group meeting on Model Constitutions, 5 December 2008

SCIOs Working Group paper - Brief outline of Scottish Law Commission's Discussion Paper on Unincorporated Associations

SCIOs Working Group - Minutes of Fourth Meeting, 29 January 2009

SCIOs Working Group - Fourth Meeting, 29 January 2009 - Revised SCIO Model Constitution