21st December 2011

Everyone is talking about SCIOs!

SCIOs or Scottish Charitable Incorporated Organisations are a new type of vehicle specially designed for charities.  SCIOs are like charitable companies in some ways but, unlike companies, they are regulated only by the Office of the Scottish Charities Regulator (OSCR) and not Companies House.

From 1 January 2012, charitable companies will be able to convert to SCIO joining the various new charities on the register which have had the right to incorporate as SCIOs since 1 April 2011.  When we last checked, there were 58 SCIOs registered at OSCR, ranging from citizen’s advice bureaus to after school care centres to neighbourhood watch groups.  So what makes the SCIO an attractive vehicle to new and existing charities? 

For new charities, the SCIO vehicle, like the charitable company, brings separate legal personality for the organisation.  That means that the charity can hold property, enter into contracts, sue, be sued and employ staff in its own name rather than in the name of its committee members or trustees.  Existing companies may choose to convert to SCIO to be subject to the lighter regulatory regime.  However, all charities are different and it is important for each charity or proposed charity to consider its individual circumstances in order to decide upon the most appropriate legal status.

Something worth noting is that a SCIO’s members are under a duty to try to ensure that the organisation acts in a manner which is consistent with its purposes.  Whilst company directors and charity trustees are under similar duties to their organisations, their ordinary members are not.  An active membership may be a reason to choose to incorporate as a SCIO.  Other reasons include where the organisation has contractual or employment commitments and where the charity trustees require protection from personal liability. 

If you have any questions or would like further advice on SCIOs, please contact Sarah Winter in the Charities Team on 01382 229222.

Sarah Winter
Senior Solicitor – Corporate & Commercial

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