THE SCOTTISH CHARITABLE INCORPORATED ORGANISATION

Introduction

The Charities and Trustee Investment (Scotland) Act 2005 has now received the Royal Assent and most of it is to be brought into force on 1st April 2006. Its full text is available online at www.opsi.gov.uk/legislation/scotland/acts2005/20050010.htm

Sections 49 - 64 introduce and deal with the new Scottish Charitable Incorporated Organisation (the SCIO - pronounced “skio”) which is to be introduced as a new type of organisation specifically for Scottish charities.

The SCIO will provide limited liability but will not be a company. It will be regulated by the Act and separate Regulations (yet to be issued) and will be administered by the Office of the Scottish Charity Regulator (OSCR).

The SCIO will not however be available when the Act comes into force on 1st April 2006. The Scottish Executive’s current reckoning, in their Implementation Plan for the Act, is that it will be available “sometime in 2007”

Historically, the SCIO comes from a proposal originally made by the Charity Commission of England & Wales in 2001. This model will provide a relatively simple type of charity which can be used ”off-the-shelf”, without much modification, by smaller charities wishing to keep initial set-up costs to a minimum, either as a single tier model (where the Trustees are the only members) or as a two-tier model (where there is a membership and a separate Board of Trustees). The SCIO may have advantages particularly for charities which do not wish to be regulated both by the new Charities Act and the Companies Acts.

Nearer the time when the SCIO becomes available as an option, we will provide a detailed Fact Sheet about its features and essential elements. We will compare a Guarantee Company with the SCIO and will list the advantages and disadvantages between them.

Once the new SCIO is available, it will be possible for an existing Guarantee Company to apply to convert into a SCIO, should that be considered appropriate. This is a one-way system, however, as a SCIO cannot convert into a Guarantee Company.

Careful planning is therefore required and expert advice from the charity’s lawyers and accountants is essential.