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3.6 version 2

Scottish Charitable Incorporated Organisations (SCIOs) A guide to the Scottish Government Consultation Analysis Report 2010 & Draft Regulations (October 2010) for advisors of smaller charities. 3.6 version 2. Background. 2005 Act Background Working Group

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3.6 version 2

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  1. Scottish Charitable Incorporated Organisations (SCIOs)A guide to theScottish Government Consultation Analysis Report 2010 & Draft Regulations (October 2010) for advisors of smaller charities 3.6 version 2

  2. Background • 2005 Act • Background • Working Group “To advise Scottish Ministers on how best to implement a regime for Scottish Charitable Incorporated Organisations (SCIOs), that is cost-effective, as straightforward as possible and tailored to the needs of Scottish charities” • Draft regulations & discussion 2

  3. Target Market • Working Group view SCIO may be most appropriate for charities with income £25k - £100k • No intention to restrict SCIO adoption Government response: …option of applying to become a SCIO will be open to all Scottish charities/potential charities 3

  4. Model Options • 3 Options presented • Vast majority preferred the Working Group’s Option 1 “A straightforward yet robust incorporation vehicle for Scottish charities” Government response: “Draft regulatory framework… that seeks to maintain accountability and organisational rigour, strengthening governance and building capacity, without encumbering SCIOs with excessive regulatory detail”. 4

  5. Applications, conversions and amalgamations • The regulations are silent on these aspects of administration of a SCIO • Administrative detail left to OSCR • Details to be included in the guidance • The Act describes some principles already 5

  6. SCIO Constitutions • The Act states that a constitution should include: • Its names and purposes • Members: eligibility for membership and how a person becomes a member • Charity trustees: A SCIO must appoint 3 or more persons who are to be charged with the general control of the SCIO’s administration, and about any eligibility for becoming a charity trustee 6

  7. SCIO Constitutions Constitutional elements set out in draft Regulation 3: • Powers • Structure • Board Composition • Office bearers • Procedural rules • Withdrawal and removal of members and charity trustees • Maximum number of charity trustees • Remuneration • Conflict of interest • Wind up and dissolution – disposal of charitable assets 7

  8. SCIO Registers • Register of charity trustees • Section 23 availability to the public • Retention for five years • Guidance to be issued • Principal contact/Registered address • Register of members • Register to be available only to other members 8

  9. Membership • Membership is to be non-transferable • Meetings of members at least annually 9

  10. Name and Status • A SCIO must state that is a SCIO • References in documents – draft Regulation 10 10

  11. Accounting framework • The Regulations are silent on the subject of an accounting framework • Intention that SCIOs subject to Sections 44 to 46 of the Charities and Trustee Investment (Scotland) Act 2005 • The Charities Accounts (Scotland) Regulations 2006 (and amendments) 11

  12. Dissolution Section 18 of the Act disapplied to SCIOs: Formal dissolution procedures must be part of the price of limited liability 12

  13. Dissolution of solvent SCIOs • Before application for dissolution a SCIO must pass a resolution stating: • Subject to OSCR‘s consent it winds up its affairs • Outstanding debts and liabilities must be satisfied • Surplus assets will be transferred • The date it proposes to dissolve • And it must have been passed not more than 15 days before making the application. 13

  14. Dissolution of solvent SCIOs • An application for dissolution of a SCIO must include: • Constitution and register of charity trustees • Other documents which will be developed as schedules to the regulations: • A declaration of solvency • Notice period for dissolution • Pro-forma balance sheets 14

  15. Dissolution of insolvent SCIOs • The principle proposed in the regulations is that a SCIO will be subject to: • Sequestration under the Bankruptcy (Scotland) Act 1985 • New bespoke process as an interim measure to allow modification in the future to include: • Applications for sequestration by the SCIO itself • Applications for sequestration by a creditor 15

  16. Dissolution of insolvent SCIOs An application for dissolution of an insolvent SCIO must include: • Constitution and register of charity trustees • Other documents which will be developed as schedules to the regulations: • A declaration of insolvency • Notice of application for dissolution • Pro-forma balance sheets 16

  17. Dissolution of insolvent SCIOs Process after receipt of compliant application: • OSCR refers application to Accountant in Bankruptcy (AiB) • AiB satisfies itself that the SCIO owes at least £1500 and therefore will award sequestration of the estate of the SCIO • Fee of £100 • Lengthy process of administration by an appointed trustee • Any surplus assets transferred to another charity • OSCR notified and SCIO removed from the Register 16

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