1. What is a SCIO?

1.1 Background

The Scottish Charitable Incorporated Organisation (SCIO) is an optional new legal form for registered Scottish charities.

The Scottish Ministers introduced the new SCIO legal form in April 2011 to allow charities to be incorporated but to be administered and regulated by a single body, the Office of the Scottish Charity Regulator (‘OSCR’). Charitable companies, which are also incorporated, report both to OSCR and to the Registrar of Companies (‘Companies House’).

Charity law in England and Wales and in Northern Ireland provides for a similar type of body to be established in those countries, in both cases to be known as the Charitable Incorporated Organisation (CIO).

This guidance is aimed at anyone who is considering setting up a charity, particularly those interested in becoming a SCIO, and those existing charities which are considering changing their legal form to a SCIO. It will also be useful to advisers to charities and anyone working
with charities, such as funding organisations or local authorities.

1.2 Legal framework

The SCIO form is created by the following legislation:

• The Charities and Trustee Investment (Scotland) Act 2005 (as amended) (‘the 2005 Act’)
• The Scottish Charitable Incorporated Organisations Regulations 2011 (‘the General Regulations’)
• The Scottish Charitable Incorporated Organisations (Removal from the Register and Dissolution) Regulations 2011 (‘the Dissolution Regulations’).

In general terms, the principles of charity law apply equally to SCIOs as they do to any other charity entered in the Scottish Charity Register. There are, however, some important differences between the duties and responsibilities of a SCIO and those of other Scottish charities, and these are set out in detail in section 5 of this guidance.

1.3 SCIOs: the key facts

The SCIO is a corporate body which is a legal entity having, on the whole, the same status as a natural person.

This means it has many of the same rights, protections, privileges, responsibilities and liabilities that an individual would have under the law.

As a legal entity, the SCIO may enter into the same type of transactions as a natural person, such as entering into contracts, employing staff, incurring debts, owning property, suing and being sued. 

As the transactions of the SCIO are undertaken by it directly, rather than by its charity trustees on its behalf, the charity trustees are in general protected from incurring personal liability. However, as with any other type of corporate body, this protection is not absolute; in some circumstances, charity trustees individually may be held responsible for the actions of the SCIO. Such circumstances are rare but may occur when the charity trustees have been reckless, negligent, have acted illegally or have acted outwith their powers in their management and control of the SCIO.

The governing document of a SCIO is a constitution which must contain a number of basic elements in relation to its governance and other key matters (see section 3.1 of this guidance). The SCIO must also:

• have its principal office in Scotland
• have at least two members; these may include some or all of the charity trustees subject to the terms of the constitution
• use and apply its property in furtherance of its charitable purposes and in accordance with its constitution.

The SCIO also differs from other charities on the Register in that its existence is dependent upon its charitable status (that is, upon being entered in the Register). In the case of Scottish charities which are not SCIOs, charitable status is awarded to an existing organisation such as a company, trust or unincorporated association. This means that these organisations may continue to exist even if charitable status is withdrawn, although in the majority of cases they would no longer be entitled to refer to themselves as charities.

The SCIO, on the other hand, becomes a legal entity only when it is entered in the Register and ceases to exist if it is removed from the Register. The SCIO cannot choose to convert to another legal form, cannot amalgamate with a body which is not a SCIO and cannot seek removal from the Register other than by dissolving itself. This 
is an important point to consider before applying to OSCR to incorporate a SCIO. Other important matters for consideration are outlined in section 2.1 below.

From 1 January 2018, Scottish Charitable Incorporated SCIOs and Charitable Incorporated Organisations (CIOs) will appear in the Registrar’s Index of Company Names, which is maintained by Companies House. Charities that are incorporated as companies already appear on the index. Please read FAQs: SCIOs on the Index of Company Names for more information.