2. Is becoming a SCIO the right choice?
The SCIO is a new legal form which provides another option for bodies wishing to register as charities in Scotland, and for those existing Scottish charities which wish to adopt a different legal form.
Before making an application to register a SCIO, it is important to consider whether the SCIO will be the most suitable legal form for the proposed charity. There are some significant differences between being a SCIO and being any other kind of body with charitable status in Scotland.
The table in section 2.1 below sets out some of the key characteristics of the SCIO as well as those of the most common types of alternative legal form used by Scottish charities. This comparison may help you consider whether the SCIO is suitable for the proposed charity.
Each organisation should decide for itself which legal form suits it best. You should consider whether the key characteristics of each legal form will be suitable for your organisation’s size and what it plans to do.
As regulator, OSCR cannot offer advice on whether being a SCIO is the right choice for a particular charity. Any body considering the SCIO as a potential option should consider taking advice from intermediary bodies, support organisations and/or professional advisers before making an application to OSCR (see section 8 for a list of useful contacts).
2.1 Table of key characteristics of SCIOs and other common charitable forms
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SCIO |
Unincorporated Association |
Company |
Trust |
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Regulator |
Single regulator OSCR |
Single regulator OSCR |
Dual regulators OSCR and Companies House |
Single regulator OSCR |
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Key legislation |
Charities and Trustee Investment (Scotland) Act 2005 |
Charities and Trustee Investment (Scotland) Act 2005 |
Charities and Trustee Investment (Scotland) Act 2005 Companies Act 2006 |
Charities and Trustee Investment (Scotland) Act 2005 Trusts (Scotland) Act 1921 |
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Legal status |
Legal personality Can undertake transactions in its own right Title to land Liability of charity trustees is limited (in most cases) Members are not liable to contribute to the assets if it is wound up |
No legal personality Some or all of the charity trustees must undertake transactions on behalf of the body Title to land and buildings must be held in the name of one or more individuals on behalf of the charity The charity trustees may have personal liability for the body’s actions and unlimited liability if it is wound up |
Legal personality Can undertake transactions in its own right Title to land and buildings will be held in the name of the company (advantage in terms of succession) Liability of charity trustees is limited (in most cases) Liability of members is usually limited in the Articles of Association to £1 |
No legal personality Some or all of the charity trustees must undertake transactions on behalf of the body Title to land and buildings must be held in the name of one or more trustees The charity trustees may have personal liability for the body’s actions although there are certain protections for trustees in trust law and common law |
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Accounting requirements |
Charity accounting requirements Preparation Discretion for charity trustees to choose to exceed minimum requirements if accrued accounts are more suited to the body’s operations |
Charity accounting requirements Preparation of receipts & payments or accrued accounts depending largely on body’s income level
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Charity and company accounting requirements Accrued accounts only regardless of income level |
Charity accounting requirements Preparation of receipts Discretion for charity trustees to choose |
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Extent of powers |
Unlimited powers in furtherance of purposes Subject to any restriction in |
Unlimited powers in furtherance of purposes Subject to any restriction in the governing document |
Unlimited powers in furtherance of purposes Subject to any restriction in the governing document Subject, in certain circumstances, to any restrictions in company law |
Limited powers Powers set out in governing document – these vary from very restrictive to very wide supplemented by those set out in trust law |
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Membership |
Must have at least two members (who may also be charity trustees) May have a single-tier structure Resolutions of members are required before certain actions can be taken Members are subject to some of the duties of charity trustees Meeting of members must be held at least every 15 months Membership cannot be transferred (see section 5.2) |
Must have at least two members (who may also be charity trustees) May have a single-tier structure Governing document sets out the powers that members have and how decisions may be taken Members are not subject to any of the duties of charity trustees |
Must have at least one member May have a single-tier structure (governed Resolutions of members are required for certain decisions Members are not subject to any of the duties of charity trustees |
Does not have a membership structure |
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Specific duties and requirements |
Duty to keep registers of members and charity trustees, and to make these publicly available in certain circumstances Governing document must contain a number of basic elements in relation to the body’s governance |
No specific duties or requirements, other than those set out in the governing document or in policies and procedures adopted by the charity trustees |
Wide-ranging duties and requirements set out by company law including duty to keep registers of members and directors |
Duties as set out in the governing document Trustees are subject to the requirements of trust law |
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Removal from the Register and dissolution |
Removal from the Register results in dissolution Dissolution Requirement for public notice of dissolution Option for creditors to instigate sequestration and subsequent dissolution (see section 7.4) No option for |
Removal from the Register does not lead to dissolution; body can continue to exist without charitable status but must use remaining charitable assets solely for charitable purposes Dissolution takes place in line with requirements set out in the governing document No requirement for public notice |
Removal from the Register does not lead to dissolution; body can continue to exist without charitable status but must use remaining charitable assets solely for charitable purposes Dissolution takes place in line with constitutional requirements (normally following a resolution of the members) or Companies House dissolves the body by removing it from the Companies Register after a public notice period Option for creditors to instigate liquidation and subsequent dissolution Option for the body to be restored (through a court procedure) following dissolution to allow outstanding transactions with the body to take place |
Removal from the Register does not lead to dissolution; body can continue to exist without charitable status but must use remaining charitable assets solely for charitable purposes Dissolution takes place when all trust property is expended or at the discretion of the charity trustees if their powers permit No requirement for public notice of dissolution |