Essentially incorporation means you open a new, incorporated charity, and close the old one. You undertake two separate processes:
Once charitable status and consent are granted, the ‘old charity’ can then transfer the assets and liabilities to the ‘new charity’.
In this guide we use the terms old and new charity as follows:
Old charity means the unincorporated charity that will wind up or dissolve.
New charity means the incorporated charity that will continue the work of the old charity.
The new charity might have the same staff, charity trustees, members, offices, etc but it will be a separate, different legal entity.
This means that the new charity will have a new Scottish charity number and a new name (see FAQs for more information). Any existing contracts, leases, funding arrangements or other agreements need to be moved to the new charity.
What is the difference between legal forms?
Charities can take a number of legal forms. The legal form is the structure, which becomes a charity. Some of these structures are ‘unincorporated’ and some are ‘incorporated’.
Think about whether you want to become a SCIO or a company. Our legal forms factsheet sets out the key characteristics of these types of charity legal form and some of the pro’s and con’s of each.
Put simply unincorporated charities, unlike companies and SCIO’s, do not have a legal personality. This means unincorporated charities cannot enter into contracts in their own name, the charity trustees have to do so on the charity’s behalf and may be personally liable if something goes wrong.
In Scotland the four most common types of charity legal form are: