Legal news

First charitable company converts to SCIO

Scotland's charity regulator has approved the first conversion of an existing charitable company to a new legal form. The Office of the Scottish Charity Regulator (OSCR) has confirmed that the Glen Urquhart Childcare Centre (SC024692) has successfully applied to become a Scottish Charitable Incorporated Organisation (SCIO).

The SCIO is unique to Scottish charities and provides a high degree of protection against personal liability for charity trustees. Since April 2011, OSCR has granted SCIO status to 215 new charities, accounting for some 20% of applications for charitable status. The Glen Urquhart Childcare Centre is the first existing charitable company to convert to the new legal form since this option became available earlier this year.

Board Director Arlene Johnstone said that conversion to SCIO status gave the trustees peace of mind and encouraged new focus on its activities. 'We now have the reassurance of continued protection against personal liability, along with reduced reporting,' she added. 'As a company limited by guarantee, we were required to report both to Companies House and to OSCR as charity regulator. We accept as a SCIO there are new responsibilities, but reporting only to OSCR means that we can focus on providing our services to the local community.'

Charities can exist as a number of legal forms, including provident and industrial societies, unincorporated associations or companies limited by guarantee. The SCIO is a corporate body able to enter into contracts, employ staff, incur debts, and to sue and be sued, providing protection against liability for its trustees while not subject to the same reporting requirements as a company. It also provides reassurance for those entering into contracts, and for creditors.

In addition, a company limited by guarantee must produce fully accrued accounts regardless of its size, while a SCIO is subject to the same accounting thresholds as unincorporated charities.

OSCR's Head of Charity Services, Martin Tyson, welcomed the new conversion and predicted that levels of applications for SCIO status would remain high. 'The SCIO legal form was keenly awaited in Scotland's charity sector and we continue to see a high level of demand,' he said. 'The SCIO legal form offers a number of benefits but it's also important that for those seeking conversion to read our guidance and to satisfy themselves that the SCIO is appropriate for their organisation.'

May  2012

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