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Untitled Document
Scotland – Charities and Trustee Investment (Scotland) Act 2005
The Act represents the first major reform of charity law in Scotland for over 50 years. It deals with:-
The “charity test”
The Act provides a non-exhaustive statutory definition of what is charitable in law through the “charity test”. Future development will occur through caselaw, as the new provisions are interpreted by the courts and applied to the circumstances of individual cases.
There are to be two elements to the new definition. First, an organisation must have purposes falling within one or more of the listed categories. Secondly, it has to demonstrate that it provides public benefit in Scotland or elsewhere. There is no automatic presumption of public benefit for particular categories of charitable activities.
Office of the Scottish Charity Regulator (OSCR)
The charity regulator for Scotland, OSCR, has a wide role and significant powers. Its functions include keeping the Scottish Charity Register, registering new Scottish charities, and monitoring and providing support to Scottish charities. In addition, OSCR ensures the provision of public accountability of charities and the protection of the public.
Scottish Charitable Incorporated Organisation
A new optional corporate form for Scottish charities is to be introduced, the Scottish Charitable Incorporated Organisation (“SCIO”). The SCIO is to be a corporate body with independent legal identity which gives its members the protection of limited liability. The SCIO legal form will only be available to charities registered by OSCR and it is to be optional, not mandatory. Other familiar legal forms, such as the company limited by guarantee, will still be available to charities.
Registration of the SCIO itself will be with OSCR, not with Companies House, and OSCR will be the sole regulator for SCIOs. There will be a model constitution, which can be adapted or altered and detailed regulations will impose further requirements. Registrations will begin in 2007.
Miscellaneous
A number of other reforms have been or are being introduced, including some new statutory duties for trustees, regulation of public benevolent collections through a licensing system, new rules on relationships between charities and professional fundraisers and on relationships between charities and commercial participators. There are new statutory investment powers for trustees of all Scottish trusts, whether they are private trusts, public trusts or charities. A revised annual accounting and reporting regime for Scottish charities applies for financial years from April 2006. Charities have a legal duty to prepare accounts and reports meeting new detailed regulatory requirements and to file those accounts with OSCR every year. Charities will also have to observe new rules on publicising their charitable status on documents and stationery.
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