vas conference 2012 company law and charity law. alastair keatinge head of charities, lindsays
TRANSCRIPT
VAS Conference 2012
Company Law and Charity Law
Alastair Keatinge
Head of Charities, Lindsays
Legal Entities available to not for profit organisations
• Unincorporated
• Incorporated
Trust
Simple: no registration requirements
A way of holding assets to separate ownership from economic interest
Trustees personally liable
Unincorporated / Voluntary Association
Informal – no general regulation of this structure / no registration required
Not a legal entity distinct from those who run it
Creates problems for contracts and holding property
Potential liability of members
SALP – Scottish Association with Legal Personality - NEW
IncorporatedAcronyms Rule OK
CLG
Company Limited by Shares
Industrial & Provident Societies
SCIO
CIC
Industrial & Provident Society
Registered with Financial Services Authority
Must be:
bona fide co-operative society (i.e. for mutual benefit of the members)
Community benefit (“benecom”) (for the benefit of people who are not members)
Examples – retail co-operatives, community associations, housing associations, credit unions
SCIOs – Scottish Charitable Incorporated Organisation:Key features:
A SCIO is a corporate body – so can hold property, employ people, enter into contracts etc in its own name
Members of the SCIO have the benefit of limited liability (nil liability)
Incorporated by OSCR, rather than Companies House or the FSA – single step process for incorporation and charitable status
SCIOs – Scottish Charitable Incorporated Organisation:
Key features (cont):
Governed by charities legislation, rather than company law (cf CIO in England) or IPS legislation
Has a constitution, rather than articles of association/rules
The principal office must be in Scotland
A SCIO must have at least two members (which can include some or all of the charity trustees) – so can’t be wholly owned subsidiary
SCIOs – Disadvantages (Compared with Company Limited by Guarantee):
Less familiar to banks, landlords, some funders and the general public
Cannot grant a floating charge
Community right-to-buy legislation does not currently allow a SCIO to be registered as a community body
CICs – Community Interest Company
Key features:
Company name end with “Community Interest Company” or “CIC”, not limited
Badge of social enterprise…….. but cannot have charitable status
Can be company limited by guarantee or Company Limited by shares
Must satisfy “community interest test”
CICs – Community Interest Company
Key features (cont):
“Asset lock” – any transfer of assets (other than for the benefit of community or to another asset-locked body) must be for all consideration
Dividend cap – so unattractive to a conventional equity investor
CICs – Main Applications:
Generally a “Plan B” if charitable status not available
Badge of social enterprise (or public benefit)
Social entrepreneur(s) wanting control at board level, while drawing reasonable remuneration
Operations intended to deliver social benefit but outwith the boundaries for charitable status
Others:
Partnership (not) for charities – profit requirement
LLP (not) for charities – profit requirement
Incorporated by Royal Charter
Incorporated by Act of Scottish Parliament or by Statutory Instrument
Governance Structures:
Wide membership
Narrow Member/Trust Model
Supporters
