1. VAS Conference 2012 Company Law and Charity Law

2. Alastair Keatinge Head of Charities, Lindsays

3. Legal Entities available to not for profit organisations Unincorporated Incorporated

4. Trust Simple: no registration requirements A way of holding assets to separate ownership from economic interest Trustees personally liable

5. 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

6. Incorporated Acronyms Rule OK CLG Company Limited by Shares Industrial & Provident Societies SCIO CIC

7. 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

8. 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

9. 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

10. 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

11. 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”

12. 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

13. 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

14. 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

15. Governance Structures: Wide membership Narrow Member/Trust Model Supporters

16. © 2012 Alastair Keatinge alastairkeatinge@lindsays.co.uk 0131 656 5746 www.lindsays.co.uk