Scottish Charitable Incorporated Organisations – dissolution regulations amendments: consultation

Section A: Changes to the SCIO dissolution application process

The proposed changes outlined in this section are intended to promote confidence in the SCIO dissolution process by:

• enhancing the information provided to the public about an application for dissolution
• increasing awareness of SCIO dissolution applications and opportunities to make representations to OSCR
• removing practical barriers to proceeding with applications.

A1. A solvent SCIO should be ‘inactive’ once an application for dissolution is submitted

Our intention is to ensure that a SCIO which has applied to dissolve does not continue its operations, other than any activities necessary to ensuring its orderly winding up. This is to ensure that the SCIO does not take on any new assets or incur any new debts once it has applied to be dissolved. We also intend to require a SCIO to notify OSCR of any substantive changes to its assets or liabilities following an application for dissolution. These changes will ensure that OSCR has accurate information about the SCIO’s final financial position.

Activities necessary for an orderly winding up may include:

• settling remaining debts and/or terminating contracts
• meeting constitutional obligations (such as holding a members’ meeting or complying with a resolution of the SCIO’s members)
• complying with a statutory requirement (such as preparing and filing accounts).

Q 1 Do you agree or disagree that a SCIO should be ‘inactive’ once it submits an application for dissolution?

Agree / Disagree / Don’t Know Please give reasons for your answer.

Q 2 Do you agree or disagree that a SCIO should inform OSCR of any material changes in its assets and/or liabilities after it submits an application for dissolution?

Agree / Disagree / Don’t Know Please give reasons for your answer.

A2. Amend the requirement for the declarations of solvency or insolvency and extend the information provided in the published notice of application

The Dissolution Regulations set out the information a SCIO must provide when it applies to OSCR for dissolution. This includes:

1. a declaration of either solvency or insolvency

We propose to replace the current declaration with a new statement. This is to make it clearer to any trustee signing it, and any third party seeking to rely on it, on the extent and effect of the statement.

2. a notice of application for a dissolution

This notice is published on the OSCR website; however, the information it contains is currently very limited. We propose to revise it to include more information for any interested parties. As SCIOs are already required to provide this information as part of the application process, we simply intend to make more of it publicly available.

• Current information for solvent applications
  • Schedule 1: declaration of solvency
  • Schedule 2: notice of application
• Proposed new information
  • Annex 1: revised schedule 1 - new statement of solvency
  • Annex 1: revised schedule 2 - new notice of application for solvent dissolution
• Current information for insolvent applications
  • Schedule 3: declaration of insolvency
  • Schedule 5: notice of application
• Proposed new information
  • Annex 2: revised schedule 3 - new statement of insolvency
  • Annex 2: revised schedule 5 - new notice of application for insolvent dissolution

Q 3 Do you agree or disagree with the changes set out in Annex 1 on the solvent dissolution application? Agree / Disagree / Don’t Know Please give reasons for your answer.

Q 4 Do you agree or disagree with the changes set out in Annex 2 on the insolvent dissolution application?

Agree / Disagree / Don’t Know Please give reasons for your answer.

A3. Notices of solvent and insolvent dissolution published on the OSCR website, and anywhere else OSCR considers appropriate

Currently applications for SCIO dissolution (both solvent and insolvent) must be published on the OSCR website. This gives members of the public, donors and creditors notice of the intended dissolution.

We propose to amend the regulations so that OSCR can publish notices anywhere they consider appropriate (such as a community website, local or sector press or the charity’s own website). This would make applications more visible for any interested parties. We do not intend to prescribe where an application must be published, as this will not always be necessary and will vary depending on the SCIO and the application.

Q 5 Do you agree or disagree with our proposal to allow OSCR to publish notices anywhere it considers appropriate?

Agree / Disagree / Don’t Know Please give reasons for your answer.

A4. Alter the publication period of solvent SCIO dissolution notices

The current regulations require the notice of a solvent SCIO’s dissolution application to be published on the OSCR website for 28 days. While this may be enough time for many applications, there may be cases where a longer publication period is desirable. In a large or complex SCIO, interested parties (such as members of the public, donors or creditors) may need more time to become aware of the application and consider whether they wish to make representations to OSCR.

We propose to change the publication period to a minimum of 28 days up to a maximum of 90 days. OSCR would determine the exact length of time that the notice should be published based on the SCIO’s individual circumstances.

Q 6 Do you agree or disagree with the changes proposed to the publication period for the notice of a solvent SCIO’s dissolution application?

Agree / Disagree / Don’t Know Please give reasons for your answer.

A5. Amend the requirement for a members’ resolution

The current Dissolution Regulations require at least two-thirds of a SCIO’s members to pass a resolution for dissolution (see Regulation 3(2) and (3) and Regulation 5(1) and (2)). This then accompanies the application to OSCR.

OSCR’s practical experience is that there are often cases where achieving the required resolution of two-thirds of the membership is not possible. In most cases this is because members are no longer contactable or engaged, particularly where the SCIO is no longer operating. This leads to the application stalling and leaves the SCIO in a ‘limbo’ state.

We propose to add to the Dissolution Regulations so that, for cases where it is not possible to obtain a members’ resolution, the charity trustees themselves can provide a resolution passed by two-thirds of their number. This would need to be accompanied with an explanation as to why a members’ resolution was not obtainable. OSCR can then determine whether the explanation is acceptable, and if the application should be progressed on that basis.

Whilst a members’ resolution should always be sought in the first instance for an application to dissolve, we believe the regulations need to recognise that this is not always possible and therefore should provide an alternative route.

Q 7 Do you agree or disagree with our proposed approach to amend the requirement for a members’ resolution?

Agree / Disagree / Don’t Know Please give reasons for your answer.