Scottish Charitable Incorporated Organisations – dissolution regulations amendments: consultation

Section B: Removal of SCIOs from the Scottish Charity Register

Unlike with other legal forms for charities which can continue to exist even if removed from the Scottish Charity Register (the Register), OSCR cannot use its powers under section 30 of the Charities and Trustee Investment (Scotland) 2005 Act (the 2005 Act) to remove a SCIO from the Register if it no longer meets the charity test.

When it appears to OSCR that a SCIO no longer meets the charity test, it must act in accordance with regulation 8 of the Dissolution Regulations. This means OSCR must either:

• direct the SCIO to take steps to meet the charity test
• direct it to apply to be removed from the Register and dissolved

If a SCIO fails to comply, OSCR must then apply for an order to the Court of Session. The Court may ‘deal with the SCIO and its trustees in any way it thinks fit’. No such applications have been made so far, and it is unclear what the extent of the court’s powers would be.

The working group sought to provide a route for OSCR to remove a SCIO without having to apply to the court by suggesting OSCR be given a power to remove (and thereby dissolve) a SCIO which no longer meets the charity test and a SCIO which has failed to submit accounts and has not responded to OSCR’s communications.

The working group recommended that the power be used where:

• inquiries had been made
• OSCR considered the SCIO no longer meets the charity test and
• the SCIO has failed to respond to directions to take steps to meet the charity test and/or to apply to be dissolved and removed from the Register.

The working group also recommended extensions to OSCR’s notice serving abilities and a required publication period for a notice to remove and dissolve an unresponsive SCIO.

Many of the working group’s recommendations on SCIO removals have been superseded by the new section 45A of the 2005 Act (inserted by the 2023 Act). This section now gives OSCR the power to remove charities (other than SCIOs) from the Register where they have failed to submit accounts and do not respond to OSCR's communications. For SCIOs in equivalent situations, provision is required in the Dissolution Regulations before they could be removed from the Register and dissolved.

We propose to provide a route for OSCR to remove a SCIO which either:

1. no longer meets the charity test and has not responded to directions issued under regulation 8

2. has failed to submit accounts and has not responded to OSCR’s communications integrating the provisions of section 45A for SCIOs within the Dissolution Regulations.

We also propose that the removal process for SCIOs is broadly similar and reflects the section 45A provisions, to ensure consistency and fairness. For either case this would be:

1. For a SCIO that no longer meets the charity test and does not respond to directions issued by OSCR under regulation 8:

• OSCR gives notice to the SCIO of its intention to remove the charity from the Register. The notice must specify that it has been given due to the failure to comply with directions issued under regulation 8, and that the SCIO may be removed if it fails to respond within 3 months.
• OSCR must publish on its website and anywhere else it considers appropriate, the notice of intention to remove a SCIO.
• Unless the SCIO contacts OSCR within 3 months of the date of the notice, OSCR may remove the SCIO.

It should be noted this proposal is not intended to cover situations where OSCR issues a direction under regulation 8 and the SCIO responds but does not comply. The regulation already provides a review and appeal mechanism in cases where a SCIO disagrees with the direction issued by OSCR.

2. For a SCIO that has failed to submit accounts and fails to respond to OSCR’s communications:

• OSCR will follow the process set out in section 45A (largely outlined above).

It should be noted that the section 45A process is not automatic. OSCR may or may not decide to proceed with removal on a case-by-case basis.

Q 8 Do you agree or disagree with the proposal to allow OSCR to remove SCIOs from the Register where the SCIO is not meeting the charity test and has failed to respond to directions issued by OSCR?

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

Q 9 Do you agree or disagree with the proposal to align the process for removing a SCIO from the Register with that set out in section 45A of the 2005 Act?

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

Q 10 Where OSCR is considering administratively removing a SCIO, what steps should OSCR take to ascertain the financial position of the SCIO?

There may be a possibility that SCIOs could be restored. This is discussed in more detail in Section C.

Q 11 Should the removal provisions proposed in Section B only be introduced if there is an ability for restoration?

Yes / No / Don’t Know Please give reasons for your answer.