A Scottish Charitable Incorporated Organisation (SCIO) is regulated under the Charities and Trustee Investment (Scotland) Act 2005 with the Office of the Scottish Charity Regulator (OSCR) as the regulatory body. A SCIO’s existence is exclusively dependent on its entry on the Scottish Charity Register.
The dissolution or winding up procedures for a SCIO follow similar lines to those of any incorporated organisation, but the whole process is done via OSCR. You are advised to speak to OSCR prior to following any of the dissolution processes.
A SCIO can be dissolved (that is, removed from the Scottish Charity Register) either:-
- at its own request by making a formal application to OSCR
- be creditor-led sequestration
Dissolving a Solvent SCIO
Assuming that the SCIO is solvent, the members will need to agree a resolution which states that the dissolution of the SCIO depends on:-
- OSCR’s consent
- satisfactory settlement of any debts and liabilities
- satisfactory transferral of surplus assets - the members will need to state which body/bodies should receive these
This resolution must be passed no more than 15 days before making the application to dissolve to OSCR. OSCR will require you to send a copy of your constitution along with the application which declares solvency of the group, the notice period for dissolution and pro-forma balance sheets.
OSCR will publish the Notice of Application for Dissolution on its website within 14 days of your application. This will remain on the website for 28 days during which time anyone may contact OSCR to offer further information or to object. After this initial period, OSCR will make its decision on the dissolution within 21 days.
If OSCR consents to the dissolution request, the SCIO can then proceed with the rest of the winding up process (within a timescale agreed with OSCR). This will include:-
- the transferral of assets to the body (or bodies) named in the resolution by the members
- Evidence that any other condition(s) of the consent given by OSCR has been satisfied
Dissolving an Insolvent SCIO
A SCIO can declare itself insolvent and apply to OSCR to be dissolved if it has outstanding debts of at least £1,500. The members will need to pass a resolution for the SCIO’s estate to be sequestrated and this needs to be presented along with the application.
Sequestration refers to the action of taking legal possession of assets until a debt has been paid or other claims have been met. The decision on whether or not the SCIO will be sequestrated (and the process associated with this) is dealt with by the Accountant in Bankruptcy (AiB). The AiB is the agency of the Scottish Government that supervises the process of insolvency in Scotland – they will act as the Trustee in Bankruptcy during the dissolution process.
OSCR will publish the Notice of Application for Dissolution on its website within 14 days of your application. The application will also be passed to the AiB to consider the sequestration request (there will be a fee associated with this).
The public Notice will remain on the OSCR website until the sequestration is either awarded or refused. This is likely to take 4-6 weeks, during which the AiB will:-
- establish the SCIO’s debts and liabilities
- publish notice of the sequestration in the Register of Insolvencies (available on the AiB website)
- hold a meeting of creditors (if appropriate)
- realise the estate and make payments to creditors if there is sufficient funds to do so
Any surplus assets will then be transferred to the body(or bodies) named in the SCIO members’ resolution and OSCR will then remove the SCIO from the Scottish Charity Register. The SCIO will then cease to exist.
Creditor-led Sequestration of a SCIO
Where a SCIO is insolvent, the SCIO’s creditors (and any other third party) can make a petition for the sequestration of the SCIO as long as the SCIO owes them at least £3,000.
The creditor (or third Party) will need to first notify OSCR and the SCIO of their intention to lodge a petition. This notification needs to be made between 7-14 days before the petition is lodged with the Sheriff Court. If the petition is successful and the sequestration of the estate awarded by the Court, the Trustee in Bankruptcy must notify OSCR.
OSCR will then publish a Notice of the award of sequestration on its website. The process and timescale of the process are similar to the dissolving of an insolvent SCIO when the application comes from the SCIO itself.
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Last Updated 05/02/2013 14:22