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Supporting Scotland's vibrant voluntary sector

The Scottish Council for Voluntary Organisations is the membership organisation for Scotland's charities, voluntary organisations and social enterprises. Charity registered in Scotland SC003558. Registered office Caledonian Exchange, 19A Canning Street, Edinburgh EH3 8EG.

Changing legal structure

Do you need to change your organisation's legal structure? Find out how to do it in this guide

There are lots of reasons you might be thinking about changing the structure of your organisation:

your organisation has grown or developed, and your current structure isn’t really fit for purpose anymore
you want more protection for your trustees
you would prefer to have fewer regulators to report to
you want to be able to access some other sources of funding.

Whatever the reason, we hope this guidance will help you through the process of changing the legal structure of your organisation.

To help determine which structure best aligns with your organisation's goals, please refer to our guide on choosing the right charity structure.

It’s important that your trustees/committee members are aware that changing your structure will take time. Depending on your current structure, what you want to change to and the work that you do will affect the amount of time and effort needed.
You may need to manage and run two organisations for a period of time during the changeover.

First steps

Check your current constitution. Whatever structure you are or want to change into, you will need to follow the process or procedure as in your own current constitution first. Hopefully there will be clauses giving you the power to be able to wind up the organisation as well, the clauses you need to look out for are detailed below:

If you are a registered charity you should have a dissolution clause which should state that assets must be used for purposes which are the same as - or which closely resemble - the purposes of the current charity.
If your current organisation has members, they will need to formally approve any change and you should keep clear minutes of meetings and a clear record of any decisions. These clauses will cover decision making by the members and should cover the process you have to follow to call a general meeting of the members and how they can approve a resolution (which is a proposal for a decision that your members have to formally vote on to approve). You might also have the power to have a written resolution, which would not require an in person meeting of the members and allows your members.
If your organisation does not have members then the Trustees should be able to make all the necessary decisions, but again you need to check your own constitution and keep clear records and minutes of any decisions taken.

No power?

If you don’t have any clauses within your current constitution to be able to make some or all of these changes then you may need to apply to OSCR under the reorganisation scheme. You can use the reorganisation scheme if your constitution does not give your trustees the power to be able to wind up the existing charity or to transfer property to another charity – you need these powers within a voluntary association or a trust, to be able to change your legal structure.

Who needs to know?

There are various people who may need to be kept informed if you have changed or intend to change your legal structure.

Registered Charity?

Are you a registered charity? You need to follow charity law requirements about making changes to your charity.

Any other regulators?

You may need to consult them or check their requirements as well. Some of these other regulators are detailed below, this list does not necessarily include all regulators that your organisation may have to report to or consult:

Your funders
Your local authority
HMRC
Disclosure Scotland
Information Commissioner's Office (ICO) - UK
Other Regulators like the Care Inspectorate

If you are creating a new legal entity you may need to re-register with them and there might be costs involved. This is a specific issue for bodies registered with the Care Inspectorate. An application to cancel the Care Inspectorate registration for the old charity/organisation has to be made and, in some cases, can be refused – so contact the Care Inspectorate as soon as possible.

Banks

Check with your bank early in the process as it may take a while to make any changes.

If you are setting up a new SCIO or Company and closing down an existing charity you will need to set up a new bank account once the new charity is registered so that it is ready to receive the cash balances from the old charity. You should do this once the new charity is registered.

You may need to run both bank accounts until the assets are all transferred across. Many banks have accounts suited to specific legal forms - make sure you have the correct one set up. SCVO has information about choosing bank accounts and a comparison table which might help with this.

It’s important that your trustees/committee members are aware that changing your structure will take time. Depending on your current structure, what you want to change to and the work that you do will affect the amount of time and effort needed. You may need to manage and run two organisations for a period of time during the changeover.