Scottish Charity law update

On 28 June 2023, the Charities (Regulation and Administration) (Scotland) Act (the 'Act') came into force in Scotland.

The previous Charities and Trustee Investment (Scotland) Act 2005 was over 18 years old and remained largely unchanged since it was introduced. The new Act aims to bring charity law in Scotland up to date with the law in England, Wales and Northern Ireland.

Social Justice Secretary Shirley-Anne Somerville noted that the new Act 'makes practical improvements', particularly relating to 'increasing transparency' and to help ensure public trust is maintained.

Transparency 

The Act aims to increase transparency and accountability in charities, ensuring public confidence in Scotland’s charity sector. In line with the Charity Commission, OSCR will now publish the names of trustees on the public Scottish Charity Register and will also maintain an internal database of trustee contact details. Under special circumstances, for example when there is a risk to personal safety, trustees will be able to request that this information is not published.

In addition, OSCR will publish additional information on its website and on the Scottish Charity Register, covering annual accounts for all charities, which will not be redacted; a list of trustees whom the courts have removed and barred from acting as trustees in the future; and a record of charities that have merged to assist with the transfer of legacies.

OSCR Powers 

OSCR's powers will largely remain unchanged, with a number of key amendments. The Scottish Regulator's inquiry powers will newly allow it to investigate former charities and former charity trustees. Alongside this, the range of offences and situations that result in automatic disqualification of charity trustees will be extended to include offences including but not limited to bribery, association with terrorist groups or sexual offences.

In addition, OSCR will newly be able to enforce its 'power of positive direction': in certain circumstances the Regulator will have the power to direct charity trustees to take specific action, to appoint interim trustees in specific circumstances and to disqualify those in senior management positions within a charity.

The Scottish Regulator will also be able to remove unresponsive charities from the Scottish Charity Register who fail to submit their accounts and do not engage with communications from OSCR.

Connection to Scotland

Perhaps the most interesting update to the legislation is the requirement for all charities in the Scottish Charity register to have and retain a connection to Scotland. OSCR now has the power to refuse charitable status to applicants who have no (or very little) connection to Scotland and charities already in existence must maintain a connection to Scotland, and may be removed from the Register if they do not. The Regulator does not anticipate that this will affect genuine cross-border charities.

OSCR is set to publish a timetable and ongoing guidance for the introduction and implementation of the above changes in the coming months, to ensure there is time for the Scottish Regulator to assist charities and those who advise them with how best to prepare and adapt to the legislative changes.

If you have any queries or concerns relating to this,  or require legal advice on any charity issue you are facing, please get in touch.