Before SCIOs existed, companies limited by guarantee were the corporate structure of choice for charities, and they continue to remain a strong option for new charities and those considering incorporation.
Like a SCIO, a charitable company has separate legal personality. This allows the charity to hold property, enter into contracts, employ staff and manage finances in its own name, providing trustees with a level of protection when carrying out their role.
Unlike a SCIO, however, a charitable company operates within two distinct legal frameworks. It must comply with charity law and report to OSCR, while also meeting company law requirements and filing obligations at Companies House. Those acting as trustees are therefore subject to both charity trustee duties and the statutory duties of directors under company law.
This dual regulation brings additional formality and administrative responsibility, but it can also be an advantage. Company law provides a well‑understood governance framework that is often attractive to funders, lenders and commercial partners, particularly where a charity is entering into complex contractual arrangements or operating beyond Scotland.
For charities with significant assets, trading activity or ambitions to operate across jurisdictions, a company limited by guarantee can offer a robust and recognisable platform for long‑term growth.
How we can help
If you are considering setting up a charity, reviewing your existing legal structure or planning for growth, please get in contact with our Charities and Third Sector team.