Scottish land transparency rules
Regulations have now been passed for the Register of Persons Holding a Controlled Interest in Land to come into being on 1 April 2022. This will place duties on certain landowning structures to disclose on a public register, details of those controlling the landowning entity (they are known as “associates”). The register will require details such as name, address and the capacity (e.g. trustee etc) in which the person has a controlling interest. It is mostly aimed at owners, but some tenants will have duties to provide information as well.
As with other transparency regimes, the aim is to provide details of human beings. That means the registration duties will not stop at the level of e.g. a trust or unincorporated association but ask for details of the trustees themselves. For some positions the rules involve an assessment of whether or not an individual “has the right to exercise, or who actually exercises, significant influence or control.” The emboldened part of that emphasises the rules are focussed on the realities of a relationship and not just the strict legal notion of influence or control.
The location of the entity is not relevant. So, an English structure with Scottish property interests will need to comply with the new rules.
After an initial grace period, there will be criminal penalties attaching to property owning entities which do not comply with their disclosure duties. After that period, there is 60 days from obtaining a controlling interest in which to bring the register up-to-date.
Charities that are CIOs or SCIOs will not be required to register. They form part of exemptions for bodies that are subject to “other transparency regimes”. (Although SCIOs are only subject to a limited transparency regime via OSCR.) Charitable trusts and unincorporated associations have no such exemption.
On “other transparency regimes”, entities subject to the Persons of Significant Control rules will not need to duplicate on this new register the provision of information that can be obtained via Companies House.
Legacies: a Scottish view of Knipe v The British Racing Drivers’ Motor Sport Charity
Many readers will be aware of the Knipe case. For those not aware of the facts, the background, in short, was this. The residue of an estate was to be divided among four organisations. Unfortunately, the names for two of the organisations did not match any actual charity or body. With that issue and a need to determine how the estate should be divided, the court was required.
In a Scottish context, a few high level comments can be made:-
Will drafting is important. Getting the right name of the intended recipient matters. It also matters to provide the executors with sufficient flexibility to deal with certain changes at a recipient charity or to address any misdescription. It may also be the case that there could be specific express instructions as what is to happen if e.g. a charity no longer exists… it might pass to another named charity or fall to other beneficiaries.
Will interpretation in Scotland. The Marley v Rawlings will interpretation Supreme Court decision featured in Knipe. There is short piece of passing Scottish consideration in Marley, but it is of course an English decision. Caution should be applied when seeking to use English interpretation rules as a guide to how a court might consider matters in Scotland.
General charitable intentions. In relation to one part of the residue, the court in Knipe decided that the words “Cancer Research” was sufficiently general to permit the executors to pass that part of the estate to any cancer research charity. As with Scottish will interpretation more widely, care needs to be taken as to how and when the Scottish court will conclude there was a general charitable intention which would allow a similar outcome to that in Knipe. In some ways in Scotland, it pays to be really general and get names really wrong! [We do not however recommend this approach to will drafting at all!]
Will rectification in Scotland. Since the Succession (Scotland) Act 2016 there has been the ability to apply to the court to rectify a will where the deceased’s instructions had not been properly implemented by the drafter of the will. That remedy has been used in the case of mis-naming a recipient organisation. But this rectification route is limited. It only applies to a failure in the implementation of the recording of someone’s wishes and that has been done by someone other than the deceased (e.g. a will writer).
Don’t ‘lose’ legacies before they even happen. Unlike England and Wales, Scotland does not have an equivalent of the register of mergers. When there is the restructuring of a Scottish charity, it is important to consider how future potential legacy income will be protected and secured and end up in the correct home.
Consultations on charity law and charity test guidance
We have previously updated on the current status of the review of Scottish charity law. The latest consultation round has closed. Readers might be interested to read the response from the Law Society of Scotland’s charity law sub-committee (of which we are a member) as a way of delving into the issues currently being considered. We will provide an update when Scottish Government reports back.
In light of the recent New Lanark cases (here is an overview of the decision as we had published in the Journal of the Law Society of Scotland), OSCR has issued a consultation on updates to its “Meeting the Charity Test” guidance. In particular the consultation ask for views on the section on “What is public benefit?” around the issues of assessing contributions to public benefit, including through commercial activities. The consultation and the proposed updates perhaps underline what we said of the New Lanark cases: context matters on the topic of charitable status.
Lots of politics… and then elections too!
Charities and political (or even ‘culture’, as some have described it) matters have attracted lots of attention in recent times. Whether it be the National Trust or student associations, there has been much said about charities engaging in what might be described as political or ‘controversial’ matters. In Scotland charities need to have regard to guidance from OSCR and the Electoral Commission as well as specific Scottish rules that relate to the run-up to elections. Elections for the Scottish Parliament are being held on 6 May.
And charities must also keep focussed on their constitutionally-stated purposes. It will be the purposes in their constitution, articles, trust deed, rules etc that will guide when and how the charity should engage in any issues including those viewed as political or controversial (whatever controversial really means!). For some, their purposes and their raison d’être make it vital that they engage in the political sphere… not for the benefit of politicians and their supporters but to further the charity’s aims and support its beneficiaries.
Charities (whether based in Scotland or not) must adhere to specific rules on campaigning or lobbying and must (as with rates relief cases, charitable status itself or charity tax treatments) know their purposes and keep their activities in line with their purposes… which can in some situations mean engaging in political or controversial matters.
The United Nations Convention on the Rights of the Child: Scots law incorporation
This is viewed as a landmark piece of legislation passed in March by the Scottish Parliament. In summary, the effect of this incorporation of the Convention will mean that:
- public authorities must not act in a way that is incompatible with the Convention
- courts will have powers to decide if legislation is compatible with the the Convention
- the Scottish Government will be able to legislate in other areas to ensure Convention compatibility
- the Children and Young People’s Commissioner in Scotland would have power to take legal action if children’s rights under the Convention are breached
- the Scottish Government must publish, and review annually, a Children’s Rights Scheme to evidence meeting the Convention’s requirements and set out its future plans for children’s rights
Charities and third sector bodies working with children and young people should be aware of the effects of this incorporation of the Convention into Scots law.
In a late twist, UK Government queried whether or not the Bill is fully within the legislative competence of the Scottish Parliament. This development has emphasised the complex mix of reserved and devolved matters within Convention incorporation and care will need taken by all those interested in the workings of the new rights and duties as to how the new law will actually operate.
Redress Scotland: legislation passed
The Redress for Survivors (Historical Child Abuse in Care) (Scotland) Bill has now completed its legislative process in the Scottish Parliament. It establishes Redress Scotland to administer a scheme for payments to survivors of historical abuse in residential care settings via contributions from public bodies, charities and others. You can read our previous overview of the provisions here.
For help and advice on Scottish charity law and Scottish legal issues for charities, get in touch with Alan Eccles: email@example.com / 07470808717.
“He is an experienced lawyer who is very well known among sources for advising clients on charity law matters.” Chambers High Net Worth 2020
Alan is “highly experienced in advising third sector organisations” … “efficient and has a very in-depth knowledge of the Scottish charity scene” Chambers & Partners 2020