Community Empowerment (Scotland) Act 2015: community transfer bodies' guidance

5. Community Transfer Bodies

Different types of body

5.1. To make an asset transfer request, your organisation needs to be a "community transfer body". This is defined in section 77 of the Act. It can be either a community controlled body (defined in section 19) or a body designated by the Scottish Ministers.

5.2. A community controlled body does not have to be incorporated, but It does have to have a written constitution.

5.3. A constitution is a document which sets out what a group is for and how it is organised. It lets everyone know who can join the group, what the rules are and how decisions will be made. You will usually need to have a constitution if you want to open a bank account or apply for grants.

5.4. If a group is incorporated it is legally a single body rather than just a group of individuals. This means the body can enter into contracts or leases itself, which continue even if the membership changes. Being incorporated may protect the members from liabilities, otherwise they could be required to pay for any debts or damages incurred by the body.

5.5. If you want to buy a property through asset transfer you must be incorporated as a company, a SCIO (Scottish Charitable Incorporated Organisation) or a BenCom (Community Benefit Company). This is set out in section 80. Alternatively you may be designated by the Scottish Ministers - see paragraph 5.14.

5.6. If your request is for lease or other rights, the property remains in the ownership of the relevant authority, and they will want to be satisfied that your structure and governance is appropriate for the responsibilities you are seeking to take on. They may require you to be incorporated. Funders may also have particular requirements for their grants.

5.7. SCVO has helpful advice on its website http://www.scvo.org.uk/setting-up-a-charity/ to help you decide what sort of organisation you want to be, including whether you should become a charity.

5.8. Whatever type of organisation you choose for your group, to qualify as a community controlled body it must have certain provisions in its constitution or other governing documents (Articles of Association for a company; registered rules for a BenCom). Model documents will be provided on the Scottish Government's website, which will cover all the requirements. If you are already an established group, you will need to check your existing constitution or governing documents to see if they include all the required points.

5.9. Bodies eligible for community rights to buy are also eligible for asset transfer - see paragraph 5.18.

Requirements for a community controlled body

5.10. To qualify as a community controlled body, your constitution, Articles of Association or registered rules must include the following things:

(a) A definition of the community to which the body relates.

Your group may represent the community in a particular area or people who have a common interest or characteristic. (See below for more on "communities of interest"). You should make sure you define the community clearly so you can know whether a person is a member of your community or not - this is important for the membership requirements.

(b) provision that membership of the body is open to any member of that community

Membership of your body must be open to anyone who is a member of the community you have defined. There must not be any additional requirements.

Some people have queried whether a body is open to all if it charges membership fees. The legislation does not prevent charging fees to cover the costs of your activities, but generally they should be set at a level that is affordable for members of your community. Membership fees are more common for communities of interest based around a common activity, for example for a sports club to cover insurance, hall hire and registration with the sport's governing body. Alternatively these costs could be covered by fundraising.

(c) provision that the majority of the members of the body is to consist of members of that community

It can be helpful to allow people to join your body who are not members of the community, to bring in additional skills and provide a wider base of support, for example from people who have moved away from the area or organisations who support the community body's purposes. However, the governing documents must require that those who are members of the community must always be in the majority. The model documents manage this by providing for those who are not members of the community to be Associates rather than Members.

If you want to buy property through asset transfer, you must also have provision that the body must have at least 20 members. This is to make sure there are enough people to take on the responsibilities of ownership and keep the body going; very small organisations can have difficulties if one or two people leave. If your community is very small and getting 20 members would be difficult, you can apply to the Scottish Ministers for designation as a community transfer body.

(d) provision that the members of the body who consist of members of that community have control of the body

Having "control of the body" means that the members of the community are in charge of the decisions made by the body. The model documents do this by having rules that only Members can vote at General Meetings, a majority of the Board must be made up of Members, and the Chair (and Vice-Chair, if you have one) must be members, if they have a casting vote in board meetings.

(e) a statement of the body's aims and purposes, including the promotion of a benefit for that community

Your aims and purposes may include activity that goes wider than your own community, such as raising money for charity, promoting your interest to other people or sharing your experience with communities in other areas. But at least one of the purposes of the body must clearly be for the benefit of the community you represent.

(f) provision that any surplus funds or assets of the body are to be applied for the benefit of that community.

Any money or property the body has, after covering its running costs, must be used to benefit your community as a whole. Bodies incorporated as co-operatives, which distribute their profits or dividends to members of the body, are not eligible to make requests for ownership.

If you are setting up a company and want to buy property through asset transfer, your Articles of Association must include arrangements for what happens to the body's assets if it is wound up, to make sure they are passed on to another community or charitable organisation. These requirements apply after settling any liabilities or contractual agreements, which would include any arrangements to pay back part of a grant or other support. The property must be transferred:

(i) to another community transfer body,

(ii) to a charity,

(iii) to such community body (within the meaning of section 34 of the Land Reform (Scotland) Act 2003) as may be approved by the Scottish Ministers,

(iv) to such crofting community body (within the meaning of section 71 of that Act) as may be so approved, or

(v) if no such community body or crofting community body is so approved, to the Scottish Ministers or to such charity as the Scottish Ministers may direct.

If your organisation is a SCIO or BenCom, the standard requirements for those types of body include arrangements to make sure property is transferred to another similar body.

Communities of interest

5.11. The legislation on asset transfer does not define what a "community" can be. It simply requires a community transfer body to define the community it relates to, and ensure the body is open to and controlled by members of that community, and uses its assets to benefit that community. Whether an organisation is eligible to make an asset transfer request depends on their constitution meeting the requirements, not on what community it represents.

5.12. A community can be any group of people who feel they have something in common. In many cases, it is that they live in the same area. However, it can also be that they share an interest or characteristic. Communities of interest could include faith groups, ethnic or cultural groups, people affected by a particular illness or disability, sports clubs, conservation groups, clan and heritage associations, etc. They may be very specialised or local, ranging up to national or international groups with thousands of members.

5.13. An asset transfer request will be judged on the benefits it will deliver, not on the community it represents. However, if your community is a community of interest you should consider engaging with local people in the area around the property, and think about how your proposals may affect them. Relevant authorities are likely to take into account the wider benefits or impact on other groups and any potential for conflict in assessing all requests.

Designation

5.14. The Scottish Ministers can designate a body to be a community transfer body. They will do this by making an order. Ministers can either designate an individual body, or could designate a class of bodies, if they decided in future that all organisations of a particular type should be able to make asset transfer requests. A designated community transfer body is only entitled to make a request for ownership, if the designation order states that it is allowed to do that.

5.15. The criteria for community controlled bodies are there to make sure the organisation truly represents the members of its community and is open and inclusive. It must also be clear that the organisation uses its assets and resources for the benefit of that community as a whole and not, for example, for the private benefit of those individuals who are members of the organisation. Ministers will normally only designate a body (or a class of bodies) if it works in a way similar to a community-controlled body, and there is a good reason why it is not able to meet the requirements in the Act. Examples could include a charitable trust which cannot change who is on its Board, or an organisation representing a small community which could not reasonably get 20 members.

5.16. Due to the responsibilities involved in dealing with any property, it is unlikely that unconstituted organisations will be accepted for designation. Organisations seeking to be designated to buy property should be incorporated.

5.17. Ministers may consider designating a class of bodies as community transfer bodies if the rules for being that type of body are similar to, the requirements for a community controlled body. Examples could include members of an umbrella organisation, or bodies which are regulated under particular legislation. This could be used to avoid the need for other legislation, or the rules of the umbrella organisation, to be amended to match the asset transfer requirements. To propose a class of bodies to be designated, a representative of those bodies should contact the Scottish Government Asset Transfer Team to discuss the issues.

Bodies eligible for Community Rights to Buy

5.18. If your organisation meets the requirements for the community right to buy or the crofting community right to buy under the Land Reform (Scotland) Act 2003, you will also be eligible to make an asset transfer request. The Scottish Ministers have made an order designating such bodies as community transfer bodies which can make asset transfer requests, including for transfer of ownership. Your constitution, articles of association or registered rules will need to meet the requirements set out in:

• subsection (1), (1A) or (1B) of section 34 of the 2003 Act (community right to buy), or

• section 71(a) to (h) of the 2003 Act (crofting community right to buy),

5.19. Further guidance and model governing documents are available at http://www.gov.scot/Topics/farmingrural/Rural/rural-land/right-to-buy.

5.20. If your organisation wants to use this designation to make an asset transfer request, you do not require a confirmation letter from the Scottish Ministers. (This letter is needed to confirm that the main purpose of the community body is consistent with sustainable development, before registering an interest in land for the purposes of community right to buy.) It is up to the relevant authority to which the request is made to decide whether a community organisation without a confirmation letter is eligible to make an asset transfer request, either as a community controlled body or as a designated body. However, you should be aware that, if you apply to register an interest in land under the community rights to buy in future, the Scottish Ministers will make their own assessment of whether your community body meets the requirements. They will not rely on any judgement made previously by another relevant authority.

5.21. We expect that bodies eligible for the right to buy abandoned, neglected or detrimental land, or the right to buy land for sustainable development, will be designated when those parts of the legislation come into force.

Applying for individual designation

To apply to be designated as a community transfer body, please send an application by email to assettransferguidance@gov.scot.

Your letter must include the following:

• Organisation name and address
• Company, charity or other registration number, if applicable
• Contact name, role within the organisation and contact details.
• An email address is preferred. It is also helpful to have a daytime telephone number, in case we need to clarify any points in your application.
• A copy of the organisation's constitution, trust deed or other governing documents.
• Details of which of the criteria for a community-controlled body your organisation does not meet, and an explanation of why it is not possible to change the governing documents to meet those criteria.
• If the issue is with the number of members, please explain how the community you represent is defined and provide the total number of people in that community.

• A description of how the organisation seeks to work in a community-controlled way despite the differences in its constitution. For example, how the views of members or the wider community are taken into account, even if they are not able to have a formal role in decision-making.

If you are already in discussion with a relevant authority about a possible asset transfer request, please include a brief description of the situation, and details of your contact at the relevant authority.