05 October 2009

Charitable Incorporated Organisations move one step closer

The Charities Act 2006 (the ‘Act’) promised a new corporate structure designed specifically for charities – the Charitable Incorporated Organisation (“CIO”).

Generally, the introduction of the CIO is seen as a welcome development as, for the first time, charity trustees will be able to enjoy the benefits of limited liability without the burden of dual regulation by the Registrar of Companies and the Charity Commission.

Most existing and new charities will be eligible to become a CIO, although exempt charities and charities currently operating as Industrial & Provident Societies will not.

The Charity Commission has now published two forms of model constitutions:

  • a foundation model (applicable where the members of the CIO and its trustees are identical); and
  • an association model (applicable where the CIO’s membership is distinct from its trustees).

Consultation response

The joint statement made by The Office of the Third Sector in the Cabinet Office and the Charity Commission indicates that a number of changes to the initial CIO proposals have been agreed. These include:

  • Ensuring a robust duty of care for CIO trustees by removing a proposal that trustees could take less responsibility for their charity’s activities;
  • Tightening up rules on access to personal information in the registers of trustees and members that CIOs will have to maintain; and
  • Replacing a number of minor criminal offences for administrative failings with the power for the Commission to direct rectification.

CIO availability

The joint response indicates that it is hoped that the new legal form will be introduced by ‘spring’ 2010 although it has not yet been decided whether all the provisions will be introduced in one go or implemented in stages. It has been suggested, for example, that the regulations may only initially allow new incorporations, introducing conversions from existing legal forms at a later stage so to avoid over-loading the Commission.

A summary of the consultation and next steps can be found by clicking here.

For more information about the CIO contact Chris Priestley.

Category: Article