At last, the charitable incorporated organisation (CIO), a new type of corporate entity designed specifically for charities, is here. After a wait of at least six years, the first applications to set up CIOs can now be submitted with the first registrations expected from 2nd January 2013.

A CIO is created on registration with the Charity Commission and is subject to the sole regulation of the Commission. It has the advantage of limited liability without the dual regulation of charity and company law.

Initially, CIOs will only be available for new charities, and then for existing unincorporated charities. Existing charitable companies will not be able to convert until 2014 at the earliest (an exact date is yet to be confirmed).

The lead up to CIOs has seen much discussion about their pros and cons, particularly whether charitable companies should consider converting. The CIO will not be suitable for every charity and on the whole we think that its disadvantages may well outweigh any advantages for larger and more complex charities.A company limited by guarantee is possibly a more suitable option for larger and more complex charities, especially those that might have need to issue debentures and grant fixed and floating charges in relation to their borrowing. There are, however, some less publicised advantages to CIOs including, for large membership charities, the email communication regime with members, which is much more flexible than for companies.

BWB is running a seminar on 29th January 2012 ‘The New Charitable Incorporated Organisation – a 60 Minute Guide’. It is pitched as a beginner’s guide so will cover the basics. You can book a place here. Separately, we are also taking bookings to brief boards at trustee meetings about the CIO.

For more information about CIOs please contact Thea Longley or Christine Rigby.

Posted on 10/12/2012 in Legal Updates

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