Charitable Incorporated Organisation

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Charitable Incorporated Organisation (CIO) is a new legal structure for charities offering some of the benefits of incorporation.  The regulations for introducing CIO’s into England & Wales have not yet been finalised but the concept was enacted within the Charities Act 2006.

A CIO:-

  1. Is a corporate body – a legal entity in its own right.  The CIO therefore acts (for example incurring liabilities and owning assets) in its own right not through trustees.
  2. The CIO trustees can still be liable in similar circumstances to those where a Company Director faces personal liability – for example where they have acted recklessly, negligently or outside powers granted to them within the constitution of the CIO.
  3. A CIO exists only whilst it is listed on the central register of CIO’s.  The CIO will be removed if it no longer meets the test for charitable status.  The Charity Commission may direct the CIO to take specified steps to meet the charity test or in default to be wound up.

There are limits on what a CIO may do:

(a) A CIO may not convert to another legal form – for example a limited company

(b) A CIO may not merge with another charity which is not a CIO

(c) A CIO may not seek its removal from the register of CIO’s – other than by dissolution

The CIO structure is likely to be suitable for small to medium size charities that want to restrict Trustees potential exposure to liability for contracts – for example, for contracts of employment.

The CIO does not have to comply with all of the obligations of The Companies Act but:

  • Must be registered with the Charity Commission
  • Must have a registered office
  • Must submit an Annual Return and Accounts to the Charity Commission
  • Must have a register of members and trustees
  • Must have a formal constitution
  • Must hold formal meetings at least once every 15 months

We can assist with advising and acting:

  • In the formation of CIO
  • Converting your existing charity to a CIO
  • Guiding and assisting you with the administrative obligations of managing a CIO
  • In the merger of two or more CIO’s

 

WE ARE ABLE TO OFFER SPECIALIST ADVICE

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Lucy Robinson
Chartered Legal Executive

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