BUSINESS LEGAL CHARITY LAW
Easing Regulation on the Charitable Sector
01/03/2011This update provides a quick guide to Charitable Incorporated Organisations (CIOs) which are a new legal form of incorporation designed specifically for charities. These are expected to be introduced in late spring 2011 and we will provide you with an up to date practice note when this happens.
The CIO structures are expected to become the most popular charitable vehicle in comparison with the current forms of charitable structures which include charitable companies, charitable trusts, companies limited by guarantee and unincorporated associations. A CIO will have the same advantages as a company limited by guarantee or a charitable company. It will have a separate legal personality and be able to contract and hold property in its name, rather than the name of its trustees. Also, the members and trustees are usually safeguarded from the financial liabilities the charity incurs, an advantage when compared with unincorporated charities.
CIOs will be regulated only by Charity Law and not Company Law and therefore they will have single regulation and will only require single registration with the Charity Commission. This means that they will benefit from less onerous filing requirements and requirements relating to reporting of constitutional and governance changes. They do not face the burden of dual regulation as would be the case when using another incorporated structure for a charitable purpose.
To form a CIO the organisation must already be registered with the Charity Commission and once registered it can apply to be a CIO. The Charity Commission will produce a model constitution for CIOs and they encourage its use in order for the registration process to be simplified. We appreciate that a model form document may not be suitable for your organisation and we can discuss drafting bespoke governing document for you.
It is expected that many existing charitable companies and societies will take advantage of the ability to convert to a CIO in order to benefit from the relaxed regulation.
It is expected that the new structure will be a popular choice in the future for charities and if you would like to receive any further information regarding CIOs or other charitable forms then please contact the writer, Tracy Evans at tracy.evans@tollers.co.uk.
