Get ready for the new CIOs
After prolonged delay, it appears as though the charitable incorporated organisation (CIO) is almost finally upon us. Nick Hurd, Minister for Civil Society confirmed that the draft supporting legal framework needed to give effect to the CIO was laid before Parliament on 30 October.
The CIO will be a new legal structure (first introduced by the Charities Act 2006), but now regulated under the Charities Act 2011, designed specifically and only for charities.
The CIO will have the benefits of its own legal identity and limited liability for its officers, but will be solely registered with, and regulated by, the Charity Commission. Therefore a CIO will not be a company and will not have to have regard to company law.
The CIO will add to the range of legal structures available to charities but existing charitable companies, charitable trusts or associations will not be forced to convert to it when it becomes available. Some existing charities, (but not all) might wish to convert to the CIO structure eventually and there will be a phased timetable for its introduction (see below).
It has been agreed that the CIO will be implemented in stages so as to not overwhelm the Charity Commission. The Cabinet Office has published a phased implementation timetable. As per Nick Hurd's announcement, the current package of supporting legal framework does not make provision for the conversion of charitable companies limited by guarantee, community interest companies, or charitable industrial and provident societies. Separate supporting legal framework will be brought forward in due course to provide a mechanism for the conversion of existing charities that wish to convert to the CIO structure. Therefore initially it will only be possible set up brand new charities as CIOs. Please see the Charity Commission's Indicative Timetable for further information below.
We are running a free workshop which will look at (amongst other things) new charity law including the CIO in further detail on Thursday 29 November at The Village Hotel, Hull 9 am to 11 am. Invitations for this Workshop are being sent out shortly and if you require further details, please contact Gerry Morrison.
The Charity Commission's Indicative Timetable
|
Date |
Applications for the CIO Structure |
|
As soon as the draft supporting legal framework is approved by Parliament (anticipated end of 2012) |
Window opens for the Charity Commission to receive applications to set up CIOs as brand new charities with anticipated annual income of over £5,000. However, new charities with annual income below £5,000 may be able to persuade the Charity Commission to register them as COIs so watch this space. |
|
1 March 2013 |
Window opens for existing unincorporated charities with annual income over £250,000 to set up a CIO and transfer assets into it. |
|
1 May 2013 |
Window opens for existing unincorporated charities with annual incomes between £100,000 and £250,000 to set up a CIO and transfer assets into it. |
|
1 July 2013 |
Window opens for existing unincorporated charities with annual incomes between £25,000 and £100,000 to set up a CIO and transfer assets into it. |
|
1 October 2013 |
Window opens for existing unincorporated charities with annual incomes of between £5,000 and £25,000 to set up a CIO and transfer assets into it. |
|
1 January 2014 |
Window opens for existing unincorporated charities with annual incomes of less that £5,000 to set up a CIO and transfer assets into it, and for brand new charities with anticipated annual incomes of less than £5,000 to set up a CIO (however see comments above). |
|
During 2014 |
Window opens for corporate conversions into CIOs (subject to parliamentary approval of separate conversion regulations to be made during 2013). This may also need to be phased by income. |
This timetable is indicative only and may well be subject to change depending upon how many applications the Charity Commission initially receives to set up brand new charities as CIOs.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.