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.
1 November 2012
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.