Charitable Incorporated Organisation

A Charitable Incorporated Organisation (CIO) is a new form of legal entity designed for non-profit organisations in the United Kingdom.

The main intended benefits of the new entity are that it has legal personality, the ability to conduct business in its own name, and limited liability so that its members and trustees will not have to contribute in the event of financial loss. These are already available to limited companies; charities can be formed as companies, but then they must be registered with both Companies House and the Charity Commission. In contrast, the CIO only needs to register with the Charity Commission. This is expected to reduce bureaucracy for the charity.^[1]

As of 2011^[update] the CIO is not yet available to charities in England and Wales. In Scotland, the Office of the Scottish Charity Regulator began registering Scottish Charitable Incorporated Organisations (SCIOs) in April 2011.^[2]

History

A Charity Commission advisory group was set up in 2000 to look at incorporation of charities, and recommended a new form of legal entity. In 2001 the Department of Trade and Industry's company law review steering group likewise recommended a charitable incorporated organisation with a separate legal regime, as company law is aimed at the commercial sector, with corporate governance structured around the assumption that members of a company have a financial interest in it.^[3]

Primary legislation to introduce the CIO as a new legal form of incorporation was included in the Charities Bill in 2004, and this aspect of the Bill was particularly welcomed by charities.^[4] It was finally enacted in the Charities Act 2006.

The Charity Commission opened a consultation on draft documentation and regulations in 2008, raising a large number of difficulties and suggested improvements.^[5]

The Scottish regulator began registering SCIOs in April 2011.^[5] To spread the workload for the regulator, existing charitable companies and industrial and provident societies are unable to convert to SCIOs until 2012; other form of charity in Scotland were able to apply from April 2011. Implementation in England and Wales is likewise expected to be phased, starting with brand new charities before conversions of existing charitable companies.^[5][6]

Meanwhile the Charity Commission in England and Wales began publishing guidance in May 2011, but with more to follow and no specific date for implementation.^[7]

References

1. ^ Shrifin, Tash (2 June 2004). "Q&A: what's in the draft charities bill". Guardian. http://www.guardian.co.uk/society/2004/jun/02/charityreform.charities. Retrieved 14 October 2011. 
2. ^ "The Scottish Charitable Incorporated Organisations (SCIOs)". Scottish Government. http://www.scotland.gov.uk/Topics/People/15300/charities/SCIOs. Retrieved 14 October 2011. 
3. ^ McCurry, Patrick (19 September 2001). "New guidelines to benefit the voluntary sector". Guardian. http://www.guardian.co.uk/society/2001/sep/19/charityfinance1. Retrieved 14 October 2011. 
4. ^ FitzHerbert, Luke (21 December 2004). "All to play for". Guardian. http://www.guardian.co.uk/society/2004/dec/21/politics.charityreform. Retrieved 14 October 2011. 
5. ^ ^{a b c} Mason, Tania (12 October 2011). "Charitable Incorporated Organisation delayed until next year". Civil Society. http://www.civilsociety.co.uk/governance/news/content/10681/charitable_incorporated_organisation_delayed_until_next_year. Retrieved 14 October 2011. 
6. ^ Office of the Scottish Charity Regulator. Retrieved 14 October 2011.
7. ^ Wiggins, Kaye (25 March 2011). "Charity Commission publishes guidance on charitable incorporated organisations". Third Sector. http://www.thirdsector.co.uk/news/Article/1062226/charity-commission-publishes-guidance-charitable-incorporated-organisations/. Retrieved 14 October 2011. 

External links

• Charitable Incorporated Organisation (CIO) guidance from the Charity Commission in England and Wales
• SCIO in Scotland