The consultation procedure carried out by the Charity Commission and the Office of the Third Sector in relation to Charitable Incorporated Organisations (“CIO”) closed in December 2008 and the results are due to be published at some point during May 2009.
As previously reported, the CIO will be a new corporate structure, registered and regulated by the Charity Commission, which specifically applies to charities. It will be an alternative to incorporation under the Companies Acts and will not require regulation under both company law and charity law.
It is expected that as a result of the feedback received during the consultation exercise the regulations introducing CIOs will be amended so that they don’t rely so heavily on company law. It was felt by many respondents that the over reliance on company law made the draft CIO regulations overly complicated for small charities.
In particular, it is possible that criminal penalties for CIO trustees who fail to meet their legal duties might be replaced by civil sanctions or the Charity Commission’s existing enforcement powers and the requirements relating to maintaining a register of members might be relaxed.
At the same time as publishing the results of the consultation exercise, the Office of the Third Sector is also due to publish a timetable for the introduction of CIOs. There has been some slippage in the target implementation date and it now looks unlikely that the new structure will be available before April 2010.
We believe that many charities will be interested in the simplicity of the model afforded by the CIO and that the straightforward method of converting to CIO status will prove attractive.
We are continuing to keep a very close eye on developments and will be advising our charitable clients on the best way forward so that those wishing to convert can do so quickly and efficiently.
For a no-obligation chat, more information or advice on Charitable Incorporated Organisations, please contact
Mark Lewis.
