The Charities Act 2006 introduces a new legal form for charities. The Charitable Incorporated Organisation (CIO) will be the first legal structure created specifically to meet the needs of charities. It will be available exclusively to charities. A CIO will be similar to a company in that it will have the benefits of incorporation. These benefits are:
(a) the creation of a distinct ‘legal personality’ for the charity; and
(b) limited liability for trustees.
A CIO will be a corporate body with a constitution, and will be registered with and regulated by the Charity Commission. Unlike a company, CIOs will not require either separate registration with Companies House or regulation under company law.
The CIO will not be suitable for all types of charity, and trustees should take professional advice if they are considering setting up a new charity as a CIO or if they are contemplating changing an existing charity into the new structure.
When will it be in force?
The Fourth Commencement Order is to include the CIO. Work is ongoing to develop the secondary legislation that will be required to provide much of the detail for the CIO. The provisions are expected to come into force in summer 2008, following the public consultation and Parliamentary scrutiny of the regulations.
related issues, please contact any member of our specialist team on 01872 241700 for further information or to arrange an appointment.
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