CIOs are here!
New Chariable Incorporated Organisations can now be formed
The Charities Act 2006 (now the Charities Act 2011) created the concept of a Charitable Incorporated Organisation as a corporate body, with limited liability registered with the Charity Commission, but with no involvement with the Registrar of Companies.
The are similar entities in Scotland, known as SCIOs.
A new CIO can now be formed, and an unincorporated charity can be converted into a CIO. Very shortly, it will be possible for charity companies limited by guarantee to convert into a CIO.
A CIO prepares charity accounts on a similar basis to unincorporated charities, but there is no £25,000 exemption from filing accounts. All CIO accounts must be filed with the Charity Commission.
A CIO must place the letters 'CIO' after it name unless granted exemption.
What are the benefits?
* The protection of trustees by limited liability
* The ability to sue, and be sued, and to contract as a corporate body, which
an unincorporated charity cannot.
* No involvement with the Registrar of Companies
If CIO hits financial problems, it is subject to regulations very similar to ordinary insolvency legislation.
A CIO is formed with a constitution in a form specified by the Charity Commission.
There are two forms of CIO - one that is a membership organisation, with a large number of members, often paying a subscription - the other is the foundation model, where there is a small number of members, usually the same as the trustees.