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New charity structure on its way

28 March 2011

Regulations allowing for the creation of a new form of charity structure, the charitable incorporated association (CIO), will be introduced into parliament by the end of the year, the Cabinet Office has said.

The aim of CIOs, introduced in outline by the Charities Act 2006, is to allow charities to limit personal liability while benefiting from simpler reporting requirements (see solicitorsjournal.com, 16 September 2008). CIOs will register with the Charity Commission and not with Companies House.

The commission published guidelines for people thinking of setting up CIOs last week, along with two model constitutions.

Publication has been timed to coincide with the first registrations of Scottish CIOs by the Office of the Scottish Charity Regulator on 1 April 2011.

“By making the CIO guidance and constitutions available now, there is the opportunity for people to look more closely at whether the structure is the right one for their needs, and what will be involved,” Sam Younger, chief executive of the Charity Commission, said.

“The guidance will help ensure people are clear about what being a CIO would mean ahead of the new structure being implemented.”

Younger said it was expected that any changes to the rules would be minor when the regulations which will complete the legal framework for CIOs were debated by parliament.

The commission published one constitution for a ‘foundation’ CIO, where only trustees voted, and one for an ‘association’ CIO, which allowed the wider membership to take part in decision making.

CIOs are expected to be most suitable for small to medium-sized charities. A consultation on the issue carried out in 2008 led to the removal of requirement for the CIO or Charity Commission to keep a register of charges, which could limit their attractiveness to larger charities.

A spokesman for the Cabinet Office said the government would introduce the CIO regulations “by the end of the year”.

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Charities