28 March, 2011
The Charity Commission today announced the publication of guidance and two model constitutions for use in registering Charitable Incorporated Organisations.
The availability of CIOs has been long-planned and intended to happen at various points since the enactment of the Charities Act 2006. A CIO will be a limited liability body regulated only by the Charity Commission unlike current charitable companies which have dual regulation by the Commission and Companies House.
There are two model constitutions for different types of organisations, one of which is going to be simpler than the other but will only be available to certain types of CIO. This follows considerable comment on the resemblance between the draft CIO constitution sent out for consultation and the Companies Act 2006 model articles for a company limited by guarantee. Many charity trustees thought it did not deliver the hoped-for simplification.
The Commission has indicated that conversion of existing charity and CIC entities into CIOs will not be an option initially. The first round of CIO registrations will be for new entities with conversions becoming available later in the first year of CIO registrations.
As the Commission's press release puts it: "The regulations which complete the legal framework for CIOs have not yet been debated by Parliament and the Office for Civil Society will in due course publish a timetable for implementation." As Churchill once said "This is not the end, it is not the beginning of the end but it is the end of the beginning".
Many charities are considering conversion to CIOs and some new projects could now start to plan to form one. We will review the guidance and constitutions and publish our comments in the near future.