Good news for charity trustees - the new CIO (Charitable Incorporated Organisation)

The Charity Commission recently announced that the CIO or “Charitable Incorporated Organisation” should be available for use by charities from late spring 2010.

It is a new form of limited liability company specifically for use by charities, which provides the protection of limited liability for the trustees and members of the charity, while also requiring less administration to run than with the traditional limited company.

The simpler administration results from the CIO only being regulated by, and registered with, the Charity Commission, so it frees the charity from having to maintain a separate registration at Companies House and from the filing requirements (e.g. changes of trustees and a separate annual return) that result from that.

If your charity is already set up as a limited company, then the charity’s trustees and members already have good protection against personal liability if something happened regarding the charity. The limited liability protection for the trustees is just as good with a CIO as with the limited company, so there is no drawback to becoming a CIO. You can convert such a company into a CIO and then benefit from the reduced red tape.

If on the other hand your charity is not set up as a limited company yet, then the charity’s trustees and members are unnecessarily exposed to personal liability at the moment. They would benefit significantly from incorporating as a CIO as soon as it becomes available.

The longer you leave incorporation, of course, the trustees and members remain exposed to the risk of personal liability. With this in mind, we advise action is taken sooner rather than later.

We recommend that all charities, whether incorporated or not, consider converting to the new CIO as soon as it becomes available.

For more information and a free guide on the incorporation of charities, please contact David Cammack at our Colchester office on tel: 01206 217311 or by email: david.cammack@birkettlong.co.uk