New type of company structure for charities is 'win win' says Essex solicitor

A new type of company structure, the Charitable Incorporated Organisation or CIO, which is set to be introduced by the Charities Commission in May this year, is a ‘win win’ according to charity law experts Birkett Long.

David Cammack of Birkett Long of Colchester & Chelmsford said: “Whether they are already incorporated or not, we are urging all charities to take a good look at the CIO – it will save them management time, reduce admin costs and most importantly reduce the extent of any liability for officers and trustees. It really is a ‘win win’ situation with no catches.”

The CIO, not to be confused with the ineffective and unloved CIC structure, is a new form of limited liability company specifically for use by charities. The CIO 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 being regulated by, and registered with, the Charity Commission only. 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 a charity is already set up as a limited company, then the charity’s trustees and members have protection against related claims for personal liability. With a CIO, the limited liability protection for the trustees is just as good as with the limited company, so there is no drawback to converting to a CIO, with the benefit of reduced red tape.

Mr Cammack said: “The CIO should be available from May this year – we urge trustees and officers of all charities to take the very simple steps to adopt the structure. The CIO structure can cut red tape and increase protection, which is good news for existing trustees and those considering a position as a trustee.”

david.cammack@birkettlong.co.uk
01206 217311