Charitable Incorporated Organisation
Encyclopedia
A Charitable Incorporated Organisation (CIO) is a new form of legal entity
designed for non-profit organisations in the United Kingdom
.
The main intended benefits of the new entity are that it has legal personality
, the ability to conduct business in its own name, and limited liability
so that its members and trustee
s will not have to contribute in the event of financial loss. These are already available to limited companies; charities can be formed as companies, but then they must be registered with both Companies House
and the Charity Commission
. In contrast, the CIO only needs to register with the Charity Commission. This is expected to reduce bureaucracy
for the charity.
the CIO is not yet available to charities in England and Wales. In Scotland, the Office of the Scottish Charity Regulator
began registering Scottish Charitable Incorporated Organisations (SCIOs) in April 2011.
's company law review steering group likewise recommended a charitable incorporated organisation with a separate legal regime, as company law is aimed at the commercial sector, with corporate governance
structured around the assumption that members of a company have a financial interest in it.
Primary legislation to introduce the CIO as a new legal form of incorporation was included in the Charities Bill in 2004, and this aspect of the Bill was particularly welcomed by charities. It was finally enacted in the Charities Act 2006
.
The Charity Commission opened a consultation on draft documentation and regulations in 2008, raising a large number of difficulties and suggested improvements.
The Scottish regulator began registering SCIOs in April 2011.
To spread the workload for the regulator, existing charitable companies and industrial and provident societies are unable to convert to SCIOs until 2012; other form of charity in Scotland were able to apply from April 2011. Implementation in England and Wales is likewise expected to be phased, starting with brand new charities before conversions of existing charitable companies.
Meanwhile the Charity Commission in England and Wales began publishing guidance in May 2011, but with more to follow and no specific date for implementation.
Incorporation (business)
Incorporation is the forming of a new corporation . The corporation may be a business, a non-profit organisation, sports club, or a government of a new city or town...
designed for non-profit organisations in the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
.
The main intended benefits of the new entity are that it has legal personality
Legal personality
Legal personality is the characteristic of a non-human entity regarded by law to have the status of a person....
, the ability to conduct business in its own name, and limited liability
Limited liability
Limited liability is a concept where by a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. If a company with limited liability is sued, then the plaintiffs are suing the company, not its...
so that its members and trustee
Trustee
Trustee is a legal term which, in its broadest sense, can refer to any person who holds property, authority, or a position of trust or responsibility for the benefit of another...
s will not have to contribute in the event of financial loss. These are already available to limited companies; charities can be formed as companies, but then they must be registered with both Companies House
Companies House
Companies House is the United Kingdom Registrar of Companies and is an Executive Agency of the United Kingdom Government Department for Business, Innovation and Skills . All forms of companies are incorporated and registered with Companies House and file specific details as required by the...
and the Charity Commission
Charity Commission
The Charity Commission for England and Wales is the non-ministerial government department that regulates registered charities in England and Wales....
. In contrast, the CIO only needs to register with the Charity Commission. This is expected to reduce bureaucracy
Red tape
Red tape is excessive regulation or rigid conformity to formal rules that is considered redundant or bureaucratic and hinders or prevents action or decision-making...
for the charity.
the CIO is not yet available to charities in England and Wales. In Scotland, the Office of the Scottish Charity Regulator
Office of the Scottish Charity Regulator
The Office of the Scottish Charity Regulator is a non-ministerial department of the Scottish Government, with responsibility for the regulation of charities in Scotland...
began registering Scottish Charitable Incorporated Organisations (SCIOs) in April 2011.
History
A Charity Commission advisory group was set up in 2000 to look at incorporation of charities, and recommended a new form of legal entity. In 2001 the Department of Trade and IndustryDepartment of Trade and Industry
The Department of Trade and Industry was a United Kingdom government department which was replaced with the announcement of the creation of the Department for Business, Enterprise and Regulatory Reform and the Department for Innovation, Universities and Skills on 28 June 2007.-History:The...
's company law review steering group likewise recommended a charitable incorporated organisation with a separate legal regime, as company law is aimed at the commercial sector, with corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
structured around the assumption that members of a company have a financial interest in it.
Primary legislation to introduce the CIO as a new legal form of incorporation was included in the Charities Bill in 2004, and this aspect of the Bill was particularly welcomed by charities. It was finally enacted in the Charities Act 2006
Charities Act 2006
The Charities Act 2006 is an Act of the Parliament of the United Kingdom intended to alter the regulatory framework in which charities operate, partly by amending the Charities Act 1993.-Provisions:...
.
The Charity Commission opened a consultation on draft documentation and regulations in 2008, raising a large number of difficulties and suggested improvements.
The Scottish regulator began registering SCIOs in April 2011.
To spread the workload for the regulator, existing charitable companies and industrial and provident societies are unable to convert to SCIOs until 2012; other form of charity in Scotland were able to apply from April 2011. Implementation in England and Wales is likewise expected to be phased, starting with brand new charities before conversions of existing charitable companies.
Meanwhile the Charity Commission in England and Wales began publishing guidance in May 2011, but with more to follow and no specific date for implementation.
External links
- Charitable Incorporated Organisation (CIO) guidance from the Charity CommissionCharity CommissionThe Charity Commission for England and Wales is the non-ministerial government department that regulates registered charities in England and Wales....
in England and Wales - SCIO in Scotland