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Last updated: 31 March 2010
Charities are increasingly seeking incorporation as a means of limiting the risk of personal liability for trustees. Currently around 25,000 registered charities are incorporated as companies, but this brings the burden of double regulation by both the Charity Commission and the Companies House. The new Charitable Incorporated Organisation (CIO) will be regulated by the Charity Commission alone. Both new and existing charities will be able to consider becoming a CIO, although other forms of incorporation will also remain available.
Provisions relating to the CIO are in section 34 and schedule 7 of the Charities Act 2006. In 2008, we published a joint consultation with the Charity Commission on the Secondary Legislation and model constitutions needed to complete the legal framework for the CIO. 90 responses were received, and we also received feedback at four consultation events. A number of changes have been made to the framework as a result of the consultation feedback. A summary of consultation responses and next steps were published here on the Office of the Third Sector website in September 2009.
There was not sufficient time for the CIO Secondary Legislation to go through Parliament in the 2009-10 session. The Charity Commission and officials in the Office of the Third Sector are also working through some operational details, which they need to resolve before the CIO provisions can be implemented.
There are two main strands of work taking place. First, three sets of Regulations will be necessary to give effect to the CIO, two of which require the affirmative resolution of both Houses of Parliament. The aim is for this legislation to be taken forward as soon as possible in the new Parliamentary session. In parallel, the Charity Commission is developing the guidance and model governing documents needed for the implementation of CIOs, and setting up the necessary systems and processes to support it.
The CIO is therefore not expected to be an option available for charities until the beginning of 2011.