Charitable Incorporated Organisation

The charitable incorporated organisation (CIO) is a new structure which, after years of delay, finally became available in January 2013. New charities have been able to register since then, but to manage the expected demand from existing unincorporated charities, the Charity Commission is making the CIO structure available in stages during 2013 and 2014 based on the charity’s annual income.

Existing charitable companies, and perhaps industrial and provident societies, will be able to convert to CIO status from some time in 2014. Even when conversion becomes available, it may be advisable for some charitable companies to keep that status rather than converting to CIO.

An organisation should choose CIO if:

  • it is legally charitable; and
  • it prefers single registration with only the Charity Commission, rather than dual registration with Companies House and the Charity Commission, and does not want to have to comply with company law; and
  • it is a new charity (not previously registered with the Commission), or is an existing charity and is in an income band which can already register as a CIO, or it doesn’t mind waiting until it becomes eligible to register (if it is unincorporated and needs to be incorporated NOW it should choose company); and
  • it is unlikely to need to mortgage property or have other borrowings secured on the organisation’s assets now or in future (at the moment there are still unresolved concerns about CIOs and borrowing; and
  • the people involved do not mind having a structure which is completely new, with a completely new form of constitution which has not yet been tested to find out what works and what doesn’t.

Other factors which may be significant in choosing between a CIO and company are:

  • a charitable company must always prepare its annual accounts as accrual accounts (adjusted to show only income relating to the year, regardless of when it was received or spent); a CIO with income under £250,000 can prepare simpler receipts and payments accounts, showing the income and expenditure in the year it was actually received and spent);
  • a CIO’s annual report only needs to comply with charity law requirements, rather than both company and charity law;
  • a CIO’s register of members is open only to its members and trustees who need access to it for CIO business, or members who want to see their own entry – not to the public at large, as a company’s register of members is;
  • as in a company, a CIO’s register of trustees has to be open to the public – but it contains much less information (does not include date of birth, nationality or occupation), and only the trustees’ names – no other information about them, is available to the public at Charity Commission offices and on its website;
  • the Charity Commission can give dispensation for a CIO trustee’s name not to be made public, if the trustee can show they could be in danger if their name is made public;
  • decisions by a company’s members and its governing body must be made by voting; a CIO’s constitution can (but does not have to) include provision for decisions to be made by consensus (without a vote, provided there is no dissent);
  • company members always have certain statutory rights, such as the right to remove members of the governing body; receive copies of the annual accounts and report; appoint a proxy to attend, speak and vote atgeneral meetings on their behalf; require a general meeting to called; call for a poll (a counted vote) at general meetings; and other rights. CIO members have these rights only if they are included in the CIO’s constitution.

information provided by:

Sandy Adirondack, 39 Gabriel House, 10 Odessa Street, London SE16 7HQ (020 7232 0726) This is not a full statement of the law and is intended for guidance only.