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Charitable incorporated organisation status - will registering make life easier?

22.04.2013

New legal structures introduced shortly before Christmas mean that charities can register as Charitable Incorporated Organisations (CIOs).

They are proving a popular legal structure for small and medium sized charities and housing associations, says Gullands paralegal and charities specialist Aman Sandhu.

“Organisations choosing to become a CIO will have the same limited liability as a company and just one regulator, the Charity Commission, reducing reporting requirements and freeing them up to focus on their charitable work,” explains Aman.

Introduced in the Charities Act 2011, CIOs allow charities to become incorporated, and so able to enter into contracts in their own right.

“Trustees or members have limited or no liability and the organisation will need only to register once with the Charity Commission, rather than also going to Companies House,” says Aman.  “The new form provides charities with some of the benefits of being a company without the associated burdens such as being subject to company law.”

She adds, “The end of dual registration is the greatest advantage of CIOs.  This reduces administrative burdens such as producing two sets of accounts and two annual reports.  The advantage this brings seems to be driving a growing interest in the form.”

Experience, however, has demonstrated to the Gullands Charity and Social Housing team that Charitable Incorporated Organisation status is not necessarily for everyone.

“Reports from across the country suggest that some of the larger charities in particular are unconvinced that becoming a CIO will offer any real advantages,” said Aman.

“We are encouraging clients to carefully consider whether the form will be right for them.  There can be no doubt that becoming a CIO will not be suitable for all enterprises and some will prefer to remain a trust, society or company.”

If your charity is considering CIO status contact Aman Sandhu by email for advice at [email protected]

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