Charitable Incorporated Organisation Debate
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Nick Hurd
Main Page: Nick Hurd (Conservative - Ruislip, Northwood and Pinner)Department Debates - View all Nick Hurd's debates with the Cabinet Office
Charitable Incorporated Organisation
Nick Hurd Excerpts(11 years, 6 months ago)
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The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)
I have today laid draft secondary legislation needed to give effect to the charitable incorporated organisation (CIO). The CIO is a new legal structure, under the Charities Act 2011, designed specifically and only for charities.
Charities seeking the benefits of incorporation can currently set up as a company limited by guarantee, but many are put off by the additional administrative burden of dual registration and regulation under both charity law and company law (of the 162,000 registered charities only just over 30,000 are structured as a company limited by guarantee). The CIO has the benefits of legal personality and limited liability, but will be solely registered with, and regulated by, the Charity Commission for England and Wales. The CIO will add to the range of legal structures that charities can choose to adopt. Implementing the CIO supports the Government’s aim of making it easier to set up and run a civil society organisation. Due to its limited liability, the CIO structure should make it easier for charities to recruit and retain trustees, and to engage in contracts and hold property. Implementation of the CIO is supported by the Charity Commission and will be welcomed by the voluntary sector.
The CIO is expected to be a popular legal structure for both new and existing charities seeking the benefits of incorporation. Given the expected levels of demand for the CIO, and to help the Charity Commission manage its available resources to support the implementation of the CIO, we have agreed with the Charity Commission a phased implementation plan, which is set out below.
The phased implementation timetable set out below is indicative (and implementation is subject to parliamentary approval of the secondary legislation needed to implement the CIO). The Charity Commission will need to retain flexibility to change the dates on which application windows open if the level of demand significantly exceeds expectations. The commission will maintain an up-to-date implementation timetable on its website.
The current package of secondary legislation does not make provision for the conversion of charitable companies limited by guarantee, community interest companies, or charitable industrial and provident societies. Separate secondary legislation will be brought forward in due course to provide a mechanism for the conversion for these entities that wish to convert into ClOs.
Charity Commission's indicative timetable
Date | Applications for the CIO Structure |
|---|---|
As soon as SIs are approved by Parliament | Window opens for charity Commission to receive applications to set up ClOs from brand new charities with anticipated annual income of over £5,000. |
1 March 2013 | Window opens for existing unincorporated charities with annual income over £250,000 to set up a CIO and transfer assets into it. |
1 May 2013 | Window opens for existing unincorporated charities with incomes between £100,000 and £250,000 annual income to set up a CIO and transfer assets into it. |
1 Jul 2013 | Window opens for existing unincorporated charities with incomes between £25,000 and £100,000 annual income to set up a CIO and transfer assets into it |
1 Oct 2013 | Window opens for existing unincorporated charities with incomes of between £5,000 and £25,000 annual income to set up a CIO and transfer assets into it. |
1 Jan 2014 | Window opens for existing unincorporated charities with annual incomes of less than £5,000 to set up a CIO and transfer assets into it, and for brand new charities with anticipated annual incomes of less than £5,000 to set up a CIO. |
During 2014 | Window opens for corporate conversions into ClOs (subject to parliamentary approval of separate conversion regulations to be made during 2013). This may also need to be phased by income bracket. |