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Consultation on CIO structure published

18/09/09
 

A joint response to the consultation on plans for a new type of incorporated charity structure has been published by The Office of the Third Sector in the Cabinet Office and the Charity Commission.

The Charitable Incorporated Organisation (CIO) will be the first incorporated legal structure designed specifically with the needs of charities in mind.

It will be an entirely new type of charity structure that will provide charity trustees with protections and responsibilities similar to those given to directors of limited companies.

Responding to the consultation on how the CIO will work, the Government and the Charity Commission have agreed to make a number of important changes to initial proposals including:

• ensuring a robust, fixed, duty of care – removing a proposal that CIO trustees could take less responsibility for their organisation’s activities;

• tightening up rules on access to personal information in the registers of trustees and members that CIOs will have to maintain; and

• replacing a number of minor criminal offences for administrative failings with the power for the Charity Commission to direct rectification.

Angela Smith, minister for the Third Sector, said: “Charities make up an important and thriving economic sector, employing half a million full-time staff and countless volunteers.

"Through the Charities Act 2006, the Government is completely overhauling the legal framework for the sector cutting outdated bureaucracy and giving charities the tools to help make a difference. The CIO is a key part of these changes, and I’m grateful to those who contributed to the consultation.”

Dame Suzi Leather, chair of the Charity Commission, said: “The CIO will combine the advantages of a corporate structure without the burden of dual regulation. It won’t be the appropriate form for every charity, but for those which have decided on incorporation this will be a welcome new vehicle. I am grateful to all those who responded to the consultation and helped in the development of the CIO.”

Increasingly, charities are seeking incorporation as a means of limiting the risk of personal liability for trustees.

Currently, around four in every ten new registered charities are incorporated as companies, but this brings the burden of double regulation by both the Charity Commission and Companies House.

The new CIO will be regulated by the Charity Commission alone.

The aim is for the CIO to become an option for charities from starting from spring 2010. Both new and existing charities will be able to consider becoming a CIO, although other existing forms of incorporation will also remain available.

 
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