Forming a Charity

The Charitable Incorporated Organisation (CIO)

The CIO is the first legal structure created specifically to meet the needs of charities and available exclusively to charities. As with a company, it will have the benefits of incorporation, which are the creation of a ‘legal personality’ for the charity and limited liability for trustees. However, CIOs will need neither separate registration with Companies House nor regulation under company law. A CIO will be a corporate body with a constitution, and will be registered with and regulated by the Charity Commission.

The CIO will not be suitable for all types of charity, and trustees should speak to us at an early stage if they are considering setting up a new charity as a CIO or would like to change an existing charity into the new structure.

What will be the advantages of CIOs over charitable companies?

• Single registration. A charitable company has to register with Companies House and with the Commission. The CIO will only need to register with the Commission.
• Less onerous requirements when preparing accounts.

Small CIOs will be able to prepare receipts and payments accounts; larger ones will prepare standard Charities Act accruals accounts.

All charitable companies, regardless of size, have to prepare accruals accounts (a balance sheet, a statement of financial activities and notes) that meet the general requirements of company law.

CIOs will only have to prepare an annual report under the Charities Act. Charitable companies have to prepare a report to meet the requirements of the Companies Acts as well as the Charities Act.

For more information about CIO's please see our article 'A New Legal Structure for Charities' or contact our Charity Team.