The Charities Act 2011, which came into effect on 14 March 2012, provides the initial legal framework for a new legal form for a charity, a CIO. This framework will be expanded upon in due course by two sets of regulations and an Order made by the Office for Civil Society. The idea behind creating this new type of legal body is to provide some of the benefits enjoyed by companies without some of the burdens.
In summary a CIO will be a form of incorporated charity without being a company and therefore only has to register with the Charity Commission and not Companies House. Unlike unincorporated charities, it will only exist once it has been registered by the Commission. The registration requirement will apply regardless of the level of income, the de minimis threshold of £5,000 will not apply. A further registration requirement is that the registered principal office of the CIO will have to be situated in England or Wales and that certain provisions contained in model documents drafted by the Commission are contained in the CIO’s constitution.
Once formed, the CIO will be able to enter into contracts in its own right, thus limiting its trustees’ liability for debts of the CIO. The CIO will also have to submit annual returns and accounts to the Commission, regardless of the value of income, and keep a register of members and trustees.
As the two sets of regulations and Order are still to be approved by Parliament it is likely that there will be some changes to how the CIO framework will work.