The Charities Act 2006 has introduced a new legal structure for charities which require a corporate structure. This is a specific new legal form of incorporation called the “Charitable Incorporated Organisation” (CIO) which will reduce the previous burden of dual regulation whereby an incorporated charity needed to comply with the requirements of both company law and charity law. This in turn required registration and returns being filed with the Charity Commission and the Registrar of Companies.

So, what are the main advantages of CIOs?

• A single registration with the Charity Commission only.
• One Annual Return.
• Simplified reporting requirements.
• Lower administration costs, in particular, unlike the Registrar of Companies there are no charges for registration or filing documents.
• Simpler arrangements for merger and reconstruction.
• A simpler constitution form with model forms available.
• Codified duties for directors and members which reflect the charitable nature of the CIO.

These and other benefits are expected to be available to be utilized from Spring 2008 once the appropriate Regulations are passed. Detailed guidance will then be issued as to how to set up a CIO and the process for conversion from an existing charitable company or unincorporated charity to a CIO. The process will differ for each of these entities as a charitable company will be able to simply re-register as a CIO without affecting the legal status of its organization. However, an unincorporated association will need to register a new CIO and then proceed to wind up the existing association, in accordance with the provisions of the governing document.

The remaining assets will then be transferred to the newly registered CIO and the organization will need to reassign all of its business relationships under the new legal identity of the CIO.

The detail behind all of these proposals will be published in due course but in the meantime, if you need any advice on the formation of charities speak to your normal adviser or contact Glen Marshall at Landin Wilcock & Co on 0114 2754321.