The long-awaited approval for Charitable Companies to convert to a Charitable Incorporated Organisation (CIO) has finally arrived. Parliament has agreed changes to enable incorporated charities and community interest companies to become charitable incorporated organisations and the process will begin from January 2018, in a phased approach commencing with smaller Charitable Companies first (see table below).
What are the benefits?
Simply put: less administration and no filing fees!
A CIO is an incorporated legal structure for a charity and the most significant benefit is that, unlike charitable companies, there is no dual regulation. CIOs are only required to register with the Charity Commission, therefore charities with this structure save on Companies House filing fees and the extra administration on having to file everything twice.
Parliament has also recently approved that CIOs will be included on the Registrar’s Business Names Index, which is maintained by the Companies House, so as to prevent CIOs setting up with names similar to one another and to comply with the regulations around using ‘sensitive names’.
What are the draw-backs?
CIOs are still relatively new (since 2013) and some financial institutions may not recognise them. However, this is less and less the case now, as more CIOs are appearing, leading to increased recognition of their legal structure. In 2016/17 there were a record 8,368 applications, compared to 5,949 in 2012/13. (You may, however, still wish to check with your specific financial institutions in advance, to be sure).
When can your charitable company start transferring over to a CIO?
The Charity Commission has advertised the following schedule depending on the level of your gross annual income:
|1 January 2018||Less than £12,500|
|1 March 2018||Between £12,500 and £25,000|
|1 May 2018||Between £25,000 and £100,000|
|1 June 2018||Between £100,000 and £250,000|
|1 July 2018||Between £250,000 and £500,000|
|1 August 2018||Greater than £500,000|
Further assistance and support:
Contact Herjeet Randhawa, RVA Advice Worker, by emailing firstname.lastname@example.org.
Full guidance from Charity Commission here.