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A charitable incorporated organisation (CIO) is a corporate form of business designed for (and only available to) charitable organisations in England and Wales. A similar form, with minor differences, exists for Scottish charities. [1]
A CIO comes into being (is "constituted") once it is registered as such by the Charity Commission for England and Wales (the Charity Commission). The application is by the proposed members of the CIO. Usually these are also the proposed trustees, but this is not a requirement. [2]
The main benefits of the CIO form are that the charity is a corporation with legal personality (the ability to enter contracts, sue and be sued, and to hold property in its own name – rather than in the name of its trustees), and its members have limited liability (their liability in the event the charity becomes insolvent is limited or nil). [3]
Historically these benefits were only available to limited companies, and thus many charities chose to incorporate as charitable companies limited by guarantee. However, this requires registration and filing with both Companies House and the Charity Commission, each of which has its own regulations and requirements. In contrast, a CIO only needs to register and file accounts and returns with the Charity Commission. This aims to reduce bureaucracy for the charity. [4]
In addition, (and uniquely among limited liability corporations in the UK), smaller CIOs in England and Wales can opt to file receipts and payments accounts, rather than the accruals accounts usually required. [5] But one disadvantage of the form for larger charities is that, unlike for charitable companies, there is no public register of lenders' charges over the corporation's assets, and this can make it harder to arrange finance. A CIO is also unable to grant a floating charge over its assets. [5]
Almost any existing charity, including charitable companies, can apply to "convert" to a CIO. Strictly speaking the CIO is a new entity, and there is no continuity of legal personality with the former charity. (Despite a natural reading of Chapter Four of the Charities Act 2011, [6] this is true even where the precursor charity is a charitable company.) This can have profound effects on the continuity of business, and can be a disincentive to conversion.
There is currently no means of converting a CIO to any other legal form – although it could be wound up and its assets transferred.
The CIO status became available to charities in England and Wales on 4 March 2013, based on The Charities Act 2011. [7] In Scotland, the Office of the Scottish Charity Regulator began registering Scottish charitable incorporated organisations (SCIOs) in April 2011. [8]
The idea originated in 1992 with the Chief Executive of the National Council for Voluntary Organisations (NCVO), Judy Weleminsky, and was taken forward by Lindsay Driscoll who was the Head of Legal and Governance at NCVO. A Charity Commission advisory group was set up in 2000 to look at the incorporation of charities, and recommended a new form of legal entity. In 2001 the Department of Trade and Industry's company law review steering group likewise recommended a charitable incorporated organisation with a separate legal regime, as company law is aimed at the commercial sector, with corporate governance structured around the assumption that members of a company have a financial interest in it. [9]
Primary legislation to introduce the CIO as a new legal form of incorporation was included in the Charities Bill in 2004, and this aspect of the bill was particularly welcomed by charities. [10] It was finally enacted in the Charities Act 2006.
The Charity Commission opened a consultation on draft documentation and regulations in 2008, raising a large number of difficulties and suggested improvements. [11]
Implementation in England and Wales has been phased, starting in 2013 with brand new charities, followed by conversions of existing unincorporated charities according to income, and then followed by charitable companies. [12]
The Charity Commission in England and Wales began publishing guidance in May 2011. On 4 March 2013, for the first time, the Commission enabled an existing charity, Challenge to Change, to convert from a charitable trust to a CIO. [13] The charity later reported some difficulties in transferring assets and long-term grant agreements to the new legal entity and subsequently closed due to reduced levels of funding. [14] Another charity converted but then reverted to its old status because of the cost and inconvenience of changing its registration number. [15] As of May 2019 [update] , there were over 17,000 CIOs registered with the Charity Commission for England and Wales. [16]
The Charity Commission for England and Wales is a non-ministerial department of His Majesty's Government that regulates registered charities in England and Wales and maintains the Central Register of Charities. Its counterparts in Scotland and Northern Ireland are the Office of the Scottish Charity Regulator and the Charity Commission for Northern Ireland.
Trustee is a legal term which, in its broadest sense, is a synonym for anyone in a position of trust and so can refer to any individual who holds property, authority, or a position of trust or responsibility for the benefit of another. A trustee can also be a person who is allowed to do certain tasks but not able to gain income. Although in the strictest sense of the term a trustee is the holder of property on behalf of a beneficiary, the more expansive sense encompasses persons who serve, for example, on the board of trustees of an institution that operates for a charity, for the benefit of the general public, or a person in the local government.
In a limited company, the liability of members or subscribers of the company is limited to what they have invested or guaranteed to the company. Limited companies may be limited by shares or by guarantee. In a company limited by shares, the liability of members is limited to the unpaid value of shares. In a company limited by guarantee, the liability of owners is limited to such amount as the owners may undertake to contribute to the assets of the company, in the event of being wound up. The former may be further divided in public companies and private companies. Who may become a member of a private limited company is restricted by law and by the company's rules. In contrast, anyone may buy shares in a public limited company.
A foundation is a type of nonprofit organization or charitable trust that usually provides funding and support to other charitable organizations through grants, while also potentially participating directly in charitable activities. Foundations encompass public charitable foundations, like community foundations, and private foundations, which are often endowed by an individual or family. Nevertheless, the term "foundation" might also be adopted by organizations not primarily engaged in public grantmaking.
Companies House is the executive agency of the British Government that maintains the register of companies, employs the company registrars and is responsible for incorporating all forms of companies in the United Kingdom.
A charitable organization or charity is an organization whose primary objectives are philanthropy and social well-being.
A community interest company is a form of social enterprise in the United Kingdom intended "for people wishing to establish businesses which trade with a social purpose..., or to carry on other activities for the benefit of the community".
An industrial and provident society (IPS) is a body corporate registered for carrying on any industries, businesses, or trades specified in or authorised by its rules.
Laws regulating nonprofit organizations, nonprofit corporations, non-governmental organizations, and voluntary associations vary in different jurisdictions. They all play a critical role in addressing social, economic, and environmental issues. These organizations operate under specific legal frameworks that are regulated by the respective jurisdictions in which they operate.
A company limited by guarantee (CLG) is a type of corporation where the company has no share capital. Members instead act as guarantors of the company's liabilities: each member undertakes to contribute an amount specified in the articles in the event of insolvency or of the winding up of the company.
The Royal Patriotic Fund Corporation was a charitable body set up by royal warrant in the United Kingdom during the Crimean War. It provided assistance to the widows, orphans and other dependants of members of the armed forces. Under The Royal Patriotic Fund Order 2005 these responsibilities were transferred to RPFC, a charitable company limited by guarantee.
Wikimedia UK (WMUK), also known as Wikimedia United Kingdom, is a registered charity established to support volunteers in the United Kingdom who work on Wikimedia projects such as Wikipedia. As such, it is a Wikimedia chapter approved by the Wikimedia Foundation (WMF), which owns and hosts those projects.
The Charity Commission for Northern Ireland is the independent regulator of Northern Ireland charities. It was established in 2009 under the Charities Act (NI) 2008.
A private company limited by shares is a class of private limited company incorporated under the laws of England and Wales, Hong Kong, Northern Ireland, Scotland, certain Commonwealth jurisdictions, and the Republic of Ireland. It has shareholders with limited liability and its shares may not be offered to the general public, unlike those of a public limited company.
The Fundraising Regulator is the independent regulator of charitable fundraising in England, Wales and Northern Ireland.
Healthy Planet Foundation was an environmental charity in the United Kingdom formed in 2007 by Shaylesh Patel, on the ethos that small changes together will build sustainable, healthy communities leaving a positive legacy for future generations. Healthy Planet championed grassroots and green causes that promoted healthy living.
The Co-operative and Community Benefit Societies Act 2014 is an Act of the Parliament of the United Kingdom. It consolidates existing legislation relating to industrial and provident societies, as well as introducing some reforms.
The Charities Regulator is the operational name of the Charities Regulatory Authority, the statutory authority responsible for the regulation of charities in Ireland. The organisation is made up of a board, with four sub-committees, and as of 2019, a staff of 38, including a chief executive.
A Scottish charitable incorporated organisation (SCIO) is a corporate form of business designed for charitable organisations in Scotland, similar to a charitable incorporated organisation in England and Wales.
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