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OTS response to CIO consultation due this week, four months late

Finance | Gareth Jones | 15 Sep 2009

The Office of the Third Sector has denied that its response to the Consultation on the Charitable Incorporated Organisation (CIO) has been delayed by serious criticisms of the draft proposals, despite being four and a half months late.

The OTS intends to publish its response to the consultation this week, having originally promised the document “by the end of April”, fuelling speculation in legal circles that reframing the proposals had proved problematic.

A spokesman for the OTS said: “It has taken longer to draw up than we thought. We wanted to spend the time to make sure it was right.”

Following publication of the consultation response, the OTS will finalise its proposals so they can be debated in parliament, and is still aiming to have the legal form available to charities by spring next year.

Sceptical reaction from lawyers

The proposed new legal form has received a sceptical reception from lawyers. Last week James Sinclair Taylor (pictured), head of the charity team at Russell-Cooke, told a members’ meeting of the CFDG that he was “not a big fan”.

“CIOs don’t seem to offer anything very substantial in terms of advantages to existing and larger charities, though they may be great for smaller new ones.

"Quite a few trustees have a feeling that it will be a great help but are not really sure of the reasons why.”

He added: “The question is, is the Charity Commission getting a large chunk of extra resources to help process CIOs in a timely fashion?

“I think it is a great organisation doing great work but I’m not sure how it is going to cope with the obligations of this entirely new regulatory regime.

“Companies House is going to be a hard act to follow with its slick administration.”

'Only time will tell'

Ian Davies, senior associate at Wilsons, told Charity News Alert he would be waiting for it to “bed down” before he would commit his clients to it.

“Although there is much that can be listed as theoretical positive benefit, in using a CIO only time will tell whether it is really easier than a private limited company.

“At least with companies, the law is certain, and if there are new developments they occur in a well-worn framework.

“The law is going to be complicated to find, with references having to be made to the original legislation, and then to the ‘ghost’ versions in the regulations. The burdens of running a private limited company are also overstated.”

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