Incorporated charities to be able to convert to CIOs from January

14 Sep 2017 News

Incorporated charities will be able to become charitable incorporated organisations from next January, as long as an order laid before Parliament is approved.

After years of delays, secondary legislation has been produced to enable the conversion of incorporated charities and community interest companies to CIOs, and now needs to be approved by both the House of Commons and the House of Lords. As long as it is approved, phased implementation is scheduled to begin from January 2018.

CIOs are a relatively new legal form, which were introduced by the Charities Act 2011. They have become a popular legal form for new charities as they offer the protections of incorporated status without having to register and file with Companies House as well as the Charity Commission, with over half of new charities opting to be a CIO.

In an explanatory note on the regulations it says that the Charity Commission expects that between 20 per cent (7,200) and 35 per cent (12,600) of existing incorporated charities could decide to convert under the proposed CIO conversion legislation over ten years.

Delays

Provisions to allow charitable and non-charitable companies limited by guarantee, community interest companies, and charitable industrial and provident societies to convert to CIO status were include in the Charities Act 2011, but the Office for Civil Society needs to introduce new regulations before organisations are able to do so.

Government has repeatedly delayed introducing regulations, though no date was ever formally set. It had initially been expected that provision would be made in 2014.

New organisations have been able to register as CIOs since 2013 and unincorporated charities have been able to convert since 2014.

Between April and June 2016 the Office for Civil Society consulted on the draft regulation. The timetable outlined then said that it expected to introduce conversion for larger charitable companies by 1 October last year and that the process would be open to all by July 2017.

 

 

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