Charitable Incorporated Organisations

Charitable Incorporated Organisation

Tony Forster

The Charities Act 2006 introduces a new legal form of incorporation which is designed specifically for charities, the Charitable Incorporated Organisation (CIO).

Charities can now be set up with a corporate structure but this means that they normally fall within the requirements of company law as well as charity law.

Incorporation as a CIO is a middle position between registration of the Charity and incorporation with Companies House

A CIO is designed for charities wanting the business benefits of a legal personality, but it needs only to be registered with and regulated by the Charities Commission

The Charitable Incorporated Organisation is only available to charities, who will be registered with the Charity Commission. This avoids the dual responsibilities of a Company Limited by Guarantee and its directors having to comply with both charity law and the Companies Acts. Existing charitable corporations will not have to convert to the new form, but if conversion is desired this will be possible by a simple conversion procedure


For charities that decide that a corporate structure is right for them, the CIO will have the following advantages over a company structure:

– A single registration – a charitable company has to register with the Registrar of Companies at Companies House and the Charity Commission. ACIOwill only need to register with the Commission

– Less onerous requirements for preparing accounts – the general regime in the Charities Act 1993 will apply, so small CIOs will be able to prepare receipts and payments accounts, whilst larger charities will prepare accruals accounts

– Less onerous reporting requirements – CIOs will only prepare an annual report under the Charities Act 1993. Under company law, companies have to prepare a directors’ report as well

– One annual return – charitable companies have to prepare an annual return under company law and, normally, a separate return under charity law

– Less onerous filing requirements – CIOs will only have to send accounts, reports and returns to the Commission. Charitable companies have to send these to us and the Registrar of Companies

– Less onerous requirements relating to reporting of constitutional and governance changes – CIOs will be subject to a less extensive range of reporting requirements than charitable companies and will only have to report to us

– Lower costs for charities – the Commission make no charges for registration and filing of information

– Simpler constitutional form – the Commission will produce model forms of constitution which will include fewer fixed governance provisions than is the case with companies

– More straightforward arrangements for merger and reconstruction – the Charities Act 2006 contains a number of provisions designed to facilitate merger and reconstruction which are not available to charitable companies

– An enforcement regime which does not penalise the charity for the conduct of its directors

– Codified duties for directors and members which reflect the charitable nature of theCIO

– EC company law directives will not apply to CIOs

–  A CIO does not need to register with Companies House

– Small CIOs will be allowed to prepare receipt and payment accounts whereas all charitable companies have to prepare accrual accounts

– A CIO’s Annual Report has only to comply with the Charities Act and not the Companies Act

– Only one Annual Return needs to be prepared

– Documents for filing need to be sent only to the Commission and not Companies House

– Changes to constitutional and governing documents only need to be reported to the Commission

– The CIO will avoid Companies House charges for registration or filing information as the Commission does this for free

– More straightforward merger arrangements will be available.


Although the CIO has clear benefits over other corporate forms, an unincorporated association will remain simpler to set up and run. Charity trustees of a CIO will have the same duties and responsibilities as trustees of an unincorporated association but there are expected to be a number of additional requirements for a CIO:

– A CIO must keep registers of its charity trustees and members and make these registers available for public inspection;

– A CIO must keep a register of any charges over its assets;

– A CIO must submit accounts and annual returns to the Charity Commission regardless of level of income;

– The form of constitution for aCIOwill be less flexible than for an unincorporated association;

– There are a number of criminal offences which could apply to the charity trustees of aCIOif they fail to meet the requirements set out in the legislation;

– A CIO must notify the Charity Commission of certain charges over its property.

Tony Forster

0117 9453 040


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