Legislation to allow charitable companies to quickly convert into charitable incorporated organisations was passed in the parliament in November 2017. CIOs were introduced as a new legal structure for charities back in 2013. There are more than 13,000 CIOs registered since this date.
Previously, charities would have had to close down their current organisation before they can commence operating as a CIO. This structure will allow charities to enter into contracts as corporate entities with limited liability for trustees and members. This may mean that it will soon become easier for charities to trade whilst still maintaining a charitable status.
The new legislation passed in November will allow community interest companies and charities with company structures to quickly convert into CIOs from 1 January 2018. However, this will be phased in as follows:
|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|
Do not send your applications too early if your charity’s income doesn’t fall into a certain bracket. The Charity Commission will not accept applications before your charity’s income bracket date. Phasing application for conversion make the application process manageable for the Charity Commission.
It isn’t known how many of the well-established charities will choose to convert, however we think this structure will be good for smaller charities and community interest companies. All charitable incorporated organisations (CIOs) will be included in the Registrars’ Business Names Index (maintained by Companies House) from 1 January 2018. The reason given for this that it will help protect CIO names. Charities that are incorporated as companies already appear on this index.
One of the advantages of this quick conversion is that the charity will keep its existing charity number. We hope that the banks will not change the charity’s bank account number, etc.
If you need further advice on converting your charity to a CIO structure, contact our partner Suda Ratnam on 020 8418 2681 or email@example.com