Changes to charitable incorporated organisations legal form

Office of the Third Sector wants CIOs in place by spring 2010

The Office of the Third Sector and the Charity Commission have outlined several changes to the proposed rules for charitable incorporated organisations in their response to a consultation held last year.

The CIO, which will be a new legal form for charities, is expected to be popular among third sector organisations because it will limit the liability of trustees, but without requiring them to register with Companies House. They will instead be regulated entirely by the Charity Commission.

The new proposals remove a suggestion that CIO trustees should have a lower duty of care than exists at the moment, and will replace a number of minor criminal offences with Charity Commission powers similar to those that currently exist for other charities.

They also include less public disclosure of the details of trustees and members.

The response said that it hoped the new legal form would be introduced by spring 2010.

But it said a decision has not yet been made about whether to introduce the provisions all at once, or to implement it in stages - the latter by allowing new formations first, then conversions later, in order to ensure that the burden on the Charity Commission is not too great.

Nicola Evans, a senior associate at charity legal specialists Bircham Dyson Bell, said she was "extremely impressed" with the joint response. She said it seemed to give proper recognition to charity law.

"There's also an understanding that the new form needs to have some flexibility because of the diverse nature of those who want to adopt the model," she said.

"They've also been very receptive to responses that differed from their expectations."

Jo Coleman, partner at specialist charity legal firm Farrer & Co, said she felt the response was a step in the right direction, but the commission's timetable for implementation laid out in the response was optimistic.

"They've got an awful lot of work still to do," she said. "They've got to produce a revised statutory instrument by the end of the year. They need to draw up guidance and revise draft constitutions.

"I think we may see it slip back a bit."



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