The provision is likely to prove particularly popular with unincorporated charities that want to limit trustees’ liability. The Charities Act 2006, for which the CIO was devised, contains specific conversion provisions to this end.
“Clearly, trustees are keen to protect themselves from potential liabilities as they carry out their duties on the boards of charities,” said Gerry Morrison, senior solicitor at Rollits. “The CIO will be suitable for most charities but probably not all.”
Charities should seek legal advice to ensure they choose the structure best suited to their need. Another lawyer, Benjamin James of law firm Bircham Dyson Bell, warned in October that charities wishing to incorporate should not wait for the CIO because it was an untested formula (Third Sector, 3 October).