Lawyers frustrated by delayed incorporation rules

Charity lawyers have reacted with disappointment to a delay to draft rules on the new charitable incorporated organisation legal structure.

The regulations, which had been expected in early summer, will not be released until after the summer parliamentary recess, which runs until early October.

The CIO form, introduced by the Charities Act 2006, has been keenly awaited by unincorporated charities because it will allow them to limit the liability of their trustees without becoming subject to dual regulation by the Charity Commission and Companies House.

Incorporated charities will be able to convert to CIOs, but Rosamund McCarthy, a partner at legal firm Bates, Wells & Braithwaite, said many unincorporated charities had been holding off from incorporating because they didn't want the expense of two structure changes.

"People are frustrated because they have been left in limbo," she said. "There is only so long they can wait."

She said the delay was probably caused by the complexity of incorporating commercial law into the rules, which added to a "sinking feeling" that the CIO form would not be "the answer to everyone's prayers".

A spokesman for the Office of the Third Sector said: "We are working hard towards introducing the draft regulations, but we are taking the time to make sure we get it right."

Michael King, senior partner at legal firm Stone King Sewell, said the news was disappointing but that the caution was justified.

"Where incorporations are perceived to be important and urgent, they are happening anyway," he said.

Catherine Rustomji, a charities solicitor at legal firm Dickinson Dees, wasn't expecting the CIO form to be available until 2010 or 2011.

"It's frustrating, because some trustees thought they would be available from this summer, but that is only when the concept was created by the Charities Act - and look how long that took to go through," she said. "Charity law is not a priority for government time."

Claris D'cruz, a charity specialist at Wilson's Solicitors, said she advised clients to incorporate immediately because of the uncertainty.

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