A Charitable Incorporated Organisation (CIO) is a new legal form of charity. It is an incorporated form of charity which is not a company. It only needs to be registered with the Charity Commission and not Companies House and is only created once it is registered by the Charity Commission. It can enter into contracts in its own right and its trustees will normally not be liable for the debts of the CIO.

It is proposed to be implemented at some point during 2012.

The CIO was created in response to requests from charities for a new structure which could provide some of the benefits of being a company, but without some of the burdens.

They will not have the added complexity of being governed as a company under the Companies Acts, but will be governed solely as a Charity.

The CIO structure has several benefits in that:

• the members and trustees are usually personally safeguarded from liabilities that the charity incurs
• the charity has a legal personality of its own, enabling it to conduct its affairs in its own right rather than in the name of the trustees.
• The charity will be governed as a charity only, so that there is only one set of annual accounts to prepare
• They will be easier, cheaper and quicker to set up.

We think that the CIO will be most suitable for small to medium sized organisations which employ staff and / or enter into contracts. But it will not be appropriate if your charity is likely to want to issue debentures.

This note does not constitute legal advice but is intended as general guidance only. It is based on the law in force in July 2012. If you would like further information, please contact Robert Macro, Head of Druces’ Private Client team on +44 (0)20 7216 5531 or Helen Freely on +44 (0)20 7216 5521 / h.freely@druces.com or email us at privatecapital@druces.com