A Charitable Incorporated Organization (CIO) is a relatively new form of charitable entity which has a separate legal personality thus giving its members limited liability, whilst only being required to be registered with the Charities Commission.

The main differences between a CIO and an unincorporated Charity are the following:

  • Protection: As the CIO has a separate legal personality it means that it can give greater protection to the people that run it (the trustees). This means that should something go wrong (that isn’t the direct fault of any of the trustees), the trustees are not personally liable.
  • Separate Legal Personality: This means that as it is like its own person in the eyes of the law, it can do things like buy property, sign contracts etc. It requires trustees to operate it but like point 1), it is on behalf of the CIO.
  • Watched over: CIOs are supervised by the Charity Commission to ensure that it is being run correctly and that the rules are being followed.

 

How to incorporate as a CIO?

The first step is to draft a ‘Constitution’. We can assist you with this. The Constitution sets out things like:

  • The CIO Name;
  • The purpose intended for the CIO to pursue, as well as the activities needed to carry out;
  • The number of trustees and how long they are appointed for, as well as re-appointment and election provisions.

We will require further information from you to help us draft the Constitution. In order to help us, we will give you a questionnaire to fill out all about the proposed CIO. We will then use that information to guide us in creating a Constitution bespoke for you. Some of the information we require will be things like:

  • How the membership and roles will work,
  • Any payment or benefits intended for the Trustees to receive from the CIO.

We will ensure that the Constitution is drafted in compliance with the model Constitution as specified by the Charity Commission in the Regulations.

 

The next step is to apply to the Charity Commission for the CIO to be incorporated and for its details to be entered in the register of charities. We will use some of the answers given in the questionnaire to assist us in the application.

 

Should the application be relatively straightforward and in compliance with the Charity Commission, it is expected that a registration decision will be make in 45 working days. This is only a guide and the Charity Commission deals with applications on a case by case basis.

 

Once the CIO is incorporated

Once the application is accepted, the CIO will exist, but with nothing to its name.

If you are incorporating a CIO from an unincorporated Charity, at this point, both the CIO and the Charity will be in existence, side by side.

 

The transfer

This is a key step in the process as the CIO will need to have all the assets transferred to it from the unincorporated charity. To do this we will prepare documents like:

  • A transfer agreement. This is between the unincorporated charity trustees and the corporate successor Charity (i.e. the CIO). This is a unique document which identifies the assets of the unincorporated charity that will be transferred, as well as set out the contractual basis on which the new CIO will receive them. We will also prepare deeds of assignment for the goodwill ensuring that the CIO encapsules all of the good name and reputation of the unincorporated Charity.
  • We will prepare all TUPE documentation to ensure that that the employees transfer from the unincorporated Charity to the CIO is done smoothly and in compliance with employment laws.
  • Minutes of the unincorporated charity agreeing to:
    1. The transfer of the assets
    2. To approve the incorporation documents
  • Minutes of the CIO to:
    1. Accept the transfer of the assets
    2. Approve and enter into the incorporation documents,

 

Final Step

Once that is done, the last step is to dissolve the old, now defunct unincorporated charity and tend to any post-transfer formalities. We can assist you on this and ensure that the old unincorporated charity no longer exists and that only the new CIO (with assets and contracts to its name) exists.