Head of Family Law, Rachel Adams has again been listed in the Chambers and Partners…
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Charities will soon be able to take advantage of a new type of corporate vehicle that will lift the current burden of dual regulation
At present charities can be set up with a corporate structure (ie as a limited company) but this means that they normally fall within the requirements of company law as well as charity law. In particular, they have to register both with the Charity Commission and the Registrar of Companies and provide accounts and returns to both.
As the framework of company law was designed primarily for commercial organisations this may mean that it is not always suitable for charities.
The Charitable Incorporated Organisation is a new corporate form which will combine the advantages of a corporate structure (such as reduced risk of personal liability) without the burden of dual regulation. The CIO format will be available after April 2010.
For charities that decide that a corporate structure is right for them, the CIO will have the following advantages over a standard company structure:
- A single registration – a charitable company has to register with the Registrar of Companies at Companies House and the Charity Commission. A CIO will only need to register with the Commission.
- Less onerous requirements for preparing accounts – the general regime in the Charities Act 1993 will apply, so small CIOs will be able to prepare receipts and payments accounts, whilst larger charities will prepare accruals accounts.
- Less onerous reporting requirements – CIOs will only prepare an annual report under the Charities Act 1993. Under company law, companies have to prepare a directors’ report as well.
- One annual return – charitable companies have to prepare an annual return under company law and, normally, a separate return under charity law.
- Less onerous filing requirements – CIOs will only have to send accounts, reports and returns to the Commission. Charitable companies have to send these to Commission and the Registrar of Companies.
- Lower costs for charities – the Commission make no charges for registration and filing of information.
- Simpler constitutional form – the Charity Commission will produce model forms of constitution which will include fewer fixed governance provisions than is the case with companies..