Charitable Company Conversion – Charitable Incorporated Organisation (CIO)

The Charity Commission has announced a phased timetable allowing charitable companies to convert to charitable incorporated organisations (CIOs) following legislative changes in Parliament on 23 November 2017.
This provides a simpler transition route to becoming a CIO for charitable companies, via an application to the Charity Commission. Currently, charitable companies or CICs wishing to convert to a CIO need to set up a new CIO with the same charitable purposes as the original charity and transfer all of the assets to the new CIO. The new process will save a significant amount of time and costs and avoid renegotiation of contractual obligations.
The new legislation also means that all charitable incorporated organisations (CIOs) will be listed on the Business names index, held by Companies House.

Please note this service will only begin from 1 January 2018. It will then follow the phased implementation timetable (by income bracket) detailed below. Applications will not be accepted before this time.

Date Annual income
1 January 2018 Less than £12,500
1 March 2018 Between £12,500 and £25,000
1 May 2018 Between £25,000 and £100,000
1 June 2018 Between £100,000 and £250,000
1 July 2018 Between £250,000 and £500,000
1 August 2018 Greater than £500,000

Why Convert to a CIO?
The CIO structure now accounts for over 50% of new charity registrations. Some charitable companies find dual regulation by the Charity Commission and Companies House and the requirement to comply with company law to be unnecessarily cumbersome. This is especially the case for smaller charities with limited resources. Depending on the size and activities of the particular charity, converting to a CIO may be an appropriate way of relieving regulatory burdens and achieving a more proportionate approach to the charity’s administration.
To convert the company will need to prepare a new CIO Constitution and a Special Resolution which will need to be passed by the members adopting the new constitution and amendment to name (“LTD” replaced by “CIO”. These documents will then be sent to the Charity Commission.

Please note that your application may be rejected if:
• Complete documentation is not sent or received
• The company’s income is above the income threshold as set out above
• Your charity is not in compliance with its reporting requirements to the Charity Commission and Companies House
• Your charity has made any changes to the new CIO governing document that would require the Charity Commission’s approval including:
o Name change, except a minor change such as removing limited or company and replacing it with CIO and also if the name is not one that is regulated on the business register and no approval has been submitted with the application
o Any additional trustee benefits especially if there is an express prohibition in the company’s governing document
o Amendments to the dissolution clause that will change the spirit of the intention of who receives the funds on dissolution
o The Articles contain entrenched provisions which are not highlighted to the Commission

If you think your charity may benefit from converting to a CIO, we can advise you and help with the application process. Fees will be £600 plus vat of £120 = £720 of which half is payable in advance.

Call us to discuss on 01925757887 or 07710141058 or email mike@charity-registration.com