Legislative changes affecting the Charitable Incorporated Organisation (CIO)
Charity Commission guidance about a phased timetable allowing charitable companies to convert to charitable incorporated organisations (CIOs).
Introduction
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.
The new legislation also means that all charitable incorporated organisations (CIOs) will be listed on the Business names index, held by Companies House.
The much anticipated Secondary Legislation under the Charities Act 2011 contains 3 distinct elements:
- the Charitable Incorporated Organisations (Conversion) Regulations
- the Charitable Incorporated Organisations (Consequential Amendments) Order
- the Index of Company Names (Listed Bodies) (England and Wales) Order
The Charity Commission (the Commission) is now preparing a programme of work to support these changes.
Charitable Company Conversion – Charitable Incorporated Organisation (CIO)
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 |
The conversion process should be simple and straightforward in most cases. As part of this process, the new CIO Constitution and Special Resolution will need to be included before submission to the Commission.
The Commission will liaise with Companies House to ensure that necessary records are updated correctly. This will mean that the date of conversion of the charitable company to a CIO – as shown on the public register of charities – will match the date of removal of the charitable company at Companies House.
Please note that due to limited resources, 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 in the CIO conversion regulations as of the date of your application
- 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:
- 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
- any additional trustee benefits especially if there is an express prohibition in the company’s governing document
- amendments to the dissolution clause that will change the spirit of the intention of who receives the funds on dissolution
Charitable Incorporated Organisations to be included in the Index of Company Names
All charitable incorporated organisations (CIOs) will be included in the Registrars’ Company Names Index (maintained by Companies House) from 1 January 2018. Charities that are incorporated as companies already appear on this index.
All CIO names will appear alongside the names of companies (and other entities) when a user makes a search through the Companies House CHS or WebCheck service.
This will help protect CIO names. For instance in the event of others looking to set up a company or CIO with the same or similar name.
Following the change in legislation, from 1 January 2018, Companies House will need to check whether a CIO’s proposed name includes ‘sensitive words or expressions’ set out in The Company, Limited Liability Partnership and Business Names (Sensitive Words and Expressions) Regulations 2014, that require the prior approval of Companies House.
Please note applicants do not need to contact Companies House in respect of the words ‘charity’, ‘charitable’, ‘association’, ‘foundation’ or ‘trust’ where they are the only sensitive words used.
Where the proposed name for the CIO includes ‘sensitive words or expressions’ other than those stated above, applicants will need to email Companies House enquiries@companieshouse.gov.uk to obtain their approval before applying to the Charity Commission. Please include ‘CIO’ in the subject line of your email to Companies House.
Before applying, applicants are advised to view Companies House website guidance (Annex A). This sets out the criteria for approval. Applicants are also advised to view Annexes B and C.
Some, but not all, words require applicants to seek the view of a government department or other body before sending their email to Companies House. This is made clear in Annex A. If the relevant body has no objection to the proposed name it will provide the applicant with a statement of non-objection.
It is important to note
- these changes will mean that all new CIOs containing a “sensitive word or expression” in their name - wishing to register with the Charity Commission after 1 January 2018 - will need to attach a letter of approval from Companies House to their application for registration as a CIO
- failure to attach this letter of approval will result in the application being returned as incomplete
- any existing CIO applications affected by these legislative changes that were submitted to the Commission prior to 1 December 2017 will continue to be handled in the usual way. Applicants will be contacted on an individual basis should a letter of approval be required
- new CIO applications affected by this legislation that are submitted to the Commission on or after 1 December 2017 will need to submit a letter of approval from Companies House as part of their application for registration. Failure to do so will cause delays
The Commission will of course, also check that the proposed name of the CIO is not ‘objectionable’ in one of the ways that are set out in our guidance on choosing charity names. Some of these also overlap with sensitive names requirements.
We have also updated our guidance about changing your charity structure to explain how to convert a charitable company to a CIO.
Last updated 29 December 2017 + show all updates
-
Added a link to the updated guidance about changing your charity structure.
-
Includes changes to how CIO conversions will be processed
-
First published.