Secondary Legislation to enable charitable companies and Community Interest Companies to convert into CIOs has been laid in Parliament and, subject to Parliamentary approval, it could be possible to convert a charitable company or CIC into a CIO in the early part of next year.
The draft regulations laid before Parliament are intended to make the process of converting a straightforward one. However, as with all legislation the devil will be in the detail.
We will more closely examine the draft regulations shortly and a more substantial blog or article will be circulated by us.
I would however urge charities to fully consider the implications of converting before pressing ahead. In my opinion, the "burden of dual regulation" - where charitable companies are subject to both company and charity law - has been overstated on occasions and whilst CIOs can be an ideal structure in some circumstances, there are other circumstances where a more traditional company structure is preferable.
Charitable companies should not necessarily rush to convert at the earliest opportunity.
In 2013, the Charitable Incorporated Organisations (CIO) was introduced as a new legal structure to meet the needs of small charities in England and Wales. Since then, it has proved popular with over 12,500 new CIOs registered by the Charity Commission. These regulations will enable a simple and direct conversion process for charities with a company structure and Community Interest Companies (CICs) looking to change their legal form into a Charitable Incorporated Organisations (CIO.)