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New rules now in effect for conversion of charitable companies into CIOs

New rules now in effect for conversion of charitable companies into CIOs

New rules have come into force that govern how charitable companies convert into charitable incorporated organisations (CIOs).

The rules came into effect on 1 January. They allow charitable companies to change their legal status through a more straightforward process involving an application to the Charity Commission. Changing to a different charitable structure usually involves setting up a new charity, transferring the original charity’s assets and liabilities to it then closing the original charity.

Under the new rules however, following the change to a CIO, the charity continues to exist but in a different form, keeping the charity’s existing name and charity number. Charities should also be able to keep their existing bank accounts and in most cases, the Charity Commission states that the new CIO should receive any legacies left to the original charitable company. Its registration with Companies House is also cancelled and it is no longer governed by company law, with no requirement therefore to submit accounts to Companies House.

The new process currently applies to charitable companies with a yearly income of under £12,500, and will become available to larger charities in stages according to the timetable on the .gov site.

Full guidance on the rule changes is available online, and Bates Wells Braithwaite has announced that it is to hold a seminar on CIO conversion on 17 April.

Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via www.thepurplepim.com.

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