When it becomes available the CIO will give charities the benefit of limited liability status without the need to also have a company structure registered with Companies House.

The introduction of the Charitable Incorporated Organisation (“CIO”) is to be delayed again and is not expected until late this year or early 2011 as there is now insufficient time for the necessary legislation to go through Parliament before the election. 

Even when the CIO does become available the regulations relating to them are likely to be relatively complex and untested. The Charity Commission is also likely to phase in its introduction so it will not initially be available to all charities.

Converting into an incorporated structure is one of the most important ways in which a charity can protect its trustees. Some charities have been putting off incorporating while they wait for the arrival of the CIO, and in so doing are leaving their trustees potentially exposed to personal liability.

This further delay and continued uncertainty about when the CIO will become available means that unincorporated charities considering incorporation should think about incorporating immediately as charitable companies limited by guarantee rather than waiting for the CIO.

(Extract from Legal Update from Charity Solicitors Russell-Cooke)

It will be possible to convert either a charitable company or an industrial and provident society into a CIO at a later date if the CIO proves to be a preferable model.