Charity Commission guidance on charity conversion to CIO status issued

The Charity Commission has announced a phased timetable for charitable companies to convert to charitable incorporated organisations (CIOs) starting with first registrations in January 2018

The new legislation also means that all charitable incorporated organisations (CIOs) will be listed on the business names index, held by Companies House.

Charitable companies will be able to convert to charitable incorporated organisation (CIO) from 1 January 2018 with a phased implementation timetable (by income bracket). Applications will not be accepted before this time. 

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.

Phased implementation timetable

DateAnnual income £
1 Jan 2018< 12,500
1 Mar 201812,500 - 25,000
1 May 201825,000 - 100,000
1 Jun 2018100,000 - 250,000
1 Jul 2018250,000 - 500,000
1 Aug 2018> 500,000

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.

It is important to include all the necessary documentation, otherwise the Commission will reject the application. Reasons for rejection will include:

·         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;

·         charity is not in compliance with its reporting requirements to the Charity Commission and Companies House;

·         charity has made any changes to the new CIO governing document that would require the Charity Commission’s approval including a 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; and

·         amendments to the dissolution clause that will change the spirit of the intention of who receives the funds on dissolution.

From 1 January 2018, all charitable incorporated organisations (CIOs) will be included in the Registrars’ Business Names Index (maintained by Companies House). Charities that are incorporated as companies already appear on this index.

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.

Where the proposed name for the CIO includes ‘sensitive words or expressions’ applicants will need to email Companies House to obtain their non-objection before applying to the Charity Commission. To speed up response times, include ‘CIO’ in the email subject line.

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 non-objection from Companies House to their application for registration as a CIO.

Any existing CIO applications affected by these legislative changes that were submitted to the Commission before 1 December 2017 will continue to be handled in the usual way. Applicants will be contacted on an individual basis should a letter of non-objection be required.

1 December 2017 is the cut-off date for charities to use the current system.

It is important to note that for all CIO applications affected by this legislation submitted to the Commission on or after 1 December 2017 will need to submit a letter of non-objection from Companies House as part of their application for registration.

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 the requirements on sensitive names.

The Secondary Legislation under the Charities Act 2011, introduced following legislative changes in parliament on 23 November 2017, contains three distinct elements:

  • the Charitable Incorporated Organisations (Conversion) Regulations;
  • the Charitable Incorporated Organisations (Consequential Amendments) Order; and
  • the Index of Company Names (Listed Bodies) (England and Wales) Order.

Charity Commission guidance, Legislative changes affecting the Charitable Incorporated Organisation (CIO)

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