And they all (CIOs) lived happily ever after?
The concept of a bespoke incorporated charitable structure was introduced by the Charities Act 2006...
...and allows trustees the benefits of limited liability without the burden of dual regulation by the registrar of companies and the Charity Commission. Chris Priestley, of Withers LLP has provided the following update:
‘The Charity Commission has now published two forms of model constitutions:
- a foundation model (applicable where the members of the CIO and its trustees are identical); and
- an association model (applicable where the CIO’s membership is distinct from its trustees).
A consultation was held on the draft regulations and the model constitutions which closed on 10 December 2008 and some nine months later on 17 September 2009 the Office of the Third Sector in the Cabinet Office and the Charity Commission issued a joint press release outlining their response to the consultation, indicating a number of changes to the initial CIO proposals have been agreed. These include:
- ensuring a robust duty of care for CIO trustees by removing a proposal that trustees could take less responsibility for their charity’s activities;
- tightening up rules on access to personal information in the registers of trustees and members that CIOs will have to maintain; and
- replacing a number of minor criminal offences for administrative failings with the power for the Commission to direct rectification.
The Cabinet Office will now amend the draft secondary legislation and the model constitutions and it is proposed that this will be completed by the end of 2009. The draft Regulations will then have to be approved by Parliament and in the meantime the Charity Commission will be preparing the systems, processes and guidance that will be required before the CIO can go live.
The joint response indicates that it is hoped that the new legal form will be introduced by ‘spring’ 2010 although it has not yet been decided whether all the provisions will be introduced in one go or implemented in stages. It has been suggested, for example, that the regulations may only initially allow new incorporations, introducing conversions from existing legal forms at a later stage so to avoid over-loading the Commission. However the CIO has been so long in the making and there is still so much to do (not to mention a general election on the horizon), the implementation target looks a little ambitious.
Many stakeholders will be particularly pleased to see the proposal to allow the charity trustees general duty of care to be disapplied in the CIO constitution reconsidered. Such a flexible approach to the duty of care appeared to be in contrast with the objective of providing sufficient accountability so as to encourage public trust and the confidence of those who deal with CIOs. Although a balancing act between accountability and straightforward administration is required, the option to water-down the duty of care for many appeared to be a step to far in favour of the latter.’
Author: Clarissa Dann
Clarissa Dann is the Editor of Caritas, Charity Funding Report and Codicil.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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