A guide to third sector trading - WCVA

It’s an idea, but is it business? A guide to third sector trading
1: Getting
started
2: First steps 3: Business
planning
4: Legal and
governance
5: Funding
and
resourcing
6: Financial
controls
7: Managing
growth
8: Management
and
governance
9: Social
enterprise
10: Sources
of support
Charitable Incorporated Organisations (CIOs)
A better option for charitable companies: The new CIO
structure, which is due to come into operation in 2011, combines
the previous two tier process of registering a company limited
by guarantee and then registering it as a charity. The following
compelling list of advantages have been persuasively advanced
by the UK government, and it is hard to see why new charitable
companies in future would want to use the former approach. It
remains to be seen whether it is worthwhile for existing charitable
companies to convert to CIOs.
• Single registration: A CIO will need to register with the Charity
Commission alone, whereas a charity that is a company needs
to register with the Charity Commission and the Registrar of
Companies. A major problem up to now has been that there was
often no assurance that the charitable objectives of the limited
company would be acceptable to the Charity Commission.
• A single annual return and simpler reporting: A CIO will be
required to prepare only one annual report, under the Charities
Act 1993. A CIO will make one annual return under charity law,
whereas a charity that is a company must prepare an annual
return under company law and, if it has an annual income of
over £10,000, it must prepare a separate annual return under
charity law.
• Simpler filing requirements: A CIO will be required to send
its accounts, reports and returns to the Charity Commission,
whereas a charity that is a company also needs to send them to
the Registrar of Companies.
• Simpler requirements on changing the constitution: A CIO
does not need to report to the Registrar of Companies.
• Lower costs: The Charity Commission does not make any
charges for registration and filing of information.
• Other benefits:
− simpler constitutional forms, and, it is claimed, greater
constitutional flexibility
− easier charity mergers
− an enforcement regime that does not penalise the CIO itself
for misconduct by its directors.
• Conversion: It will be extremely simple to convert charitable
companies and charitable industrial and provident societies
to CIOs. Converting charitable trusts and unincorporated
associations to CIOs should also be relatively straightforward.
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