Convert to a CIO

Introduction

Is your charity an unincorporated association or a trust?  These two charity forms are unincorporated – i.e. the charity has no legal personality separate from its members and/or trustees. As a result, the charity cannot enter into contracts, such as employment contracts, in its own name. The trustees have to enter into contracts personally, and they can be personally liable if something goes wrong.

Key Benefits of Converting to a CIO

• Simplified Legal Structure: The charity, as a legal entity, can enter into contracts, hire staff, and own property in its own name, rather than relying on individual trustees.
• Clearer Liability: The charity itself is liable for contracts and loans, reducing potential personal liability for trustees.
• Corporate Body: Can hold its own property
• Limited Liability: A major claim could lead to the charity being liquidated, but no claim can be made against the personal assets of members or trustees provided they act properly.
• Legal: Can sue and be sued in the name of the charity (rather than trustees personally)

Our Services

We offer a seamless service to support the conversion of your incorporated charity into a Charitable Incorporated Organisation (CIO). This includes setting up and registering the new CIO, obtaining Charity Commission authority for trustee indemnity, and securing approval in cases where conflicts of interest may arise—particularly when the same trustees are involved in both the old and new entities. Our goal is to make the transition smooth, compliant, and stress-free.

To convert your incorporated charity to a CIO we will:

1. Set up and register the new CIO
2. Obtain Charity Commission authority for the CIO to grant you indemnity for any liabilities incurred while acting as trustees of the unincorporated charity.
3. Obtain Charity Commission authority where the same trustees are involved in both the old and new charities, and are unable to manage potential conflicts of interest when approving the transfer.

After this, you will need to work with your accountant and solicitor to:

1. Agree a transfer date with the new CIO to transfer your charity’s assets and liabilities to the new CIO.
2. On or after the transfer date, transfer funds from your charity’s bank accounts to the CIO’s bank accounts and, where relevant, register the change in ownership of land at the Land Registry.
3. Prepare and execute the correct documentation, such as a pre-merger vesting declaration.
4. Take legal advice on designated land, permanent endowments, and special trusts.
5. Close your charity after you have transferred all your assets and liabilities to the CIO and passed your charity’s records to the new CIO.