At ECS, we think that the legal vehicle for your charity should provide a structure for good governance and legal compliance. It should not be a hindrance or put obstacles in the way of your ministry and pointing people to Jesus.
Over time the needs of a ministry change – as well as the legal landscape. Many Christian charities and churches are set up as charitable companies. But now is a good time to review whether a charitable company is still providing the best legal vehicle for your ministry or if it would be better for you to convert to a CIO.
Converting to a CIO means drafting a new CIO Constitution, passing a couple of members’ resolutions and applying to the Charity Commission. If you need to update your objects, Trustee benefit or dissolution provisions, we can do this as part of the process and make the necessary application to the Commission. Your charity number does not change as part of converting to a CIO and there is no transfer of assets from the company to the CIO – the company is simply treated as having changed legal form.
We are experts at charity governance and ensuring that Christian ministries have the best legal vehicle to enable long term effectiveness for the gospel. If you would like to explore reviewing your current structure, please get in touch with your usual contact at ECS or speak to Caroline Eade who heads up our charity team on 01858 411568 or contact her by email at [email protected].
Reasons to change to a CIO
- To reduce your admin load
A charitable company is regulated both by Companies House and the Charity Commission. A CIO is only regulated by the Charity Commission, so your reporting obligations and workload are reduced. - Your charity will no longer be subject to company law
Company law and charity law both apply to a charitable company. Only charity law applies to a CIO. The financial and administrative demands of company law and Companies House are set to increase due to recent legislation – you can find out more about this in our article here. - To improve governance
Company law mandates that the members of a company are responsible for a wide variety of decisions in the life of a company. For example, members have the power to remove directors by a simple majority – you cannot include a higher voting threshold in your articles. In a CIO, you can tailor the rights of the members more easily to the needs of your ministry. - To provide a clear Christian identity
We often see company articles which refer to the Christian faith, without a clear definition of what that means. As there is more variance about the doctrines which are important to Christians in the UK, it is important that your governing documents set out clearly the truths from the Bible that your ministry holds dear. This helps to protect the identity of your ministry for the long term, as well as allowing your ministry to benefit from protections in equality legislation. - To reduce your costs
You may be able to save money on audit/examination fees, as the rules for CIO accounts are different from those for companies. You would need to check this with your treasurer or accountant.
