Two Interesting Innovations; the Charitable Incorporated Organisation and the Charity Tribunal

There are arguments that the CIO is not necessary. While it confers limited liability, there is already a limited liability vehicle for charities in the company limited by guarantee and many of the arguments about the problems with dual regulation between Companies House and the Charity Commission are arguably over-stated. Furthermore, much of the draft regulation around the CIO has been taken from company legislation, further begging the question about whether the CIO is necessary.

On the other hand, the CIO does have very clear duties for its members and trustees set out at Schedule 7 of the 2006 Act, which could offset the uncertainties of the new directors' duties set out in Ss172-178 of the Companies Act 2006.

The Charity Tribunal is a welcome innovation which will help to hold the Commission to account, and which is a much-needed counterweight to the enhanced powers of the Commission conferred by the 2006 Act. Rules are to be laid down by the Lord Chancellor.

One of the criticisms of the Charity Tribunal is that there is no legal aid or its equivalent in respect of bringing an action there, and the Tribunal may only award costs if:

• it considers that any party to proceedings before it has behaved vexatiously, frivolously or unreasonably, or

• it considers that a decision, direction or order of the Commission subject to the proceedings was unreasonable.

As a result, a party bringing an action in the Tribunal must consider the cost implications to themselves of doing so.

A large list of matters appealable to, and reviewable by, the Tribunal is set out at Schedule 4 of the 2006 Act.