Community Interest Companies
What is a Community Interest Company?
A Community Interest Company, or CIC for short, is a new type of company for persons who wish to form company that benefits the local community or a specific group of the community instead of the owners.
A CIC takes the form of a limited company with additional features. This limited company could be a plc, a private company limited by shares or by guarantee. This means it has the same obligations and also the same benefits as other limited companies registered at Companies House.
How does a CIC work?
As we know a CIC is formed for the benefit of the community and as such have a statutory “asset lock” to prevent monies from the company being distributed, other than when permitted by legislation.
This allows all assets and profits from the company to be used for community purposes.
A CIC can take many forms. Such as running a business to generate profits so they may be used for the community or something far more direct as a play group for toddlers.
A CIC cannot be formed for political means or be a charity.
Setting up a CIC?
To set up a CIC it must first be eligible to pass the “Community Interest Test”. To pass such a test the Regulator must be satisfied that the activities of the company will produce a benefit to the community.
The Regulator will see a “Community Interest Statement” from all applicants and the memorandum and articles of association (mem & arts) must comply with current legislation.
Producing the Community Interest Statement and passing the test are probably the most arduous parts of setting up a CIC.
The setting up of the CIC is via paper application only and can take up to two weeks, although this is relatively painless.
It is worth noting that an existing company may be converted to a CIC by changing its name and updating the memorandum and articles of association.
My CIC is formed. What happens now?
A pack will be sent to you in the post. This will include:
Your commitments
Once a year you will need to file an annual CIC report and accounts to satisfy the Regulator and Companies House. And it’s important to keep the community abreast with its activities and use any assets and profits for the community only. You will also need to file annual documents to Companies House.
A Community Interest Company, or CIC for short, is a new type of company for persons who wish to form company that benefits the local community or a specific group of the community instead of the owners.
A CIC takes the form of a limited company with additional features. This limited company could be a plc, a private company limited by shares or by guarantee. This means it has the same obligations and also the same benefits as other limited companies registered at Companies House.
How does a CIC work?
As we know a CIC is formed for the benefit of the community and as such have a statutory “asset lock” to prevent monies from the company being distributed, other than when permitted by legislation.
This allows all assets and profits from the company to be used for community purposes.
A CIC can take many forms. Such as running a business to generate profits so they may be used for the community or something far more direct as a play group for toddlers.
A CIC cannot be formed for political means or be a charity.
Setting up a CIC?
To set up a CIC it must first be eligible to pass the “Community Interest Test”. To pass such a test the Regulator must be satisfied that the activities of the company will produce a benefit to the community.
The Regulator will see a “Community Interest Statement” from all applicants and the memorandum and articles of association (mem & arts) must comply with current legislation.
Producing the Community Interest Statement and passing the test are probably the most arduous parts of setting up a CIC.
The setting up of the CIC is via paper application only and can take up to two weeks, although this is relatively painless.
It is worth noting that an existing company may be converted to a CIC by changing its name and updating the memorandum and articles of association.
My CIC is formed. What happens now?
A pack will be sent to you in the post. This will include:
- Certificate of Incorporation
- 4 copies of the Mem & Arts
- Company Register
- E-filing code to lodge documents at Companies House
Your commitments
Once a year you will need to file an annual CIC report and accounts to satisfy the Regulator and Companies House. And it’s important to keep the community abreast with its activities and use any assets and profits for the community only. You will also need to file annual documents to Companies House.