What is a Community Interest Company (CIC)?
CICs are a new type of limited company created by the Companies (Audit, Investigations and Community Enterprise) Act 2004 and the Community Interest Company Regulations 2005. The CIC aims to meet the needs of organisations which:
• trade with a social purpose (“social enterprises”) or carry on other activities which benefit the community; and
• wish to enjoy the benefits of limited company status; and
• want to make it clear that they are established for the benefit of the community rather than their members; but
• are not able, or do not wish, to become charities.
Who is responsible for CICs?
The CIC Regulator is an independent public office holder appointed by the Secretary of State for Business, Enterprise and Regulatory Reform. The CIC Regulator’s duties are to:
• to consider applications to form a CIC
• to ensure that a CIC complies with its legal obligations
• to take enforcement action where serious infringements occur
The Regulator also has an important role:
• in the development of CICs as a new company type i.e. the brand; and
• in providing help and guidance to CICs, to those people considering setting up a CIC, and to business professionals advising CICs.
Why were they created?
The report ‘Private Action, Public Benefit’, published by the Strategy Unit in 2002, pointed to a gap in the range of options available to social enterprises that wished to incorporate as companies. Social enterprises are an exciting and fast growing sector yet some of the legal forms were originally designed for completely different types of organisations. The Government established this new framework to support the sector by offering a modern and appropriate legal vehicle to help raise their profile.
What are they key features of a CIC?
• CICs work for the benefit of the community.
• CICs can be companies limited by guarantee or limited by shares.
• A CIC is quick, easy and inexpensive to set up because the Regulator provides model memorandum and articles of association, which include an asset lock. The asset lock is a fundamental feature of the CIC. It is statutory, cannot be removed and is overseen by the Regulator (more information on the ‘asset lock’ can be found by visiting the CIC Regulator website – link at the bottom of this page).
• There is a greater transparency of operation as a CIC has to deliver an annual community interest company report about its activities for the public record.
• The CIC has greater flexibility compared to a charity in terms of its activities. It does not have trustees and its directors can receive reasonable remuneration. Regulation is light touch.
Further Information is available through the links on the right of this page.