What is a Community Interest Company (CIC)?
The CIC was created by the Companies Act 2004 (this has subsequently been amended by the Companies Act 2006).
It is a limited liability company designed for social enterprises which has the aim of providing benefit to a community. It must use its assets, income and profits for the community it has chosen to benefit. A CIC can be limited by either shares or guarantee. It must, however, satisfy what is called a community interest test. This test will be satisfied where the CIC can show that a reasonable person might consider its activities are being carried out for the benefit of a community.
A statement evidencing that the organisation satisfies this test must be provided in the form of a Community Interest Statement. A CIC may not be political and cannot also be a charity.
Setting up a CIC
A CIC can be formed as new company or alternatively, you can convert an existing company into a CIC.
In the case of a new company, the required form must be lodged with the Registrar at Companies House together with a small fee. The form outline’s the company’s proposed name, the type of company, its articles of association (this is the company’s governing document), together with its Community Interest Statement. This must be accompanied by the other documentation which we would usually submit when looking to incorporate a new company. The Registrar will then decide whether the company is eligible to be a CIC.
There are model articles recommended by the CIC Regulator depending upon whether the CIC is a small or large company. The CIC is, however, not obliged to use them - save in respect of certain prescribed wording.
Conversion of an existing company into a CIC
The conversion of an existing company involves the passing of a special resolution to change the company’s name to include CIC in its name and to adopt new articles of association or amend its current articles. These documents must be submitted to the Registrar with the appropriate form containing the Community Interest Statement and a fee. The Registrar will then decide whether the company is eligible to be a CIC.
If you have an enquiry in relation to conversion to CIC status or simply want to speak to a member of our expert Team for further information and guidance, please use the request a call back or make an enquiry option to get in touch.