A community interest company (CIC) is a type of company introduced by the United Kingdom
United Kingdom government in 2005 under the Companies (Audit, Investigations and Community Enterprise) Act 2004, designed for social enterprises that want to use their profits and assets for the public good. CICs are intended to be easy to set up, with all the flexibility and certainty of the company form, but with some special features to ensure they are working for the benefit of the community. They have proved popular and some 10,000 registered in the status's first 10 years.
1 As social enterprise 2 Legal forms and social objectives 3 Formation and registration 4 See also 5 References 6 External links
As social enterprise
Main article: Social enterprise
A community interest company is a business with primary social
objectives whose surpluses are principally reinvested for that purpose
in the business or in the community, rather than being driven by the
need to maximise profit for shareholders and owners. CICs tackle a
wide range of social and environmental issues and operate in all parts
of the economy. By using business solutions to achieve public good, it
is believed that CICs have a distinct and valuable role to play in
helping create a strong, sustainable and socially inclusive
CICs are diverse. They include social and community enterprises,
social firms, mutual organisations such as co-operatives, and
large-scale organisations operating locally, regionally, nationally or
Legal forms and social objectives
CICs must be limited companies of one form or another. A CIC cannot be
a charity, an IPS or an unincorporated organisation.
Regular limited liability companies that do not have charitable status
find it difficult to ensure that their assets are dedicated to public
benefit. There is no simple, clear way of locking assets of such a
company to a public benefit purpose other than applying for charitable
status. The community interest company is intended to meet this need.
When a CIC is requested, the CIC regulator considers whether
applications meet the criteria to become a CIC. If satisfied, the
regulator advises the registrar in
CICs are specifically identified with social enterprise. Some organisations may feel that this is more suitable than charitable status. Members of the board of a charity may only be paid where the constitution contains such a power and it can be considered to be in the best interests of the charity. It means that, in general, the founder of a social enterprise who wishes to be paid cannot be on the board and must give up strategic control of the organisation to a volunteer board, which is often unacceptable. This limitation does not apply to CICs. They are looking to work for community benefit with the relative freedom of the non-charitable company form to identify and adapt to circumstances, but with a clear assurance of not-for-profit distribution status. The definition of community interest that applies to CICs is wider than the public interest test for charity.
Formation and registration The formation and registration is similar to that of any limited company. New organisations can register by filing the Form IN01 and memorandum and articles of association together with a form CIC36 signed by all their directors, explaining their community credentials to the Registrar of Companies for England and Wales, or the Registrar for Scotland with a fee of £35. Existing companies can convert to a CIC by passing resolutions which make changes to their name and to their memorandum and articles of association and by delivering to the Registrar of Companies copies of these documents, together with a fee for £35, and a form CIC37 (which is similar to a CIC36, but asks for confirmation that the company is not a charity, or that permission has been obtained from the Charity Commission to convert from a charity to a CIC). The Registrar will conduct the normal checks for registration and pass the papers to the Regulator of Community Interest Companies, to determine whether the company satisfies the community interest test. CICs cannot:
be politically motivated (see regulation 3 of the Community Interest
^ "What is a CIC?". CIC Association. Retrieved 30 September 2015. ^ "The rise and rise of the community interest company". Third Sector. 1 June 2015. Retrieved 30 September 2015. ^ Bounds, Andrew (9 July 2013). "Social enterprises seen as driver for growth". Financial Times. Retrieved 30 September 2015. ^ Jump, Paul. "How to: Decide between charitable and CIC status". Third Sector. Retrieved 30 September 2015.
Community Interest Companies Regulator CIC Association website Social Enterprise and Business Structures in Canada Discussion paper on work being done in Canada to create a unique social enterprise legal business structure, using the UK example. Davies, William (13 September 2004). "How to tame capitalism". New Statesman. Retrieved 26 April 2012.
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