Community Interest Companies (CICs)
Community interest companies (CIC) are a new type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company. This means that a CIC cannot be formed or used solely for the personal gain of a particular person, or group of people.
CICs can be limited by shares, or by guarantee, and will have a statutory “Asset Lock” to prevent the assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset-locked organisation, such as another CIC or charity.
A CIC cannot be formed to support political activities and a company that is a charity cannot be a CIC, unless it gives up its charitable status. However, a charity may apply to register a CIC as a subsidiary company.
The Companies (Audit, Investigations and Community Enterprise) Act 2004 “the Act” established the Regulator as an independent public office holder appointed by the Secretary of State for Trade and Industry. The appointment was subject to an open public recruitment process monitored by the Office of the Commissioner for Public Appointments.
The Regulator is an independent official and her powers are set out in the Act and the Community Interest Company Regulations 2005. The Act requires her to discharge her functions in accordance with good regulatory practice.
In particular, she must have regard to:
- The likely impact of her actions on those affected
- The results of consultation with stakeholders
- The efficient and economic use of her resources
The Government expects the Regulator to be a “light touch regulator” who will encourage the development of the CIC brand and provide guidance and assistance on matters relating to CICs.
The Regulator of Community Interest Companies and the Registrar of CompaniesThe Regulator and the Registrar have very distinct functions and roles, but plan to work very closely together to provide a seamless service.
If you require information about general company formation and requirements rather than more specific community interest company information you may wish to consult the Companies House web site www.companieshouse.gov.uk