Community Interest Companies
Community Interest Companies [C.I.Cs] are a new form of organisational structure. C.I.Cs are different from charities and intended to be appropriate for entrepreneurs or others intending to establish social enterprises.
The differences between a C.I.C. and a ch Save arity are:
- Charities must pass a closely defined “public benefit” test [see separate briefing note on this site]. A C.I.C. need only benefit the community – a much wider and more flexible test.
- Charities are regulated by the Charity Commission. The regulatory regime is more onerous than for C.I.C.s – so that for example a board member of a C.I.C. may be remunerated – and charities are limited in the financial benefits that can be paid to trustees.
- Charities enjoy tax advantages, C.I.C.s do not.
The advantages of a C.I.C. are:
- That the status offers a structure giving the advantages of limited liability of a company.
- That the C.I.C. is a recognised structure - familiar for example to government or other bodies making grants.
- The C.I.C.s would be able to issue shares – to assist them in raising capital.
- C.I.C.s will be subject to an “asset lock”. This is an important element of C.I.C.s (distinguishing them from a conventional limited company), subject to exceptions (modest dividends) a C.I.C. may not distribute their assets amongst their members – so ensuring that the organisation is run for the benefit of the community rather than the financial gain of its members.
In order to form a C.I.C. a company must be formed and then an application made to The Regulator of C.I.C.s who must be satisfied that the formation of the C.I.C. is in the public interest.
We are able to advise as to what is likely to be the best vehicle for your intended purpose – charity or C.I.C. and we are able to undertake the formation process on your behalf.
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