How to register a Community Interest Company (CIC)
Forming a Community Interest Company (CIC) is the popular solution for small and medium sized Social Enterprise ventures. With less red tape than a full Charity registration, a CIC is specifically intended for social and community enterprises and is recognised by funding bodies.
The registration process is complex, involving forms with up to 35 pages – but you don’t need to worry about that, because ORDERED MANAGEMENT deals with the forms.
Being recognised as a Social Enterprise.
Any company can act in the community interest if the directors decide it should…
but the only ways a limited liability venture can gain recognition as a truly not-for-profit operation is to register a Community Interest Company, a Company Limited by Guarantee or a Charity Limited by Guarantee. The CIC format (Community Interest Company) became a legal option in 2006 and has become popular for small and medium sized not-for-profit ventures.
Charities must be established exclusively for charitable purposes, but a Community Interest Company can be established for any lawful purpose (other than political causes) as long as its activities are carried on for the benefit of the community.
To discuss how to register a CIC contact us on 0117 370 2725.
Your aims as a CIC
Our job in forming your CIC is to turn your ideas and plans into legal documents that will be accepted for Community Interest Company registration at Companies House and with the CIC Regulator. Make notes on your vision, aims and intentions and tell us about it in plain English. We can offer suggestions, but it’s your ideas that matter.
The constitutional documents for your CIC (called Memorandum & Articles of Association) must state the Aims of the proposesd non-profit company. Only you can say what you intend, but we have put together some examples to show how it is done.
Shares or Guarantee?
A community Interest Company may be “limited by shares” or “limited by guarantee” and you must make that choice before ordering. It cannot convert from one to the other after the company has been registered. The difference between the two is the status of the owners or controllers. We have prepared a special article to help you choose between the two options, but here is a summary of the key issues:
In a CIC “limited by shares” the owners will each hold shares, just as they would in a normal profit making business. They can each have any amount of shares, thereby defining the degree of control or ownership that each of them holds. Each shareholder has as many votes as they have shares. They may also receive dividends.
In a CIC “limited by guarantee” the controllers will be called Trustees and will each commit to a cash guarantee to be paid if the company were to fail. The guarantee is normally set at just £10 each. Each Trustee has one vote. Decisions by the committee of Trustees/ Directors are made on a one-person-one-vote basis. No dividend can be paid. This format is more acceptable to most funding bodies.
To choose which type of CIC you want, consider whether your plans for the company look more like a non-profit business or more like a charity. If it is more like a business then it is better to choose a CIC limited by shares. If it looks more like a charity it is best to register a CIC limited by guarantee. For a more detailed explanation see our separate article on “CIC with shares vs guarantee”. If you need help call us by phone, send us an email or use out online chat service (see right hand column).
If your organisation plans to do any work with young or vulnerable people it must have a procedure for obtaining proper criminal record checks. The CIC Regulator will ask about that, so avoid registration delays by making sure you have the answer ready. Tell us about your procedures for obtaining DBS checks and which agency you use to make those checks.
CIC regulation is strict…
…but not as strict as it is for a registered charity. This company type is recognised by many funding bodies as a well-regulated structure for not-for-profit ventures. The Community Interest Company format was specifically designed to provide a purpose-built legal framework and a “brand” identity for social enterprises that want to register a a limited company.
If you already have a company
…you can convert it into a Community Interest Company in order to gain recognition as a Social Enterprise. You must be clear about your intentions, because the CIC Regulator will expect operations and reporting to be entirely consistent with your stated aims as a CIC. But, once your decision is made and you place your order with us, we will handle the entire process of converting your LTD to a CIC.