Forming a
Community Interest Company (CIC) is the new and 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.
Being recognised as a Social Enterprise.
Any company can act
in the community interest if the directors decide it should...
but the only way a
limited liability venture can gain recognition as a truly
not-for-profit operation is to register as a Community
Interest Company, a Company
Limited by Guarantee or a Charity
Limited by Guarantee. The CIC format (Community Interest
Company) is the most recent to be legislated for use by a non-profit organisation and has quickly gained
popularity 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 as long as
its activities are carried on for the benefit of the community.
Our job in creating
your CIC is to turn your ideas and plans into legal documents that will
be accepted for formal registration as a Community
Interest Company. 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.
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).
CRB Checks
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 CRB 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 relatively new company type is
increasingly recognised by 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 adopt the limited company form.
£163 (£145 + VAT)
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.
£163 (£145 + VAT)
give us a call on 0117 370 2725
Social
Enterprise.
People register Community Interest Companies for social enterprises,
community activities, commercial ventures to support charities,
sporting activities, clubs...
A CIC is beneficial for all sorts of
groups and organisations, we’ve helped form Community Interest
Companies focussed within a broad range of sectors including…
childcare companies,
community fitness ventures,
music tuition,
arts projects,
employment initiatives,
martial arts groups,
anti-smoking projects,
fashion and design development schemes,
ethnicity projects,
volunteer worker support groups,
training schemes for the unemployed,
catering industry training initiatives,
recycling promotion,
learning difficulties support networks,
and more…
a
political group or a registered charity cannot form a CIC
a
sports or social club can also form a CIC
Your sports club may also be able to register as a Community Amateur Sports Club to gain tax reliefs from HMRC. See our page about CASC for more details.
