Community Interest Company's (CIC)

A Registered CIC refers to a Community Interest Company (CIC) that has been officially registered with the UK’s Companies House. A CIC is a special type of limited company that is created to benefit the community rather than private shareholders or investors.

Summary:

• A CIC - is a company that is set up to benefit the community, with legal protections on profits and assets.

  
  

• Key Features: Asset lock, social purpose, limited liability, and oversight by the CIC Regulator.

  
  

• Registration: Done with Companies House + additional form (CIC36).

What Makes a CIC Different?

1. Social Purpose: A CIC is designed to use its profits and assets to benefit the community or a specific group of people, rather than for personal gain. It can operate in any sector, such as healthcare, education, social welfare, environment, and more.

2. Asset Lock: The asset lock is a legal requirement for CICs. This means that the company’s assets must be used for the benefit of the community and cannot be sold or distributed to owners or investors (unless it's to another CIC or charity).

3. Public Benefit: A CIC must demonstrate that its activities are for the public good, such as providing services or support to vulnerable groups or creating positive social impact.

Key Features of a Registered CIC

• Registration: A CIC must be registered with Companies House just like any other company in the UK. It also requires CIC-specific registration with the Regulator, which is the CIC Regulator.

  
  

• Legal Structure: Like a standard limited company, a CIC has a board of directors, and limited liability applies, meaning the directors' personal assets are protected from the company's debts.

  
  

• Profit Distribution: While a CIC can generate profit, it has strict rules about how profits are used. Generally, profits are reinvested in the community or used to fund social projects, rather than distributed to shareholders.

  
  

• Regulator Oversight: The CIC Regulator monitors and ensures that CICs comply with their social purpose. The company must submit an annual community interest report to prove it is fulfilling its purpose.

How to Set Up a CIC

1. Choose a Social Purpose: You’ll need to demonstrate how your business benefits the community. This could be anything from providing jobs to underprivileged communities, running a local youth program, or improving local green spaces.

2. Register with Companies House: The process is similar to registering a standard limited company, but you also need to submit an additional CIC36 form to show your community interest.

3. Appoint Directors and a Community Interest Statement: Like any limited company, you’ll need to appoint directors, but you’ll also have to submit a community interest statement that explains how your CIC benefits the public.

4. Asset Lock: As part of your application, you must agree to the asset lock, ensuring that any profits or assets are used for the benefit of the community.

5. Annual Reports: You must submit annual reports to both Companies House and the CIC Regulator outlining how the business has benefited the community.

Why Choose a CIC?

• Social Impact: Ideal for businesses focused on community service and making a positive social impact.

• Limited Liability: Like any limited company, it provides the same protection for personal assets.

• Tax Benefits: There may be some tax exemptions or advantages, though this depends on the nature of your business.

• Public Trust: Being registered as a CIC demonstrates a commitment to social responsibility, which may improve public trust and attract donations, grants, or investment.

CIC vs. Charity:

While a charity is also set up for social purposes, it is governed by different regulations and often has more restrictions (e.g., charities cannot operate for profit, while a CIC can). CICs can also engage in commercial activities and earn profits, as long as they are reinvested in the community.