Community Interest Company - CIC

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IMPORTANT:  Before deciding to adopt the Community Interest Company structure it is vital that you obtain professional advice.

A Community Interest Company (CIC) is a legal structure that is designed for businesses that benefit the community rather than solely to make money.  A CIC can be a company limited by shares or a company limited by guarantee and have the same benefits as other companies of this type.

Every CIC must

  • Be approved by the CIC Regulator and pass the Community Interest Test
  • File an annual CIC report with its accounts
  • Keep the community aware of its activities
  • Only use its assets and profits for the community specified, or  pass them on to another body with a similar interest (asset lock)
  • Be registered with Companies House in the same way as any other company with the same incorporation documents plus a Community Interest Statement

A CIC cannot be a charity but a charity can own a CIC to run its trading activities.  This would allow the CIC to pass its assets to the charity

Advantages of being a CIC

  • Freedom to trade
  • Able to pay directors
  • Ability to pay dividends to shareholders (subject to a cap)
  • Retain benefits within the community
  • Seek investments, with tax benefits for investors
  • Do not have to comply with charity law

Disadvantages of being a CIC

  • No tax benefits
  • Some Charitable Trusts will not fund
  • Additional registration costs
  • New legal structure and not widely known so might not attract investors

IMPORTANT:  Before deciding to adopt the Community Interest Company structure, it is vital that you obtain professional advice.