Converting Companies, Community Interest Companies (CICs) and Charities

This is a layman's guide to converting companies, Community Interest Companies (CICs) and charities.  

You can convert existing (private, commercial) companies, CICs and charitable companies, but not charitable trusts or unincorporated associations.  There are 2 types of companies - limited by shares and limited by guarantee.  You cannot convert a company limited by shares to one limited by guarantee, or vice-a-versa.  

If you’re not sure whether a charity or social enterprise (CIC) would suit you best, this Charity Excellence guide gives you what you need to know and ask yourself. It's just one of the guides in the Non Profit Start Up Toolbox.

Better still, use Funding Finder, to find a huge range of grants and Help Finder to find lots of free fundraising support and also companies that make product/financial donations. There's a fundraising online health check, with 50+downloadable funder lists, the huge resource base, Crisis Support Programme and Quality Mark. Quick, simple and everything is free.  

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What Is Company, CIC and Charity Conversion?

Conversion of a company in legal terms is far too complicated for a man of my meagre talents and I'm not clever enough to be  a lawyer, so cannot offer professional opinion.  If you need expert advice, you should seek it.  You can find pro bono legal providers by registering, then logging in and going to Help Finder.  Use the HR & Legal serach category to find pro bono support.  

My layman's interpretation is that you are changing the legal structure of your pricate company, CIC or charity, but it remains in existence, so no contracts are broken - leases, staff employment and lots of others.  That makes changing much easier than creating a new company and then transferring the assets and closing the existing one.  However, if you've set a company up, but aren't trading/have assets/contracts, then simply closing it and starting again might be simpler. 

Converting A Company To A Community Interest Company (CIC)

The most common conversion seems to be to convert a company to a CIC. 

To do that, you must have at least 2 directors and you cannot convert to a different structure of company.  That is, if you are a company limited by guarantee, you must convert to a CIC limited by guarantee.

To apply for company conversion to a CIC, you will need to submit 4 documents:

• F37 Company Conversion Declaration.
• CIC Model Articles of Association
• Special Resolution to Convert to a CIC
• NM01 Change of Name. 

Once completed, you need to post these to Companies House with a cheque for £25.

The Government guidelines and links to the documents above in Section 4 of this publication. 

There are a range of other conversions, but (in my experience) these are pretty unusual.  You can find guidance on all of these in the other sections of the guidance above. 

Converting a CIC Limited by Guarantee to a Foundation CIO

You can convert a CIC Limited by Guarantee or a CIC Limited by Shares (as long as the share capital is fully paid up) to a CIO. 

• Step 1: Prepare a conversion resolution
• Step 2: Adopt the Charity Commission model CIO constitution
• Step 3: Prepare a resolution adopting the CIO constitution
• Step 4: Apply for charitable status.  This is the Charity Excellence guide to registering a charity.

There are 2 types of CIO - Foundation and Association.  Almost everyone chooses the Foundation model. 

You can find the detailed CIC Conversion guidance here. 

Converting a Charitable Company To A CIC

To be honest, I've never heard of anyone converting a charitable company to a CIC, but if you want to, you can find the guidance on how to do that here.

Converting Charitable Trusts and Unincorporated Associations

You cannot covert if your organisations is not incorporated.  Usually referred to as unincorporated associations, community groups etc.  these have a constitution or governing document but are not registered with the Charity Commission or Companies House.  Equally, charitable trusts are registered with the Charity Commission, but are not incorporated.  

What you have to do is go through the normal Charity Commission registration process, usually to become a CIO.  That can be an absolute pain if you are registered charitable trust, but I've never found a way round it.  You can find the Charity Commission guidance here. 

A CIC must be a limited company, so an unincorporated charity (including charitable trusts) can’t convert to a CIC.

Converting A CASC To A Charity

Basically, you can't convert Community Amateur Sports Club and there's probably no point in doping so anyway.

The CASC scheme allows amateur sports clubs to register with HMRC and benefit from a range of tax reliefs.  Once registered as a CASC, a club cannot apply to be recognised as a charity. To convert a registered CASC to a charity involves closing down (winding up) the CASC and transferring over the assets and activities to a new charity.

If your club is already a charity then CASC status is unlikely to be of any additional benefit. You may still apply for CASC status, but if your club meets the requirements of the scheme and is registered as a CASC, then it would no longer be entitled to be a charity.

Lots More Free Resources For Your Charity Or CIC

For more lots more resources to help you make your charity or CIC a success, visit the Start-up Toolbox in the Resource Hub.  Better still, join the Charity Excellence Framework, which works for charities and CICs.

A registered charity ourselves, we provide 8 online health checks, the huge information hub, Quality Mark and 3 online directories.

• Funding Finder - click through to more funders than any other grants directory, categories for Crisis Funding, Core Funding and Small Charities & Community Groups and 50+ downloadable grant lists.
• Help Finder – find advice, pro bono support and free services and products, including lots of free fundraising support and companies that make product/financial donations.
• Data Finder - finds data for funding bids, fundraising research, impact reporting, planning and campaigning. 

Plus the system health check now includes crisis assessment, the Charity Sector outlook supports your planning, there’s the Crisis Toolbox. As well as guides on how to how to find new sources of funding, reduce your energy costs, save money without cost cutting  and the crisis hub, with links to even more support.  We also use the system’s Big Data for our monthly crisis update – the latest information on what you need to know and do.  

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