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This dummies guide to Community Interest Companies explains the meaning of the term CIC, what a CIC is, the the different types of CIC company structure, how many directors you'll need and whether a CIC is a charity, or not; it isn't. There are CIC definitions and a FAQs list at the end with answers to common CIC company questions.
CIC stands for Community Interest Company, which is one of the most common types of non profit organisation in the UK.
A social enterprise is a company that uses its profits and assets for the public good. Community Interest Companies (CICs) are probably the most well known. They are a special type of limited company which exists to benefit the community rather than private shareholders.
CICs are not charities. The legal definition of charity is narrower than that for a CIC company. All charities are non profits, but not all non profits are charities.
CICs have more of a 'business' image than charities, can pay board directors more easily, financial reporting is less of a burden, some can issue shares etc, but don't qualify for charity tax reliefs and, whilst you can fundraise, it's more difficult.
Use our step by step guide on CIC versus charity, which gives you the questions to ask yourself and walks you through choosing whether a CIC or charity would be best for you.
Use our step by step guide on how to convert a private company to a CIC and a CIC LBG to a charity.
There are 2 kinds of CIC - limited by shares or by guarantee. Almost everyone chooses a CIC limited by guarantee (LBG). Only CICs LBG can convert to a charity (Foundation CIO model). A CIC can have either a large membership or a small membership set of articles. Almost everyone chooses small membership.
A CIC must have a minimum of 1 director. There's no maximum. However, many CICs wish to fundraise and I think that at least some funders may not be willing to make a grant to a CIC with only one director. However, that's just my opinion and I may be wrong; I often am. I would suggest 2 or 3 directors, even if only to spread the workload and make sure the company doesn't cease trading, if something untoward should happen to you.
Most people can be directors. You must be at least 16, but arguably 18 is better, as anyone under this age cannot enter into contracts or sign contracts on behalf of a company. You cannot be an “undischarged bankrupt” (have active bankruptcy proceedings against you), or be a disqualified director.
Three online directories Funding Finder, Help Finder and Data Finder, 100+downloadable funder lists, 40+ policies, 8 online health checks and huge resource base. And it works for CICs, as well as charities.
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You need to register a CIC with Companies House and the CIC Regulator but the process of registering a CIC covers both. Use our step by step guide on setting up and registering a CIC for this.
Community Interest Statement (CIC Form 36). A Community Interest Statement (CIC F36) is what you use to satisfy the CIC Regulator that your company will meet the Community Interest Test. That is, its purposes are in the community or wider public interest and access to the benefits will not be confined to an unduly restricted group.
CIC Asset Lock. Your articles also include an asset lock. That is, on dissolution, the company’s assets must be given to another CIC or a registered charity. You enter the details of the one you choose.
CIC Company Articles Of Association. Download and complete the appropriate CIC company articles of association. This is a substantial legal document that can appear quite daunting, but all you really need to do is fill in the blanks, so it’s not as difficult as it might first appear. In my experience, the vast majority of CICs are Limited By Guarantee and are small membership.
What You Need to Register A CIC Online. To register your CIC with Companies House, you'll need your community interest statement (CIC F36) and company articles of association (both in pdf format), the details about your company and directors, and a credit card or Pay Pal to pay the registration fee.
Here are simple definitions for the main terms you are most likely to come across.
Please note that I am not a lawyer, so am not competent to provide professional advice. Equally, the definitions above are simple summaries of their more complex meanings, as a guide to understanding only. If you need proper advice, you need to engage a lawyer.
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To access help and resources on anything to do with running a charity, including funding, click the AI Bunny icon in the bottom right of your screen and ask it short questions, including key words. Register, then login and the in-system AI Bunny is able to write funding bids and download 30+ charity policy templates as well.
I am not an accountant, nor a lawyer and no advice can be applicable to all organisations, in all circumstances, so this resource is no more than a guide to understanding CIC companies. I've summarised the regulatory guidance and augmented this with my own experience and Internet research, but I am not competent to provide professional advice. I have included links to the source guidance to enable you to check this yourself and, if you think you might need professional advice, use Help Finder to find pro bono support.
