Community Interest Companies (CICs) & Social Enterprises
What are social enterprises?
What are Community Interest Companies (CICs)?
What are the benifits of being a CIC?
What are social enterprises?
Social enterprises are dynamic businesses with a social purpose working all around the UK and internationally to deliver lasting social and environmental change.
Well known social enterprises include Cafedirect, The Big Issue, The Co-operative Group, Welsh Water (Glas Cymru),the Eden Project and Jamie Oliver's Fifteen, but there are many other social enterprises operating in a wide range of industries from farmers markets and recycling companies to transport providers and childcare.
The social enterprise sector is incredibly diverse, encompassing co-operatives, development trusts, community enterprises, housing associations, football supporter's trusts, Social Firms and leisure trusts, among others. As a result social enterprises use a wide variety of legal forms; some incorporate as companies while others take the form of industrial and provident societies. From July 2005 social enterprises have also been able to register as Community Interest Companies.
What are Community Interest Companies (CICs)?
Community interest companies (CIC) are a new type of limited company created by the Government designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company. This means that a CIC cannot be formed or used solely for the personal gain of a particular person, or group of people.
CICs can be limited by shares, or by guarantee, and will have a statutory “Asset Lock” to prevent the assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset-locked organisation, such as another CIC or charity.
A CIC cannot be formed to support political activities and a company that is a charity cannot be a CIC, unless it gives up its charitable status. However, a charity may apply to register a CIC as a subsidiary company.
The CIC complements existing legal forms for social enterprise, such as the Company Limited by Guarantee or Shares and the Industrial & Provident Society.
There are now over 1000 organisations registered as CIC's.
City Healthcare Partnership, one of the Governments pathfinder projects for social enterprise in the healthcare sector became the 1,000th registered CIC on the 14th June 2007.
What are the benifits of being a CIC?
CICs are regulated to ensure they are working with the community in mind. With all the flexibility and certainty of the company form, but with some special features to ensure they are working for the benefit of the community.
Key features include:
a statutory "lock" on the assets and profits of CICs
a "community interest test" which companies must pass in order to be registered
an annual report explaining how their activities have benefited the community and how they are involving their stakeholders
a CIC regulator responsible for ensuring that CICs comply with their legal requirements
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