Alex Stobart of Mydex Data Services CIC says: Its welcome news that Community Interest Companies, as a part of the social enterprise and wellbeing economy, are growing in number across Scotland. Companies House and the CIC Regulator will ask you to describe, in detail, your proposed community activities. Where businesses have Corporate Social Responsibility (CSR) policies which govern who they can donate money to, these are still likely to favour charities over other vehicles. What is a community interest company or CIC? If giving back to the community is something that youre passionate about youre going to want to read this article. Meanwhile the asset lock decrees that assets must be dedicated to benefitting your chosen community. Community interest companies: guidance chapters - GOV.UK Most CICs in Scotland dont hold share capital. The Community Interest Company (CIC) is a corporate structure that was first introduced in 2005. Suchcommunities are often regarded asnatural grouping based on ties ofshared blood, language, history,territory and above all, culture. A CIC can be set up as a private company limited by shares, private company limited by guarantee or public limited company. Your email address will not be published. But its important to understand the advantages and possible downsides. Inform Direct is a very user-friendly system to use. The CIC model is specifically identified with social enterprise. Legal forms CICs must be limited companies of one form or another. A Community Interest Company can be registered in England and Wales, Scotland or Northern Ireland. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. As we know, a CIC places restrictions and a cap on the payment of dividends and the use of assets. Since October 2014, a dividends cap has been in place to maintain the community focus of the company. Generally, these companies are limited companies. To help us improve GOV.UK, wed like to know more about your visit today. If youd like to take part please email: jayne.chappell@socialenterprise.scot, You can send your news for our Social Enterprise Weekly newsletter and social media promotion direct to: news@socialenterprise.scot. If you continue to use this site we will assume that you are happy with it. They are typically focused on a particular geographical area or group of people. Social Enterprise Places How to Choose a Legal Structure for Social Purpose Business There are different ways of setting up different types of community companies, shown here with an overview. A community interest statement, explaining what your business plans to do. Thinking about applying to become a community interest company (CIC)? A Community Interest Company (CIC) is a type of company designed for social enterprises that want to use their profits and assets for the public good; they work for the benefit of the community. This file may not be suitable for users of assistive technology. Wed like to set additional cookies to understand how you use GOV.UK, remember your settings and improve government services. PDF, 395 KB, 9 pages, Ref: BIS/13/712 A CIC receives income from a variety of sources including contracts, trading income and grants. You have accepted additional cookies. Whats the Key Difference Between a CIC and a Charity? There exist various other forms of community company, including (among others) Charitable Trading Companies (CTCs) and Industrial and Provident Societies (IPSs). A community interest company (CIC) is a type of limited liability company formed specifically for the purpose of carrying on business for the benefit of a community. 0800 023 6868, Any financial promotions issued by Unbiased Limited have been approved for the purposes of section 21 of the Financial Services Market Act 2000 by Resolution Compliance Limited which is authorised and regulated by the Financial Conduct Authority (FRN:574048). For some this social, communal element of their endeavours is something they want to emphasise. Copyright 2006 - 2023 Law Business Research. Wed like to set additional cookies to understand how you use GOV.UK, remember your settings and improve government services. PDF, 273 KB, 9 pages, Ref: 13/781 While the dividend cap aims to achieve a balance between dedicated benefits to the community and potential personal gain by shareholders, in some circumstances this might feel quite restrictive and discourage potential shareholders from investment. Incorporating as a CIC is a way that these unincorporated organisations can protect their assets. Helping to improve the community you live in, and make the world a better place than you left it, is a noble undertaking. Certain grants and other funding schemes may be open only to charities and not to community interest companies. At heart, a CIC is shaped and driven by its community purpose, which is set out from the start in its constitution. Theyre providing jobs to its residents and also funding projects that help improve the local environment. Type of organisation: Community Interest Company (CIC) Legal Status: Incorporated Governing Document: Memorandum and articles of association Common examples: Waste recycling, day care centres, local transport provision Key Features A community interest company: has the features and identify of a limited liability company Quite simply its taken all the stress and strain out of company law. Do you prefer the familiarity of the limited company structure? This is because the definition of community interest within the test applied to a CIC is broader than the Public Benefit Test for charities. Even though its hard to put a value on, a registered charity generally carries a sense of trust that inspires confidence and which is not fully replicated by the CIC brand. Once your application is submitted to the appropriate division of the Companies House, it will then pass on to theCIC Regulator. Having this familiar structure can make dealing with other organisations such as government bodies more straightforward. The statutory basis of the asset lock, which ensures that a CICs funds will be used for the benefit of the companys social objectives rather than for individual shareholders, helps provide reassurance to investors and the wider public. Some legal forms and organisational types (e.g. Even if it is dissolved, a specific feature of the CIC model is that any residual assets (after paying off any creditors) must be transferred to another asset-locked body, like another CIC or a charity. For example, it may be expected that a charitys extra money is used to purchase a new building. How Many Directors Does a CIC Need? - KG Accountants Blog CICs are not charities, and as such are not subject to many of the tax and other advantages conferred by charitable status. CICs tackle a wide range of social and environmental issues and operate in most parts of the economy. Chapter 6, 7 and Annex A of the CIC guidance notes have been updated to reflect the changes to the dividend and performance related interest caps that will take effect from 01 October 2014, Section about public benefit entities added to chapter 8: statutory obligations. The Asset Lock is a fundamental feature of Community Interest Companies (CICs). Foreword in chapter 1 of the guidance updated. We use some essential cookies to make this website work. Theres Clean Water Wave CIC working with advanced technology to transform polluted water into clean water and theres Circle Scotland CIC, a hub for charities, social enterprises and socially aware businesses, offering support and consultancy under one roof. Would you need the freedom granted by the CIC compared to being a charity? As with all major financial and business decisions, you may like to consult a professional adviser before making your move. First, they should share a readily identifiable characteristic (i.e. If the CIC doesnt use up its entire dividend capacity in a given financial year, its possible to carry the unused capacity forward for up to five years subsequently. They may feel more comfortable offering their time, services or donations to a charity a form theyll be more familiar with. The CIC structure was established in 2005. .css-4zz0xt{font-size:inherit!important;font-weight:inherit!important;font-style:italic;}.css-1q50ylw{font-weight:400;font-size:16px;line-height:24px;margin-bottom:16px;font-size:inherit!important;font-weight:inherit!important;font-style:italic;}Create and send invoices in less than a minute with .css-k1irjw{display:inline;}.css-9quc0p{display:inline-block;-webkit-text-decoration:underline;text-decoration:underline;text-decoration-skip-ink:auto;border:0;outline:none;background:none;padding:0;margin-top:0;margin-left:0;margin-right:0;color:#3063E9;border-radius:8px;-webkit-transition:opacity 120ms ease-in-out,color 120ms ease-in-out,background-color 120ms ease-in-out,border-color 120ms ease-in-out;transition:opacity 120ms ease-in-out,color 120ms ease-in-out,background-color 120ms ease-in-out,border-color 120ms ease-in-out;display:inline;}.css-9quc0p:hover{color:#234BC3;cursor:pointer;}.css-9quc0p:active{color:#1A368E;}.css-9quc0p:visited{color:#8928A2;}.css-9quc0p:visited:hover,.css-9quc0p:visited:active{color:#5F1D6B;}.css-9quc0p:focus{outline:0;box-shadow:0 0 0 4px #AFD0FE;}.css-9quc0p:focus::-moz-focus-inner{border:0;}.css-9quc0p:focus:not(:focus-visible){box-shadow:none;}.css-1ot5gf0{font-weight:400;font-size:16px;line-height:24px;display:inline-block;-webkit-text-decoration:underline;text-decoration:underline;text-decoration-skip-ink:auto;border:0;outline:none;background:none;padding:0;margin-top:0;margin-left:0;margin-right:0;color:#3063E9;border-radius:8px;-webkit-transition:opacity 120ms ease-in-out,color 120ms ease-in-out,background-color 120ms ease-in-out,border-color 120ms ease-in-out;transition:opacity 120ms ease-in-out,color 120ms ease-in-out,background-color 120ms ease-in-out,border-color 120ms ease-in-out;display:inline;}.css-1ot5gf0:hover{color:#234BC3;cursor:pointer;}.css-1ot5gf0:active{color:#1A368E;}.css-1ot5gf0:visited{color:#8928A2;}.css-1ot5gf0:visited:hover,.css-1ot5gf0:visited:active{color:#5F1D6B;}.css-1ot5gf0:focus{outline:0;box-shadow:0 0 0 4px #AFD0FE;}.css-1ot5gf0:focus::-moz-focus-inner{border:0;}.css-1ot5gf0:focus:not(:focus-visible){box-shadow:none;}SumUp Invoices. For the same reason, theres a cap on performance-related interest payments currently 20 per cent. A community interest company (or CIC) is a company which trades with a social purpose (a so-called 'social enterprise') or carries on. In order for the CIC to be established, this has to be reviewed and approved by the CIC Regulator. Legal Structures for Voluntary and Community Groups | NICVA CICs receive no special tax benefit while charities are eligible for multiple tax concessions. If a CIC chooses to use shares to raise equity, and pay dividends to investors, they need to be mindful of the dividend cap. In order to register as a CIC, a business must apply to Companies House with a statement of its social objectives along with a legal declaration that its assets will only be used for these purposes. 2) Community Interest Companies are not charities.
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