Community Interest Company

The Community Interest Company (CIC) is a new limited company structure for Social Enterprises that secures an ‘asset lock’ for the community and focuses on community benefit. It has been designed to make incorporation simple for SEs wishing to use the familiar corporate form with a separate legal identity from its members.

Compared with other limited companies, CICs are subject to additional regulation to ensure that the community benefits (www.cicregulator.gov.uk).

The regulation of a company as a CIC has to be approved by the regulator, who also thereafter has a monitoring and enforcement role. To apply for registration, the SE must provide the regulator with evidence that  it satisfies the community interest test. In order to determine whether or not a company satisfies (or will satisfy) the test, the SE needs to consider:

• The purposes for which it has been set up;
• The range of activities it is engaged in;
• Who will be seen as benefiting from its activities.

There are now over 2000 organizations in the UK registered as CICs. Each CIC is required to report to the regulator on what it delivers for the community and its stakeholder involvement. In addition to the ‘asset lock’, CICs are subject to a dividend cap. This means that, unlike most companies, CICs may only declare a dividend by an ordinary or special resolution of its members ( a dividend cannot be declared by the directors alone).

Bob Doherty and others (2009) Management for Social Enterprise. Los Angeles: Sage. p.38.