Setting up a Social Enterprise: Community Interest Company (CIC) Guide
So, you've got a brilliant idea that benefits your community, but the thought of navigating legal structures and complex paperwork has you feeling lost? Worry not, intrepid social entrepreneur! Community Interest Companies (CICs) might just be the perfect vehicle for your vision. Think of it as a business with a big heart. Unlike traditional companies focused solely on profit, CICs prioritise social impact. They're legally bound to reinvest their profits back into the community they serve, ensuring their mission remains front and center.
1. What are the key features of a CIC?
Community Focus: Your CIC must have a clear and specific community it aims to benefit. This could be anything from a local neighborhood to a niche group with shared interests.
Asset Lock: To ensure your CIC's commitment to social good, its assets are legally locked. This means they can't be distributed to shareholders or directors for private gain.
Limited Profits: While CICs can generate profits, they're capped at a maximum of 35% distribution. The rest must be reinvested in the community or the CIC's operations.
Governance: A CIC must have a board of directors, with at least one-third being independent directors, meaning they have no financial stake in the organisation.
2. What are the benefits of setting up a CIC?
Community Focus: Your CIC must have a clear and specific community it aims to benefit. This could be anything from a local neighborhood to a niche group with shared interests.
Asset Lock: To ensure your CIC's commitment to social good, its assets are legally locked. This means they can't be distributed to shareholders or directors for private gain.
Limited Profits: While CICs can generate profits, they're capped at a maximum of 35% distribution. The rest must be reinvested in the community or the CIC's operations.
Governance: A CIC must have a board of directors, with at least one-third being independent directors, meaning they have no financial stake in the organisation.
3. What are the steps involved in setting up a CIC?
Develop your Community Interest Statement: This document outlines your CIC's aims, activities, and how it will benefit the community.
Choose a Company Name and Structure: Decide whether to operate as a limited company by shares or guarantee, and register your chosen name with Companies House.
Apply for CIC Registration: Submit your application and Community Interest Statement to the Community Interest Company Regulator.
Appoint a Board of Directors: Assemble your board, ensuring at least one-third are independent directors.
Comply with Ongoing Reporting Requirements: CICs must submit annual reports and accounts to the Regulator.
4. Where can I find resources and support for starting a CIC?
The Office of the Regulator of Community Interest Companies: The official government body overseeing CICs, offering guidance, resources, and information on the application process.
Social Enterprise UK: A national membership organization supporting social enterprises, including CICs, with resources, training, and networking opportunities.
NCVO (National Council for Voluntary Organisations): A leading charity umbrella body offering resources and support on setting up and running charitable and social enterprises, including CICs.
5. Remember, there's no one-size-fits-all answer to whether a CIC is right for you.
Do your research, weigh the pros and cons, and seek professional advice if needed. But if you're passionate about making a positive impact in your community, a CIC could be the perfect launchpad for your social enterprise journey.
Ready to make a positive impact in your community?
Consider becoming a Community Interest Company (CIC)!
CICs are unique businesses that prioritize social benefit over shareholder profit. They're a powerful way to combine business expertise with a passion for making a difference.
Here's a quick guide to get you started:
Understanding the Process
Visit the Office of the CIC Regulator for a comprehensive overview of forms, guidance, and resources.
Explore the registration options for both new CICs and existing company conversions.
Gather essential information about directors, company address, and community impact goals.
Choose your registration method:
Faster and more convenient.
Costs £27 and takes approximately one hour to complete.
Includes HMRC registration for Corporation Tax.
Requires a Government Gateway user ID and password specifically for your company.
Costs £35 and takes around two weeks to process.
Requires signed forms IN01 and CIC36, plus your Memorandum and Articles.
Converting an Existing Company to a CIC
Registration for conversions is currently available by post only.
Costs £25 and takes approximately two weeks.
Required documents include: new CIC articles, forms CIC37 and NM01, a copy of the Special Resolution, and a cheque for £25 payable to Companies House.
Additional Considerations
Conversion of charitable companies to CICs is possible but involves complex legal restrictions. Legal advice is strongly recommended.
Need help with language translation? Use our convenient translator in the top right corner of our website.
Ready to take the next step?
Visit the Office of the CIC Regulator website for detailed guidance and forms.
Together, we can make a difference!
Contact us for FREE advise
We can help you with your social enterprise and social impact objectives.