What is a Community Interest Company?
A Community Interest Company (CIC) is a company, formed under the Companies Act 2006, which is specifically set up to run a business as a social enterprise and for the benefit of the community. All its income, assets and profits must be used for the community it is set up to benefit.
What a CIC is not!
- A CIC is not set up to benefit shareholders, directors or employees.
- It cannot be a political organisation or linked to any political campaigning organisation.
- A CIC is not a charity.
Who controls and monitors the activity of a CIC?
- CICs are controlled by the CIC regulator who is appointed by the Secretary of State.
- The CIC Regulator decides if the company passes the community benefits test in order to be registered as a CIC and has the powers to wind up the CIC if this test is not satisfied at any time.
- CICs must file annual accounts like any other limited company and must also file an annual report on its community activities.
What is the difference between a CIC and a Charity?
A Charity is a non profit making organisation. Its activities are strictly controlled by statute and it must not undertake trading activities. It is entitled to significant tax and rates benefits.
A CIC may carry on any activity PROVIDED that the activity is carried on for the benefit of the community. It may trade and make profit (indeed it will have to do so to fund itself) PROVIDED these profits are ploughed back into the community. It has no tax or rates benefits.