Community Interest Companies

December 2007

CommunityInterest Companies (CICs) are limited companies, with special additional features,created to conduct a business or other activity for community benefit. This isachieved by a "community interest test" and "asset lock"that ensures that the Community Interest Company is established for communitypurposes and the assets and profits are dedicated to these purposes.Registration of a company as a Community Interest Company has to be approved bythe Regulator who also has a continuing monitoring and enforcement role.

TheCommunity Interest Company was introduced by the United Kingdom government in2005. It is intended that Community Interest Companies will be easy to set up,with all the flexibility and certainty of the company form, but with somespecial features to ensure they are working for the benefit of the community.

Numerous‘Community Interest Companies’ have been registered since part two of theCompanies (Audit, Investigations and Community Enterprise) Act 2004 was passedand the Community Interest Company Regulations 2005 came into force. In April 2007it also became possible to register a Community Interest Company in Northern Ireland.

CommunityInterest Companies can be a company limited by guarantee or shares or a publiclimited company. In practice most are companies limited by guarantee.

A CommunityInterest Company is seen as a suitable form of organisation for a SocialEnterprise. Social enterprises tackle a wide range of social and environmental issuesand operate in all parts of the economy. By using business solutions to achievepublic good, the Government believes that social enterprises have a distinct andvaluable role to play in helping create a strong, sustainable and sociallyinclusive economy.

For fullbriefing paper please click here.

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