# New model for social enterprise organisations launched

- Link: https://fundraising.co.uk/2005/06/30/new-model-social-enterprise-organisations-launched/
- Published: 2005-06-30T23:00:00+01:00
- Author: Howard Lake

From today social enterprise organisations can choose a different method of corporate
registration, the “Community Interest Company”.
Governed by the Companies (Audit,
Investigations and Community Enterprise) Act 2004 and the Community Interest Company
Regulations, the Community Interest Company (CIC), is a new form of company for 
nonprofit organisations.

Sinclair Taylor & Martin, the charity team at Russell-Cooke Solicitors, have explained
the key features of CICs:

 
 “Objects and activities must pass a ‘community interest’ test. This means that
the company’s objects and activities must benefit the community. In addition, the
beneficiaries of a CIC must not come from a group that is unduly limited in size.
Each year, the CIC will have to produce an annual report of its activities which
will go on public record. It will have to show that it has involved its stakeholders
including its beneficiaries and that it has pursued its objects during that year.

  They may be limited by shares or by guarantee
  They must have an asset lock. This means that:
   * The assets of the company must be used solely for the objects or transferred
     to another asset-locked company
   * The assets may be transferred only at full market value unless transferred 
     to another asset-locked organisation
   * Assets cannot be returned to the members except in limited circumstances
  They are regulated by a new Regulator of community interest companies
  
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  Dividends can be paid but there must be a dividend cap (set by the Regulator)
  Interest can be paid but there must be a similar interest cap on loans and other
  debts
  They are registered in a similar way to standard limited companies, however a 
  separate declaration will need to be made if and when the company applies to register
  as a CIC. The Registrar of Companies liaises with the Regulator who will decide
  whether the company passes the community interest test and if appropriate approve
  registration.
  They will also be subject to the usual regulatory constraints and powers that 
  are associated with company status
  The Regulator of Community Interest Companies has certain supervisory powers and
  may appoint managers and appoint and remove directors on mismanagement of the 
  company”
  CICs should be of interest to organisations which act in the community interest
  but whose objects fall outside those that would qualify them for registered charity
  status. Charities might also consider establishing their trading subsidiaries 
  as a CIC.
  Clare Booth at Russell Cooke can offer more advice on CICs on 020 8394 6498.
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