Community interest companies

New corporate legal forms are emerging, ready-made with accompanying regulation and waiting to be adopted by entities that wish to straddle the role of a business and community organisation. Their growth is a sign that social enterprise is beginning to take root as a more permanent and widespread feature of the social and wider economy.

Since 2005, UK social enterprises may choose to incorporate as a ‘Community Interest Company’ or ‘CIC’. The CIC brand offers a corporate legal form that, so far, has remained unique to the UK while attracting increasingly international interest. It features a regulatory regime designed to allow for the incorporation of a traditional company format (limited by guarantee or shares) but with a formal commitment to use the company’s assets, income and profits for the benefit of the community they are formed to served.

To do so, CICs must take on board additional governance features, including an ‘asset lock’ that, broadly, prevents the company from underselling its assets or from paying dividends above a certain amount (except to another asset locked entity). The social purpose of the company is in this way ‘locked in’ and may not be overridden even upon dissolution of the company (where assets may only be distributed to another asset-locked body).

In addition, companies wishing to register and trade as a CIC are obliged to deliver an annual CIC Report setting out their activities in pursuit of their community purpose to the Regulator for Community Interest Companies.

Research at the Centre for Law and Enterprise traces the development of CICs closely. We provide practical advice to prospective, start-up and established CICs. We bring together practitioners, policy makers and researchers to improve the effectiveness and profile of the CIC format, and to consider its potential for internationalisation.

What is a social enterprise?

Put simply, a social enterprise is a business with primarily social objectives. Rather than being driven to maximise profit for shareholders, a social enterprise meets its social objectives by reinvesting its surpluses in the business or in the community.

Social enterprises in the UK are increasingly choosing to incorporate as Community Interest Companies or ‘CIC’. Over the past ten years, since its statutory inception in 2005, the CIC format has aided a total 11,200 social businesses fulfil their social and environmental missions.

PolicyBristol, 'The Community Interest Company: celebrating a ten year anniversary'

Contact us

For more information please contact Nina Boeger.

Tel: +44 (0) 117 954 5358