How does a CIC differ from any other company?
As a unique type of structure we are often asked how a CIC differs from ordinary private or public limited companies. The main differences are as follows: The purpose of the CIC is always to benefit a particular community. All CICs must on formation satisfy a community interest test and continue to do so throughout the lifetime of the company. CICs are subject to what is known as an “Asset Lock” which means that the CIC cannot transfer any of its assets for less than market value to anybody other than another CIC, a charity or for the benefit of the specified community. The name of a new CIC must end with the words “community interest company”, “CIC”, “community interest public limited company” or “community interest plc” depending on the type of CIC formed. CICs can only pay dividends to: certain asset-locked bodies; or in limited circumstances, with the appropriate articles of association, to other persons including private investors. Every year a CIC must file a Community Interest Company Report (in addition to its Annual Return and Annual Accounts) which must contain specified information, including: a description of the company’s activities that have benefitted the specified community; full details of payments made to the directors including any benefits; the value of any assets that have been disposed of for less than market value; and any dividends that have been paid and compliance with the dividend capping rules. The report must be filed at the same time as the annual accounts and is also subject to a filing fee of £15. CICs are controlled not only by the Registrar of Companies but also by the CIC Regulator who has extensive powers to enforce laws which apply solely to CICs. A CIC cannot be converted into an ordinary private limited company.