Community Interest Company (CIC)

1. Individuals: Any individual, whether they are a local resident, a supporter of the community cause, or otherwise interested party, can become a shareholder in a CIC. This inclusivity helps engage the broader community in supporting the company's mission.

2. Employees: If a CIC has employees, they may have the opportunity to become shareholders. This can create a sense of shared ownership and alignment with the company's community-focused goals.

3. Local Residents: CICs often aim to benefit a specific community or locality. Allowing local residents to become shareholders ensures that those directly affected by the company's activities have a stake in its success.

4. Community Groups: Community groups or associations with aligned goals and interests may become shareholders to support and participate in the CIC's initiatives. This can foster collaboration and strengthen community engagement.

5. Nonprofit Organizations: Other nonprofit or charitable organizations that share similar objectives may become shareholders to contribute to and collaborate with the CIC in achieving their shared mission.

6. Businesses: Businesses, especially those with a commitment to social responsibility and community impact, may invest in a CIC as shareholders. This can be part of their corporate social responsibility (CSR) efforts.

7. Government Bodies: Local government or other public-sector entities may become shareholders in a CIC, particularly if the company's activities align with public policy goals or community development initiatives.

8. Investors: Private investors, including impact investors and socially conscious funds, may choose to invest in a CIC as shareholders. Their investment supports both financial sustainability and social impact.

Important Things To Know

1. Community Benefit: The primary purpose of a CIC is to benefit the community or a specific community interest. This is achieved by conducting activities that have a positive impact on social, environmental, or other community-related objectives.

2. Limited by Guarantee or Shares: CICs can be structured as companies limited by guarantee or by shares. The choice of structure influences the liability of the members (guarantors or shareholders) and the distribution of profits.

3. Asset Lock: CICs are subject to an "asset lock," which means that their assets and profits must be used primarily for the benefit of the community. In the event of dissolution, any remaining assets must be transferred to another asset-locked body or used for community purposes.

4. Community Interest Test: To become a CIC, a company must pass the community interest test. This involves demonstrating that its activities are carried out for the benefit of the community, rather than for private profit.

5. CIC Regulator: CICs are regulated by the CIC Regulator, a government office in the United Kingdom. The regulator ensures that CICs adhere to their community interest objectives and comply with relevant laws.

6. Governance Documents: The governance of a CIC is outlined in its governing documents, such as the Articles of Association and the Memorandum of Association. These documents detail the rights, responsibilities, and decision-making processes of its members.

7. Shareholders or Guarantors: CICs can have members who are either shareholders (if structured as a company limited by shares) or guarantors (if structured as a company limited by guarantee). Guarantors commit to contributing a nominal amount in the event of the company's winding up, while shareholders hold shares in the company.

8. Dividends and Distributions: While CICs can pay dividends to shareholders, there are limits on the amount and frequency of such distributions to prevent excessive financial gain for individuals. Profits are generally reinvested in the community-oriented activities.

9. Reporting Requirements: CICs have specific reporting requirements, including the submission of an annual community interest report. This report details the company's activities during the year and how it has benefited the community.

10. Conversion to Charity: Some CICs may choose to convert to a charitable company if they wish to obtain charitable status and access additional funding sources. This decision is often influenced by the desire to further align with community-driven objectives.

11. Community Interest Statement: CICs are required to have a community interest statement, outlining their specific community-oriented objectives. This statement helps guide the company's activities and ensures transparency in its mission.