How do I register a Community Interest Company CIC?
CIC company formation approval and tax

• CIC36 form
• Memorandum; Company limited by guarantee with a small membership.
• Articles: model constitution no. 1 see others below.

General

• Decide who will be the founding member(s) promoting and approving the application.
• One member is enough.
• Members may be added after incorporation.
• Ensure that the promoters are generally familiar with the structure and requirements of a CIC.
• Briefly:
• Business not purely for private advantage.
• Any profits or assets are used principally for the benefit of the community.
• Profits may not be distributed to the members.
• Community interest test.
• Asset lock.

What may and may not happen

• A CIC cannot be a charity.
• But a charity can set up a CIC subsidiary company.
• May not engage in political activities.
• A CIC is normally:
• Company limited by guarantee - each member guarantees £1 in the event of an insolvent liquidation.
• Subject to an asset lock - funds go to a predesignated and approved asset locked recipient in the event of a solvent liquidation or discontinuance.
• In practice this means another CIC or registered charity.
• But:
• May have shareholders.
• May pay dividends to shareholders, subject to limits.
• see Other model constitutions no.'s 2 to 6, below.
• May pay Director's Remuneration, reasonable in the circumstances for defined services.

Memorandum and Articles

• Model Standard Memorandum and Articles, provided in MSWord format, are the simplest way for you to comply with regulations and good governance.
• 1. Company limited by guarantee with a small membership; model constitution no. 1
• Memorandum
• Articles.
• Check if CIC model constitutions no.'s 2 to 6 apply below.
• Compulsory articles are shown in red.
• Make any required amendments to Model Standard Articles not shown in red.
• Decide whether all members are to be directors - if not, amend standard article 26.3 "Each member of the company shall be a Director".
• Asset lock article 3- Provide details of a recipient for residual assets on solvent liquidation or discontinuance.
• In practice the asset lock recipient will be another CIC or a registered charity.
• 3.5 For the purposes of this Article 3, the following asset-locked body is specified as a potential recipient of the Company's assets under Articles 3.2 and 3.4:
• 3.6 Name:
• 3.7
• 3.8 Charity Registration Number (if applicable):
• 3.9 Company Registration Number (if applicable):
• 3.10 Registered Office:
• Add the company objects to article 5 see below.
• Otherwise we recommend adopting the Model Standard Articles.
• Members may subsequently agree to change the Articles.

Other model constitutions no.'s 2 to 6

• http://www.bis.gov.uk/.../model-constitutions
• 2. limited by guarantee with a large membership.
• Limited by shares.
• Schedule 2 will only pay dividends to asset-locked bodies.
• 3. with a small membership.
• 4. with a large membership.
• Schedule 3 will pay dividends to shareholders.
• 5. with a small membership.
• 6. with a large membership.
• Check CIC Schedule 2 and 3 statute, below

Article 5 - Objects of the company

• These need to be drafted by yourselves for CIC Regulator approval.
• CIC guidance about CIC article 5 Objects says:
• Unrestricted objects are the default setting.
• But it is best practice to define them in article 5.
• If Objects are not clear in the article 5 Objects they must be clear in form CIC36 Declarations on Formation of a Community Interest Company which is the basis for CIC Regulator appraisal and approval.
• Form CIC36, provided in MSWord format, defines Who-what-how of objectives. These must be reasonably and evidently appropriate as the objectives of a CIC:
• Who? - define the community which is to benefit:
• May be geographic or
• A defined part of UK or another country.
• What will you do?
• How will that benefit the community?
• If you should generate a surplus of funds how will these be applied?
• We recommend that you prepare objects based on form CIC36 and then transcribe them into article 5 of your Objects.
• Article 5 Objects should be drafted to the standard of a business plan so that they can inspire confidence in people who are expected to provide funds.
• Members may subsequently agree to change Objects.
• "Three bears" approach; the drafting should be just right:
• Objects should be tight enough to ensure the CIC stays within the original intentions of the founder(s).
• Not so tight as to cause accusations of straying outside its original purposes.

Legal structure and Tax:

• Subject to the normal law relating to any company.
• HMRC say:
• "As a limited company a CIC is liable to Corporation Tax just like any other company.
• It will be chargeable on any trading profits
• (though it will be a question of fact whether or not a particular CIC is trading)
• and on its investment income and gains.
• It is eligible for any reliefs which are available to all companies
• but there are no CIC specific tax exemptions/reliefs available."
• Additionally subject to The Community Interest Company CIC Regulator.
• Must satisfy all Companies House and HMRC filing requirements subject to penalties in default.
• Your existing company may be converted into a CIC; please talk to us.

• Statute: Community Interest Company Regulations 2005
• CIC Schedule 2. will only pay dividends to asset-locked bodies.
• CIC Schedule 3. will pay dividends to shareholders.

The Community Interest Company CIC Regulator:

• Approves.
• Monitors.
• Regulates.
• Enforces.
• Raises awareness.
• Ensures that society:
• Recognises and trusts
• CIC integrity and excellence.

CIC Regulator guidance

Processing

• The Companies House application is a postal process.
• Not available online.
• We will provide you with a package, normally online.
• Signed forms need to be returned to us by post or by hand with original signatures.
• Any pages not requiring a signature may be sent back electronically.
• Registrations are coming through in about one week
• but any rejection will add a further week.
• Please allow for this in your planning.
• We will try to ensure that applications will not be subject to rejection, query and hold-up.
• You need to be satisfied that the article 5 Objects and CIC36 form content will be acceptable.
• The chosen name, if acceptable to Companies House, will be reserved during the formation process as a "Proposed Name".
• It is not possible otherwise to reserve a name with Companies House except by registering the company.

Accountancy and company secretarial

We will be pleased to support you with accountancy and company secretarial submissions.

• Subject to penalties in default even if the CIC is dormant:
• Form AR01 Annual Return; can be filed online.
• Annual accounts:
• Must be filed by post; cannot be filed online.
• Must be filed with form CIC 34 Community Interest Company Report.
• Filing fee £15.00.
• Form CT600 Company Tax Return.
• Subject to penalties in default reduced to nil for nil returns:
• VAT if you are making vatable supplies.
• PAYE if you are paying people.
• Subject to penalties in default but not reduced to nil for nil returns:
• Construction Industry Scheme CIS if you are paying people in construction.

See penalties details: AR01 - Annual accounts - CT600 - VAT - PAYE - CIS