Tag: CIC

Voluntary dissolution of a CIC

A Community Interest Company, CIC, is a special type of limited company which exists to benefit the community rather than private shareholders.

Under section 53 of the Companies (Audit, Investigations and Community Enterprise) Act 2004 a CIC is only allowed to cease being a CIC by dissolution, or by converting to a charity. This means that once a company has become a CIC it can’t convert to an ordinary limited company.

There are a number of different routes to dissolution, each with its own rules and procedures.

Dissolution is fully explained in the Companies House booklet ‘Strike-off, Dissolution and Restoration’.

Apply to voluntarily dissolve a CIC

Complete and send Form DS01 to the Registrar of Companies, with a cheque for £10 made payable to Companies House.

When the form is accepted, a notice will be placed in the London Gazette – or the Edinburgh and Belfast editions as appropriate – giving at least 2 months notice of the intent to remove the company.

If you wish to transfer assets for less than full consideration to an asset locked body that is not already specified in the articles of association, you will need the consent of the Regulator and must complete form CIC53. The information supplied will be used to help the Regulator decide whether or not to object to the striking off of the CIC.

Please note:

  • a ‘transfer’ includes every description of disposition, payment, release or distribution, and the creation or extinction of an estate or interest in, or right over, any property.

More detailed information and help can be found here

How To Convert a Community Interest Company to a CIO

Charity Commission LogoIf you are a Community Interest Company (CIC) you can apply to the Charity Commission to convert directly to a Charitable Incorporated Organisation (CIO).

Step 1: Prepare a conversion resolution

The directors of the CIC will need to produce a conversion resolution which confirms that the members of the CIC wish to convert the CIC into a CIO under the Charitable Incorporated Organisations (Conversion) Regulations which came into force on 1 September 2018.

Step 2: Adopt Charity Commission model CIO constitution

Adopt and complete one of the model CIO constitutions found here

Replace ‘CIC’ with ‘CIO’ in the name to reflect that the organisation has converted.

Section 8 of the model CIO constitution covers if members would be liable to contribute to the assets of the CIO if it is wound up.

If the amount each member would be liable for is more than £10, you must select option 2 to confirm:

  • the CIO’s members will be liable to contribute to its assets if it is wound up
  • the amount up to which they will be liable for

The amount you enter in section 2(i) must not be less than the amount up to which the CIC’s members were liable to contribute to the assets of the CIC if it were wound up.

If the amount each member of the CIC is liable to contribute to its assets if it winds up is £10 or less, you can select option 1.

Step 3: Prepare a resolution adopting the CIO constitution

Prepare a resolution adopting the proposed constitution of the CIO. The resolution must confirm that the members of the CIC have adopted the proposed constitution of the CIO.

Step 4: Apply for charitable status

To apply for charitable status as a CIO, you will need to apply to register as a charity and also submit:

  • the resolution of conversion of the CIC to a CIO
  • the proposed constitution of the CIO
  • the resolution of the CIC adopting the proposed constitution of the CIO
  • a completed Trustee Declaration Form

In the ‘Special Circumstances’ section of your application, write that you are a CIC wishing to apply for charitable status as a CIO. Tell us the name of the CIC.

More help can be found here

After you have applied

The Charity Commission will check that you can register as a charity.

If you can they will give Companies House what they need to confirm to the Regulator of Community Interest Companies that you wish to convert your CIC to a CIO.

Once approved, Companies House will cancel the registration of the CIC and the Charity Commission will then register the CIO as a charity and let the trustees know.

Setting Up A Social Enterprise

Related imageYou must choose a business structure if you’re starting a business that helps people or communities (a ‘social enterprise’).

If you want to set up a business that has social, charitable or community-based objectives, you can set up as a:

  • limited company
  • charity, or from 2013, a charitable incorporated organisation (CIO)
  • co-operative
  • community interest company (CIC)
  • sole trader or business partnership

If you’re setting up a small organisation like a sports club or a voluntary group and do not plan to make a profit, you can form an ‘unincorporated association’ instead of starting a business

Social enterprises are distinct from traditional charities or voluntary organisations in that they generate the majority, if not all, of their income through the trading of goods or services rather than through donations.

Charity Types

You need to choose the right structure for your charity, depending on whether you need it to have a corporate structure and whether you want to have a wider membership

There are four main types of charity structure:

  • charitable incorporated organisation (CIO)
  • charitable company (limited by guarantee)
  • unincorporated association
  • trust

Your charity structure is defined by its ‘governing document’ (the legal document that creates the charity and says how it should be run

More detailed information can be found here