Community interest company (CIC)

Page written by AI. Reviewed internally on May 2, 2024.


A community interest company (CIC) is a special type of limited liability company that is designed specifically for social enterprises and community-oriented businesses in the UK. 

What is a community interest company?

CICs are established to operate primarily for the benefit of the community or to pursue charitable purposes, rather than for the sole purpose of generating profit for shareholders.

Like traditional limited liability companies, CICs offer limited liability protection to their directors and members. This means that the personal assets of individuals associated with the company are generally protected from the company’s liabilities.

One of the defining features of CICs is the “asset lock” provision, which prevents the distribution of profits or assets to shareholders beyond a certain limit. This ensures that any profits generated by the company are reinvested into the business or used to further its social mission.

CICs are regulated by the Office of the Regulator of Community Interest Companies, which oversees their formation, operation, and compliance with legal requirements. This includes ensuring that CICs adhere to their stated social objectives and maintain transparency in their activities.

While CICs are required to have a social purpose, they still have flexibility in their operations and business activities. They can engage in commercial ventures, generate revenue, and pursue growth opportunities, as long as these activities align with their social mission and do not compromise their community-focused objectives.

Example of a community interest company

A community interest company could be a social enterprise that operates a community-owned café in a rural area.

The CIC’s primary objective is to benefit the local community by providing a welcoming space for residents to socialise, access locally sourced food and drinks, and participate in community events and activities.

The CIC’s structure ensures that any profits generated by the café are reinvested back into the business or used to further its social mission, rather than being distributed to shareholders. Additionally, the asset lock provision ensures that the café’s assets are dedicated to serving the community.

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