Setting up a Community Interest Company is more straightforward than most people expect, but there are specific steps and documents that are unique to a CIC. Get them right from the start and you will save yourself significant time and cost further down the line. This guide covers the full process, based entirely on guidance from GOV.UK, Companies House, and the Office of the Regulator of Community Interest Companies.
Step 1: Decide Whether a CIC Is the Right Structure
Before you register anything, be clear that a CIC is the right legal structure for your organisation. A CIC is a permanent commitment. Once registered, the only ways to exit are to dissolve the company entirely or to convert it to a charity both of which require Regulator approval. You cannot simply convert a CIC back into a standard limited company.
Step 2: Choose Your CIC Structure Limited by Guarantee or Limited by Shares?
CICs can be formed as either a company limited by guarantee or a company limited by shares. The right choice depends on how your organisation plans to raise money and whether you want to bring in investors.
| Limited by Guarantee | Limited by Shares | |
|---|---|---|
| Members | Members guarantee a nominal amount (usually £1) | Shareholders hold shares in the company |
| Dividends | Cannot pay dividends | Can pay dividends subject to the cap |
| Best for | Grant-funded or donation-based organisations with no external investors | Organisations seeking external investment or with multiple stakeholders |
Step 3: Prepare Your Documents
To register a CIC you need the same documents as any company registration, plus two additional documents specific to CICs:
Articles of Association
Your articles must include mandatory CIC clauses covering the asset lock and community benefit purpose. The CIC Regulator provides model articles of association on GOV.UK which include all the required clauses highlighted. You can adapt these for your organisation but you cannot remove the mandatory clauses.
Form CIC36: Community Interest Statement
This is a written statement explaining what your CIC intends to do, who it will benefit, how its activities will serve the community, and how any profits will be used. This is not a marketing document it is a legal declaration that the Regulator will use to assess whether your organisation satisfies the community interest test.
Step 4: Register With Companies House
You register a CIC through Companies House, either online or by post. The registration fee is £115 for online applications. Companies House passes your application to the CIC Regulator, who checks that your organisation satisfies the community interest test. Once the Regulator is satisfied, Companies House issues your certificate of incorporation confirming your CIC’s legal existence.
Can an Existing Company Convert to a CIC?
Yes. An existing limited company can convert to a CIC. To do so, the company must pass the necessary resolutions to change its name and articles of association, and submit form CIC37 to Companies House along with a fee of £35. The CIC37 is similar to the CIC36 but asks for confirmation that the company is not a charity and has not previously been refused CIC status. The Regulator must then be satisfied that the company meets the community interest test.
What Are Your Ongoing Obligations Once You Are Registered?
Once your CIC is registered, you have the same obligations as any other limited company filing annual accounts at Companies House, maintaining statutory registers, and keeping HMRC informed. On top of these, CICs have one additional annual obligation:
The CIC Annual Report (Form CIC34)
Every CIC must file an annual CIC report (form CIC34) alongside its statutory accounts. This report shows that the CIC is still satisfying the community interest test and is engaging appropriately with its stakeholders. It covers:
- The activities carried out during the year and how they benefited the community
- How the CIC consulted with the people affected by its activities and the outcome of those consultations
- Details of any dividends paid and any director remuneration
- Details of any assets transferred out of the CIC during the year
What Happens If the CIC Is Wound Up?
If a CIC is dissolved or wound up, its residual assets after all debts are settled must be transferred to another asset-locked body. This is usually a charity or another CIC named in the articles of association. If no asset-locked body is named, the Regulator must consent to the transfer and decide where the assets go. The assets cannot be distributed to directors or shareholders in the usual way.
Who Regulates a CIC?
The Office of the Regulator of Community Interest Companies oversees all CICs in the UK. The Regulator’s role is described as light touch in normal circumstances, but the Regulator does have significant powers where needed including the ability to remove directors, freeze assets, appoint a manager, and apply to the courts to wind up a CIC that is not operating in the community interest.
