A community interest company, known as a CIC is a hybrid between a regular commercial trading company and a charitable company, and became available from July 2005.
The idea behind the CIC was to promote social entrepreneurship, allowing for projects to be undertaken where high calibre directors can be recruited by offering market salaries, and investors with a social conscience can receive a return on their money, albeit capped by regulation.
A key feature is the "asset lock" whereby the assets of the CIC can only be applied directly for the objects of the Community Interest Company or similar enterprise upon cessation of the company's business.
It will not be automatically treated as a charity and it will ordinarily pay tax like any other company, although certain tax breaks for investors may be available.
There will be a regulator for Community Interest Companies and upon the approval of the regulator an application for company formation can proceed to Companies House.
It will be possible to convert existing companies into Community Interest Companies.
It is therefore essential that anybody looking into forming such a Community Interest Company takes the appropriate professional advice.
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