THRIVE THROUGH CORPORATE SOCIAL RESPONSIBILITY : Companies with Consciences; Changes in the Law Mean That Supporters of Community Initiatives Will Soon Have a New Way of Making a Commitment. Simon Littlejohns, a Partner at Accountants and Business Advisers PKF in Birmingham, Reflects on the Fresh Opportunities
Social enterprises will soon have a new choice of legal entity available to them, the community interest company, CIC.
The first CICs are likely to be registered this summer, so it is important that the social entrepreneurs, who may be thinking about incorporation, understand their key features and the legal rules which will apply to them.
So why could this change be of interest?
Put simply, the new CICs will be very flexible ways in which to organise and manage social enterprises or community interest groups, while at the same time giving valuable protection of limited liability status to the group's founders, ie its members.
A CIC is a new type of company. Like other existing companies, CICs will have a two tier structure, with members and directors. A CIC will be able to acquire, use and deal with all types of property and other assets, enter into contracts and other legal agreements, employ staff, borrow funds and give security for borrowings.
CICs will be limited by shares or by guarantee. A unique feature is that, if they have shares, certain levels of dividend can be paid on investor shares However, there will be a statutory cap on dividends, as well as a cap on interest levels on certain loans.
The CIC registration process will involve submission of a number of statutory forms, a constitution anda community interest statement with payment of appropriate fees.
It is likely that there will be two fees. One is for registration by Companies House and the other for registration with a CIC Regulator. Effectively, CICs will be regulated by, and be accountable to, both the Registrar of Companies and the CIC Regulator. …