Requirements for Submitting Constitutional Documents and Nominating an Asset-Locked Body for a Community Interest Company (CIC) in the UK
Models for Community Company Constitutions and Articles of Association
Forming or converting to a Community Interest Company (CIC) in the UK involves several key steps, including submitting constitutional documents and nominating an asset-locked body. Below are the requirements and processes for these critical components:
1. Constitutional Documents for CIC Formation
When forming a CIC, you must submit specific constitutional documents: - Memorandum and Articles of Association: These documents outline the company’s purpose, structure, and governance. They should include all the provisions required by The Community Interest Company Regulations 2005, as the model constitutions provided have been prepared with the assistance of lawyers experienced in the social enterprise sector. - Statement of Community Benefit: This statement explains how the CIC will benefit the community. It is a crucial part of the CIC formation process as it ensures the company operates in the community's interest.
2. Process for Nominating an Asset-Locked Body
An asset-locked body is a critical component of a CIC, as it ensures that the company's assets are used for community benefit rather than private gain. Here’s how to nominate one: - Appointment of a Regulator: The CIC Regulator, located at 2nd Floor Companies House, Crown Way, Cardiff, CF14 3UZ, oversees the community interest aspect of CICs. An asset-locked body is typically appointed by the CIC to hold and distribute assets in case the CIC is wound up. - Selection Criteria: The asset-locked body should be a registered charity, a permitted IPS, or an equivalent body established outside the UK (with evidence of charity status required in such cases). It must be able to manage and distribute any remaining assets in accordance with the CIC’s community benefit goals. - Documentation: Documentation must clearly specify the relationship between the CIC and the asset-locked body, ensuring transparency and compliance with CIC regulations.
3. Formal Application and Registration
To form or convert to a CIC, you must: - Submit Application: Send the completed application form to the CIC Regulator at Companies House along with the necessary documents, including the constitutional documents and details of the asset-locked body. - Pass the Community Interest Test: The CIC Regulator will assess whether your business meets the community interest criteria. - Register with Companies House: Once approved by the CIC Regulator, you will need to register your company with Companies House, submitting the required constitutional documents and details of the asset-locked body.
4. Annual Reporting Obligations
After registration, CICs must submit annual reports, including: - Statutory Company Accounts: These detail the company’s financial position. - CIC34 Report: Explains how the company has benefited the community. - Confirmation Statement: Updates Companies House on the company's details.
Failing to meet these obligations can result in penalties, so it's crucial to stay on top of these responsibilities.
Before Nominating the Asset-Locked Body in the Articles of Association, its suitability should be checked with the Office of the Regulator of Community Interest Companies.
A community interest company's constitution is established by its articles of association and memorandum of association. A community interest company cannot nominate itself as an asset-locked body.
If a community interest company nominates an organization that is not an asset-locked body, and it is placed on the public record, it must remedy the situation and meet the associated cost. There is no restriction on the number of asset-locked bodies that can be specified.
Example of Nomination Process
When nominating an asset-locked body, you should ensure that it shares the same goals as your CIC. For example, if your CIC focuses on environmental projects, you might nominate a charity that works in environmental conservation. The nomination should be documented clearly in your CIC's constitutional documents and approved by the relevant regulatory bodies.
By following these steps and ensuring compliance with CIC regulations, you can successfully form or convert to a Community Interest Company in the UK.
The CIC Regulator can be contacted via email at [email protected]. For general enquiries, their contact number is 029 2150 7420.
Financial organizations play a crucial role in the process of forming or converting to a Community Interest Company (CIC) in the UK. Banks or financial institutions might be involved in the financial aspects of submitting applications and registrations.
In the business of creating a CIC, the finance sector is essential, as it helps ensure that a community interest company's assets are managed efficiently and remain locked for community benefit rather than private gain, aligning with the CIC's community benefit goals.
