Asset-lock definition

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Community interest companies

What is a community interest company?A community interest company (CIC) is a type of limited liability company formed specifically for the purpose of carrying on business for social purposes or to benefit a community. A CIC must comply with usual UK company law requirements, and is also subject to additional regulation to ensure that the CIC's assets, income and profits are used in the interest of the community it is intended to serve. It is a social profit-making enterprise. It is not a 'not-for-profit' organisation, as it must generate profit to remain solvent, but its profits will be applied to its community purpose rather than for private gain.Legal frameworkThe principal legislation governing CICs is:•the Companies Act 2006 (CA 2006) and subordinate legislation•the Companies (Audit, Investigations and Community Enterprise) Act 2004, Part 2 and Schedules 3 to 7 (C(AICE)A 2004)•the Community Interest Company Regulations 2005, SI 2005/1788 (the CIC Regulations) •the Community Interest Company (Amendment) Regulations 2014, SI 2014/2483, and•the Companies (Miscellaneous Reporting) Regulations 2018, SI 2018/860A CIC takes the form...

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Can a community interest company (CIC) have a standard limited company as a wholly-owned subsidiary? Will the subsidiary be subject to any of the restrictions that a CIC needs to comply with in order to retain its CIC status?

Can a community interest company (CIC) have a standard limited company as a wholly-owned subsidiary? Will the subsidiary be subject to any of the restrictions that a CIC needs to comply with in order to retain its CIC status? The community interest company (CIC) is a limited company which operates in order to use its profit and income for the benefit of the community it serves. The fact that it operates for this particular purpose makes such a company subject to additional restrictions which apply specifically to CICs: the ‘community interest test’ and the asset lock. The community interest test requires CICs to conduct their business in such a way that a reasonable person might consider that its activities are carried out for the benefit of its community. The ‘asset lock’ prevents CICs from transferring assets at less than market value unless the transfer falls within a category of permitted transfers, such as to another asset-locked body. If the constitution allows a CIC to pay dividends, these...

Can a CIC be a partner in a general partnership?

Can a CIC be a partner in a general partnership? The principal legislation governing Community Interest Companies (CICs) is contained in: • Companies Act 2006 • Companies (Audit, Investigations and Community Enterprise) Act 2004 (C(AICE)A 2004) • Community Interest Company Regulations 2005, SI 2005/1788 (the CIC Regulations) • Community Interest Company (Amendment) Regulations 2014, SI 2014/2483 C(AICE)A 2004, s 26 provides that a CIC can be: • a company limited by guarantee (with or without a share capital) • a private company limited by shares, or • a public company limited by shares A general partnership is defined in section 1 of the Partnership Act 1890 (PA 1890) as being ‘the relation which subsists between persons carrying on a business in common with a view to profit’. As such the partners in a partnership can be individuals, corporations, other partnerships or a combination of these (section 5 of Schedule 1 to the Interpretation Act 1978 (IA 1978)). It is therefore possible to have a partnership where some...