Community Interest Company (CIC)
A Community Interest Company (CIC) is a unique form of limited company in the UK created specifically for businesses that aim to serve the community rather than generate private profit. It offers the same advantages as a traditional company, such as limited liability, legal recognition, and operational flexibility, while embedding strict safeguards to ensure that the organisation’s assets and profits are dedicated to the public good.
At the heart of every CIC lies a community interest test and an asset lock, both of which guarantee that the company’s work and resources remain tied to its social mission. This structure makes CICs especially attractive for entrepreneurs and groups who want the credibility of a regulated framework while focusing on community benefit. Unlike charities, CICs are easier to run, face fewer restrictions, and still retain strong transparency requirements through annual CIC reports.
Types of CIC Registration
There are two main ways to form a CIC:
1. CIC Limited by Guarantee (LBG) and
2. CIC Limited by Shares (LTD).
Each type is designed to meet different funding and operational goals while ensuring that the community remains at the heart of the business.
Set up a CIC - Limited by Guarantee (LBG)
A CIC Limited by Guarantee does not issue shares. Instead, it is formed by members who each guarantee a nominal amount (often £1) towards the company’s liabilities if it were to close down. This structure ensures that no profits are distributed as dividends; instead, all income is reinvested to support the company’s community objectives.
Because it cannot distribute profits, this form is highly trusted by funders and grant-making bodies. It is also the preferred model for not-for-profit ventures and social initiatives that rely heavily on donations or grants. An additional advantage is that an LBG CIC can later be converted into a charity if the directors decide that charitable status would bring more opportunities.
In short, setting up a CIC with LBG model is perfect for mission-driven organisations that want to remain not-for-profit and fully dedicated to community service.
Set up a CIC - Limited by Shares (LTD)
A CIC Limited by Shares follows a slightly different approach. It allows the company to issue shares and distribute dividends to shareholders, but this is tightly regulated. By law, dividends are capped at 35% of distributable profits, ensuring that the majority of the income continues to serve the community.
This model is especially useful for social enterprises that need to attract investment while safeguarding their mission. It strikes a balance between financial sustainability and social responsibility, giving investors a modest return while guaranteeing that community impact remains the top priority.
Setting up a CIC with LTD model works best for businesses that want to grow commercially, bring in external investors, and still maintain their community-oriented focus.
How CIC Company Work in Practice
In practice, a CIC functions much like any other company. It can own property, enter into contracts, employ staff, and deliver goods or services. The difference lies in accountability: all assets and profits are legally locked for community benefit. Directors must demonstrate through an annual CIC report how their work continues to create public good.
CICs are commonly used for projects such as community cafés, cultural centres, training programmes, local transport initiatives, social housing projects, or environmental ventures. They are especially effective where sustainability, trust, and transparency are essential to long-term impact.
Why Choose CIC Registration?
Whether you register a CIC as Limited by Guarantee or Limited by Shares, the outcome is a professional structure that protects your mission while providing flexibility to operate as a business. The LBG model is the best choice for not-for-profit and grant-based projects, while the LTD model suits social enterprises that wish to scale with investment.
Whichever option you choose, CIC registration offers a clear, regulated, and sustainable way to combine enterprise with community benefit, ensuring that your business success creates a lasting impact where it matters most.
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