[1] CICs were introduced by the UK government in 2005 under Part 2 of the Companies (Audit, Investigations and Community Enterprise) Act 2004.
They enjoy the flexibility and certainty of the company form, but with statutory provisions to ensure they are working for the benefit of the community.
By using business methods to achieve public good, it is believed that CICs have a distinct and valuable role to play in helping create a strong, sustainable and socially inclusive economy.
Before the CIC regime was introduced there was no simple, clear way of locking the support of such a company to a public benefit purpose, other than applying for charitable status.
[7] This community interest test is met primarily by including a suitable objects clause in the articles of association.
The only exceptions are distributions to the company's members for the purpose of returning paid-up capital, or paying dividends and interest (which are subject to caps).
If satisfied, the regulator advises the Registrar in Companies House who, provided that all the documents are in order, will issue a certificate of incorporation as a CIC.
[17] A CIC is expected, though not absolutely required, to specify an "asset-locked body" in its articles of association, to which any surplus assets will be transferred when the company is wound up.
Louise Smyth was appointed as Regulator in September 2020;[21] she is also (since 2017) Chief Executive and Registrar for England and Wales at Companies House.