Community Interest Company (CIC) – features and how to set one up

A Community Interest Company (CIC) is a special type of limited company established to carry out activities for the benefit of the community.

CICs first appeared in 2005 and were designed to provide a company structure for social enterprises that did not want, or were not suitable, to become charities.

For example, CICs began to be established to manage community facilities, such as swimming pools, community centres, and other assets that were being sold by local authorities.

CICs now operate across the UK in a wide range of sectors, including health, the arts, media, education and social work.

So, what are some of the unique features of a CIC, how are they financed, and how do you go about setting up this kind of company?

Features of a CIC

Basically, a CIC is a normal company that can be limited by guarantee, or limited by shares.

What makes a CIC distinct is its community purpose and asset lock, which restrict how its assets and profits can be used or distributed.

The asset lock ensures that the CIC’s assets are used for the benefit of the community. Transfers of assets must comply with the asset lock rules, including transfers to permitted asset-locked bodies.

If a CIC is wound up, its remaining assets must normally be transferred to another asset-locked body, such as another CIC or a charity.

The community interest test

When applying to set up a CIC at Companies House, you must tell the regulator how the company passes the community interest test. In other words, there must be a clear benefit to the wider community, not just the members of the CIC.

All directors must sign a community interest statement to this effect.

If the regulator refuses the application, you have the right to appeal the decision.

Converting to a CIC

Existing companies can convert to CICs by passing the required resolutions and submitting a signed community interest statement for the regulator’s approval.

A charity that wishes to convert to a CIC must first seek permission from the relevant charity regulator.

How do CICs and charities differ?

One major difference is that CIC directors can be paid for their work and CICs generally have more flexibility over how they are managed than charities. Charity trustees, by contrast, are generally unpaid for acting as trustees, although charities can employ paid staff and executives.

CICs may be eligible for grants and other forms of social investment, although eligibility depends on the individual funder’s rules.

It’s worth pointing out, however, that CICs don’t enjoy the same tax advantages as charitable organisations.

Financing a CIC

Subject to certain rules, both companies and individuals can invest in a CIC and finance can also be raised through bonds and/or loans.

If a CIC is set up as a company limited by shares, it may be able to pay dividends to private investors, subject to its articles and the CIC dividend rules.

The old maximum dividend-per-share cap was removed in 2014, but the maximum aggregate dividend cap remains at 35% of profits for dividends subject to the cap. This means at least 65% of profits must be reinvested in the CIC or used for the community it was set up to serve.

See the current CIC Regulator guidance for the detailed rules on shares and dividends.

Who regulates CICs?

CICs are overseen by the Office of the Regulator of Community Interest Companies. Regulation is generally light-touch compared with charities, but the regulator can step in if complaints are made or the community interest appears to be at risk.

Like all registered companies, CICs must file a confirmation statement and annual accounts with Companies House. In addition, CICs must prepare and file an annual community interest company report, which sets out information including:

• what the company has done to benefit the community,
• how it has involved stakeholders in its activities,
• payments or benefits received by directors,
• and dividends paid, where applicable.

The community interest report is submitted alongside the annual accounts and becomes part of the public record.

What’s in a name?

The regulator stipulates that the name of a private CIC must end in a prescribed designation, such as ‘community interest company’ or ‘CIC’. Welsh equivalents are available for companies whose registered office is stated as being in Wales. Otherwise, the normal rules that apply to company names also apply to CICs.

How to set up a CIC

You can apply to set up a CIC online or by post. From 1 February 2026, it costs £115 to incorporate a CIC online or £139 by post.

You’ll need to state the social purpose of the enterprise and the activities the CIC will undertake to achieve this goal in form CIC36.

You will also need CIC Articles of Association and details of the company’s directors. The CIC Regulator provides model CIC constitutions which can be used as a starting point.

The online service allows you to register the company with Companies House, submit the CIC36 and Articles to the CIC Regulator, and register for Corporation Tax with HMRC as part of the process.

See the official CIC registration guide for the current application process.

Read our guide to the main types of UK companies.