Charities & Social Enterprise Social Enterprise

Meet your ongoing CIC compliance obligations

How to stay compliant as a Community Interest Company. Covers annual CIC reports (Form CIC34), asset lock obligations, dividend caps, and CIC Regulator oversight. This guide is for existing CICs, not for setting up a new CIC.

UK-wide
Guide summary

As a Community Interest Company (CIC), you must file an annual CIC report (Form CIC34) with your accounts, follow asset lock rules to protect community assets, and limit dividends to 35% of profits. These rules ensure your CIC benefits the community.

  • File Form CIC34 with your annual accounts (£15 fee)
  • Submit within 9 months of your accounting reference date
  • Asset lock prevents private gain—assets must benefit community
  • Dividends capped at 35% of profits (65% reinvested)
  • Pay dividends only if CIC is limited by shares
  • Transfers below market value need Regulator approval
  • On dissolution, assets must go to another asset-locked body
  • Convert existing companies to CIC using Form CIC37 (£45 fee)
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UK-wide Community Interest Company

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As a Community Interest Company (CIC), you have ongoing compliance obligations beyond those of a standard limited company. The CIC Regulator monitors compliance with the community interest test, and you must file an annual CIC report alongside your accounts.

This guide covers your ongoing obligations. It does not cover setting up a CIC - see our separate guide for that.

Key ongoing requirements:

  • Annual CIC report (Form CIC34)
  • Asset lock compliance
  • Dividend cap calculations
  • Continuing to meet the community interest test

Annual CIC report (Form CIC34)

Every CIC must file an annual community interest report regardless of size. This report demonstrates that you continue to provide benefit to the community.

What to include in your report

Your CIC34 must describe:

  • Activities: What the CIC did during the year
  • Community benefit: How activities benefited the community
  • Stakeholder engagement: How you consulted stakeholders
  • Director remuneration: What directors were paid
  • Asset transfers: Any transfers to asset-locked bodies
  • Dividends: Amounts paid and to whom (if CIC limited by shares)

The report must be filed with your annual accounts within 9 months of your accounting reference date. The filing fee is £15.

The asset lock

The asset lock is the defining feature of a CIC. It ensures that assets (including profits) are used for community benefit rather than private gain. Unlike voluntary asset locks in other companies, the CIC asset lock cannot be removed.

Practical implications

The asset lock affects how you can use CIC assets:

  • Property sales: Must be for full market value, or to another asset-locked body
  • Service contracts: Must be at market rate - you can't give favourable terms to connected parties
  • Dissolution: Remaining assets must go to another asset-locked body, not to members
  • Grants and donations: Once received, become subject to the asset lock

If you need to transfer assets below market value, you'll need CIC Regulator consent and must demonstrate community benefit.

Dividend cap (CICs limited by shares)

If your CIC is limited by shares, you can pay dividends to shareholders. However, dividends are capped to ensure most profits are reinvested for community benefit.

Calculating the dividend cap

The aggregate dividend cap limits total dividends to 35% of profits. This means 65% of profits must be reinvested in the CIC or used for community benefit.

Example: If your CIC makes £100,000 profit, maximum dividends are £35,000. The remaining £65,000 must be retained or used for community purposes.

Exception: Dividends paid to asset-locked bodies named in your articles don't count towards the cap. This allows profits to flow to charities or other CICs.

If your CIC is limited by guarantee, you cannot pay dividends at all.

Converting an existing company to CIC

If you're converting an existing limited company to a CIC (rather than having registered as a CIC from the start), you need Form CIC37.

Converting from a charity

If you're converting a charitable company to a CIC, you need prior written consent from the charity regulator:

  • England and Wales: Charity Commission
  • Scotland: Scottish Charity Regulator (OSCR)

This is a significant decision as you'll lose charitable status and associated tax benefits. Take professional advice before proceeding.

Geographic variations

CIC registration is UK-wide, but there are some differences in Scotland.

CIC Regulator oversight

The CIC Regulator monitors all CICs and can take action if you fail to meet requirements.

What the Regulator can do

The CIC Regulator has powers to:

  • Request information about your activities
  • Investigate complaints about CIC conduct
  • Appoint or remove directors
  • Apply to court to wind up a CIC
  • Set conditions on asset transfers on dissolution

The Regulator takes a light-touch approach and doesn't proactively supervise individual CICs. However, they will investigate complaints and can take enforcement action if you breach CIC requirements.

Common compliance issues

The CIC Regulator frequently sees these problems:

  • Late CIC reports: Must be filed with accounts - late filing can trigger investigation
  • Inadequate community benefit description: Reports must clearly explain what community benefit was provided, not just list activities
  • Undisclosed director payments: All remuneration must be declared in the CIC report
  • Asset transfers without consent: Below-market transfers to non-asset-locked bodies need Regulator approval
  • Dividend cap breaches: Paying more than 35% of profits as dividends

Annual compliance checklist

  1. 1

    Prepare CIC report (Form CIC34)

    Describe activities, community benefit, stakeholder engagement, director remuneration, and any dividends or asset transfers.

  2. 2

    File CIC report with accounts

    Submit CIC34 with your annual accounts to Companies House. Filing fee is £15. Deadline is 9 months from your accounting reference date.

  3. 3

    Review dividend payments

    If you paid dividends, ensure total doesn't exceed 35% of profits. Document calculations in case of Regulator query.

  4. 4

    Check any asset transfers

    Verify any asset transfers were at full market value or to asset-locked bodies. Get Regulator consent if needed.

  5. 5

    Update stakeholder records

    Keep records of stakeholder consultation ready for next CIC report.

  6. 6

    Monitor community benefit

    Ensure activities continue to benefit the community defined in your CIC36 statement.