Community Interest Company Regulations 2005
What this means for your business
- Applies to
- United Kingdom
- On this page
- 18 compliance obligations, 3 practical guides
What you must do
18 compliance obligations under this legislation.
Management duties 2
Distribute residual assets correctly on CIC winding‑up
When your community interest company is wound up and there are assets left after all debts are paid, you must first pay members only up to the paid‑up value of their shares. Any assets left after that must go to the asset‑locked body set out in the company's constitution, or to the body the Regulator directs. This ensures the company’s assets stay locked for community benefit.
Ensure dividend rules in articles follow ordinary/special resolutions
If you run a Community Interest Company, you must not put any clause in your memorandum or articles of association that allows dividends to be declared in any way other than by an ordinary or special resolution of the members. In practice this means checking your constitutional documents (or any amendments) to confirm they only permit dividend declarations through the proper resolutions.
Notifications 1
Submit appeal to the Regulator within the required time‑limit
If your community interest company receives a formal decision or direction you disagree with, you must send a notice of appeal to the Regulator. The appeal must be received within two months of being given the reasons for the decision (or within three weeks for a regulator‑issued direction). Missing the deadline means the appeal cannot be heard.
Other requirements 2
Limit reductions of share capital that return assets to members
If your Community Interest Company wants to give money or assets back to its shareholders by cutting the share capital, you can only do it if the reduction either clears any unpaid share amounts or the payment does not exceed the paid‑up value of each shareholder’s shares. In practice you must check the numbers and record the justification before any reduction.
Obtain Regulator approval before changing company objects
If you run a community interest company and want to change the purpose (objects) set out in your memorandum, you must first get approval from the CIC Regulator. Any amendment you make will be ineffective until the Regulator has signed off it.
Payments and fees 3
Do not pay interest above the statutory cap on performance‑related loans
If your business is a community interest company (CIC) and you issue debentures or take on debts where the interest rate is linked to performance, you must not pay interest higher than the interest cap that was in force when the agreement was signed. The interest you pay must be calculated using the reference rate that applied at the start of the financial year the interest becomes due, but you may still pay interest that accrued before you became a CIC or any arrears that would not breach the cap.
Do not pay more than paid‑up value for share buy‑backs
If your business is a Community Interest Company, you can only redeem or buy back your own shares at a price that does not exceed the amount that has already been paid for those shares. In other words, you cannot give members more money than the shares' paid‑up value when you repurchase them.
Pay regulator fees to the Registrar of Companies
If you run a Community Interest Company (CIC), you must pay the fees listed in Schedule 5 of the CIC Regulations. These fees cover the Regulator’s work on matters relating to your CIC and must be paid directly to the Registrar of Companies.
Registration and licensing 6
Apply to the Regulator for approval before changing a CIC’s memorandum
If your community interest company wants to change the objects listed in its memorandum, you must carry out a special resolution, give the required documents to the Companies House registrar, and then wait for the Regulator’s decision. The change can only go ahead once the regulator has approved it and you have shown that the new objects meet the community‑interest test.
File community interest and notice statements with special resolution
When you send a special resolution to Companies House, you must also send a community interest statement and a statement (in the Regulator’s approved form) showing how you have informed people affected by the proposed change. Both statements must be signed by every director and filed together with the resolution.
Include required CIC provisions in memorandum or articles
If your business is a community interest company that has share capital, you must make sure its constitutional documents (the memorandum and/or articles of association) contain the specific provisions set out in Schedule 2 or Schedule 3 of the Regulations. This is a condition for being recognised as a CIC and must be done when you incorporate or amend those documents.
Include Schedule 1 provisions in memorandum/articles
If your business is a community interest company that is limited by guarantee and has no share capital, you must put the specific provisions set out in Schedule 1 into its constitutional documents. This has to be done when you register the company (or when you amend its constitution). Failing to do so means the company’s registration will be incomplete or could be refused.
Sign and submit required conversion documents for a CIC
If you want to change your existing company into a Community Interest Company, every director must sign a community interest statement and two statutory declarations – one that the company is not an excluded company and another confirming it is not a charity (or that you have Charity Commission consent). The declarations must use forms approved by the CIC Regulator and be filed with the conversion paperwork.
Sign community interest statement and regulator‑approved declaration
When you set up a Community Interest Company, each person who will be a first director must sign two documents: a community interest statement and a declaration that the company will not be an excluded company. The declaration must use the form approved by the CIC Regulator.
Reporting and filing 4
Prepare and file annual Community Interest Report
Each year your CIC must produce a Community Interest Report that explains how its activities have helped the community, shows any consultation you carried out and its outcomes, and gives details of directors’ pay (unless you’re a quoted company). If you transfer assets for less than full market value you must also state the amount or a fair estimate of the value transferred.
Provide reports to the CIC regulator when requested
If you are the manager (usually a director) of a Community Interest Company, you must send any reports the regulator asks for, using the format they specify. This is an ongoing duty – you need to respond promptly each time a request is made.
Report dividend details in your CIC annual report
If your community interest company has paid a dividend this year, plans to pay one, or has paid dividends in any of the past four years, you must include specific dividend figures and an explanation of how they meet the CIC dividend limits in your annual report. The report must show per‑share amounts for the current year, the amounts and maximum per‑share figures for the previous four years, and detail any exemptions or unused dividend capacity.
Submit a complete notice of appeal when challenging a regulator decision
If your community interest company wants to appeal a regulator’s order or decision, you must send a formal notice of appeal. The notice must include your name and address, a GB service address, the dates you were given reasons (or say none were given), the grounds and arguments for the appeal, details of the disputed decision, a list of supporting documents, copies of the regulator’s reasons and any other relevant paperwork, and it must be signed and dated by you or an authorised officer.
Practical guidance
Our guides explain how to comply with the requirements above.
Set up a community interest company (CIC)
How to register a Community Interest Company, pass the community interest test, and complete the required forms. For social enterprises …
Understand CIC asset lock rules
How the CIC asset lock protects community assets, when and how you can transfer assets, and dividend and interest caps …
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, …
Sections and provisions
42 classified provisions from this legislation.
Duties 20
- s.7 Company without share capital
- s.8 Company with share capital
- s.10 Declaration of dividends A relevant company
- s.11 Prescribed formation documents person who is
- s.12 Prescribed conversion documents
- s.13 Requirement for Regulator’s approval with respect
- s.14 Documents to be delivered to registrar of companies
- s.15 Decisions etc of the documents
- s.21 The interest cap shall not be liable
- s.23 Distribution of assets on a winding up member
- s.24 Redemption and purchase of shares may not distribute assets
- s.25 Reduction of share capital may not distribute assets
- s.26 General community interest company report
- s.27 Information about dividends
- s.33 Reports
- s.35 Documents
- s.36 Fees payable by a community interest company
- s.37 Time limits
- s.38 Notice of appeal
- s.42 Reasons
Powers 3
Definitions 5
Exemptions 5
- Schedule 3 ALTERNATIVE PROVISIONS PRESCRIBED FOR THE MEMORANDUM OR ARTICLES OF A COMMUNITY INTEREST COMPANY LIMITED BY SHARES, OR LIMITED BY GUARANTEE WITH A SHARE CAPITAL
- s.16 Exemptions
- s.17 Declaration of dividends
- s.28 Information about debts or debentures on which a performance-related rate is payable
- s.41 Dismissal of appeal