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Community Interest Companies (CICs)

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Published: 12 Oct 2018 Reviewed: 08 Nov 2019 Update History

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Technical helpsheet issued to help ICAEW members understand key aspects of the legal, regulatory and reporting frameworks for Community Interest Companies (CICs).


This helpsheet has been issued by ICAEW’s Technical Advisory Service to help ICAEW members to understand key aspects of the legal, regulatory and reporting frameworks for Community Interest Companies (CICs).

What is a CIC?

Community Interest Companies (CICs) are a form of social enterprise formed for community benefit. They are relatively quick, easy and inexpensive to set up and offer significant flexibility (especially when compared with a charity for example).

In most respects they operate in the same way as any other company, however they have a higher level of transparency of operation, have statutory clauses which cannot be removed and offer a continuity of purpose.

Further benefits are explored in Community interest companies: benefits of a CIC.

Community benefit

In order to be registered, and throughout its life, a CIC must meet the ‘community interest test’. This test is quite broad and is based on whether a reasonable person might consider that its activities are being carried on for the benefit of the community (The Companies (Audit, Investigations and Community Enterprise) Act 2004 s35(2)).

There are a number of exclusions however. An entity with political motives, benefiting only the employees of a particular employer or members of a particular body would fail the ‘community interest test’ (The Community Interest Company Regulations 2005 Part 2).

Asset lock

CICs are subject to an ‘asset lock’ which ensures assets are retained within the CIC to support its activities or otherwise used to benefit the community. This means that CICs cannot transfer assets at less than their market value (unless transferring to another asset locked body or for the benefit of the community) and on dissolution must transfer surplus assets to another asset locked body.

Dividend cap

If permitted by its governing documents, a CIC is able to pay dividends to its shareholders. In addition to the usual provisions contained within the Companies Act 2006 with regard to distributable profits (guidance is available in TECH 02/17 BL Guidance on realised and distributable profits under the Companies Act 2006), such dividends are also subject to a dividend cap, currently set at 35% of distributable profits. This ensures that 65% of a CIC’s distributable profits are reinvested back into the company or used for the community it was set up to serve.

Legislation and regulation

A CIC is a company and can choose from one of three legal forms afforded by the Companies Act 2006; a private company limited by guarantee, a private company limited by shares or a public limited company.

In addition to the Companies Act 2006, CICs are subject to The Companies (Audit, Investigations and Community Enterprise) Act 2004 and The Community Interest Company Regulations 2005 as well as subordinate regulations.

CICs are regulated by the Office of the Regulator of Community Interest Companies.


CICs are not and cannot be charities even if their activities are charitable in nature. It is however possible to convert between a CIC and charitable company or vice versa.


It is possible to convert other legal entities into CICs or vice versa. Guidance on the conversion process is contained within Community interest companies: forms and step-by-step guides.


CICs are no different from other companies with respect to preparing and filing their accounts, although prior to 2 September 2019 all CICs were unable to file their accounts electronically. Small CICs (approximately 75% of all CICs) are now able to use a new online filing process. Further details are available in the Office of the Regulator of Community Interest Companies’ blog post, CIC Accounts and Online filing.

The Office of the Regulator of Community Interest Companies has however specified that CICs should aspire to provide the fullest possible information rather than simply comply with the minimum requirements and as a result, most CICs will follow FRS 102.

Public benefit entity

Where FRS 102 is followed, the directors of a CIC should have regard to whether the company would meet the definition of a public benefit entity (PBE) as set out in the glossary:

An entity whose primary objective is to provide goods or services for the general public, community or social benefit and where any equity is provided with a view to supporting the entity’s primary objectives rather than with a view to providing a financial return to equity providers, shareholders or members.

Some CICs will meet this definition and others will not. It is important therefore to consider the particular facts and circumstances of the CIC concerned and the governing documents should be reviewed as part of this process.

Where this definition is met, depending on the circumstances, a CIC may need to apply the specific provisions of the ‘PBE’ prefixed paragraphs within the standard. When applying such paragraphs an explicit and unreserved statement that the CIC is a public benefit entity is required by paragraph PBE3.3A unless the entity is following Section 1A.


There is no specific SORP for CICs and it is not appropriate for a CIC to follow the Charities SORP.


The directors of a CIC should carefully check its governing documents for any specific provisions in relation to audit or other external scrutiny.

As they are subject to the Companies Act 2006, CICs must also adhere to the audit requirements contained within the Act. Members may therefore wish to refer to the helpsheet Is an audit required for a company?.

CIC report

CICs must also deliver a Community Interest Company Report (CIC34) made up to the same date as the accounts, regardless of the size of the company. The report should be sent with the accounts to Companies House along with a fee of £15 (payment can be made by debit or credit card if using the online filing system).

The report will need to include details of:

  • What the CIC has done to benefit the community;
  • How it has involved its stakeholders’ in its activities;
  • The remuneration of directors;
  • Any assets transferred outside the CIC;
  • Dividends paid on shares; and
  • Interest paid on capped loans.

The report CIC34: community interest company report and examples of completed reports are available from the Office of the Regulator of Community Interest Companies. The majority of CICs will need to complete the simplified report. The detailed report is reserved for those CICs with more complex financial arrangements.

Further guidance and resources

The Office of the Regulator of Community Interest Companies has produced an extensive range of guidance which is publically available. This guidance includes:

If in doubt seek advice

ICAEW members, affiliates, ICAEW students and staff in eligible firms with member firm access can discuss their specific situation with the Technical Advisory Service on +44 (0)1908 248 250 or via webchat.

Terms and conditions

© ICAEW 2024  All rights reserved.

ICAEW cannot accept responsibility for any person acting or refraining to act as a result of any material contained in this helpsheet. This helpsheet is designed to alert members to an important issue of general application. It is not intended to be a definitive statement covering all aspects but is a brief comment on a specific point.

ICAEW members have permission to use and reproduce this helpsheet on the following conditions:

  • This permission is strictly limited to ICAEW members only who are using the helpsheet for guidance only.
  • The helpsheet is to be reproduced for personal, non-commercial use only and is not for re-distribution.

For further details members are invited to telephone the Technical Advisory Service T +44 (0)1908 248250. The Technical Advisory Service comprises the technical enquiries, ethics advice, anti-money laundering and fraud helplines. For further details visit icaew.com/tas.

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  • Update History
    01 Oct 2018 (12: 00 AM BST)
    First published
    11 Apr 2024 (12: 00 AM BST)
    Changelog created. Converted to new template. Links updated. Removed link to deleted helpsheet. This helpsheet has not had a full review