The Community Interest Company

The purpose of the paper is to investigate the success of the
development of the Community Interest Company (CIC). The CIC corporate form
was created in 2005, designed with an asset lock to prevent successful charitable
social enterprises becoming corporate targets. In practice many people have still
not heard about CICs, and the original observations in this paper are intended to
aid the understanding of CICs development by both practitioners and academics.
Written principally from a practitioner’s perspective, the paper is empirical in
nature, presenting reasons for the subsequent legislative changes to this type of
UK social business in 2009, 2012 and 2014 and providing an analysis of aspects
of CIC reporting, as filed in CIC annual reports and in the Companies House
2017 dataset. It is intended, in part, to address the lack of generally available
literature informing practitioners about the existence and potential use of the
CIC corporate form, either as a Company Limited by Shares, CLS, or a Company
Limited by Guarantee, CLG, by social entrepreneurs seeking to incorporate UK
social business enterprises at Companies House.
For the practitioner, it communicates findings about the CIC form in the
context of the original legislation in 2005, with an overview of the regulatory
changes that sought improvements to CIC reporting, actioned the removal of one
of the dividend caps and relaxed the asset lock. It further indicates the preference
for the CIC form of Company Limited by Guarantee (CLG), highlights that few
CICs (2%) have achieved the status of large companies, and that there is little
published about the financial success or otherwise of CICs. The CIC corporate
form, with the inbuilt asset lock, is becoming an accepted corporate model in
practice and its potential for use as a corporate raid dis-incentive is not limited to
charitable organisations. For the academic, this work indicates certain gaps, and
consequently areas for further research, in the role of CICs in business theory
models, in regional variations, and importantly, in their financial success