A Community Interest Company (CIC) is a type of limited company designed for organisations that want to use their profits and assets for public or community benefit. CICs are commonly used by social enterprises and are subject to additional regulation to ensure they operate primarily for social purposes.
An asset lock is a legal feature of a Community Interest Company that restricts how its assets and profits can be used or distributed. It helps ensure that value generated by the organisation is retained for community benefit rather than transferred for private gain. The asset lock must be written into the Articles of the company and must either specify another asset locked body (charity or CIC) or must allow the CIC regulator to decide on the final distribution of assets on winding up.
The CIC Regulator is the statutory body responsible for overseeing Community Interest Companies in the UK. Its role is to ensure that CICs meet the community interest test and comply with ongoing requirements, including reporting obligations and restrictions on the use of assets and profits.
The community benefit test is the assessment a company must satisfy to become, and remain, a Community Interest Company. It considers whether the organisation’s activities are carried on primarily for the benefit of the community rather than for shareholders or members.
