Community intrest companies

Community intrest companies

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I would be interested to read peoples comments on the new community interest company. I have read some of the regulators guidance and find myself confused as to what purpose they are intended to serve. The only advantage appears to be that dividends are payable,unlike a company limited by guarantee, or am I missing something>

William Everatt

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By narrowboatwilliam
14th Jul 2006 09:02

are they the future?
I suppose a lot of us are wondering how to deal with the threatened attack by the revenue on small companies pay arrangements, and since we have to respond to government initiatives, maybe some clients will benefit from adapting their activities to include an element of community benefit.They might take an appropriately low salary and be able to receive a capped dividend in line with their investment, benefiting the community by ther trading activity.
Perhaps Brown & Primarolos plan all along has been to benefit the community?

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By deanshepherd
12th Jul 2006 22:36


The clue is in the name..

They are for the use of people who want to conduct a business or other activity for community benefit, and not purely for private advantage.

Unless I am mistaken, they are limited by guarantee and cannot therefore pay dividends.

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By martinfoley07
13th Jul 2006 11:08

...having reviewed the situation...
...in some depth last year for a new client that was a genuine "halfway house" type of scenario, and thought that the CIC would be a useful vehicle, and provide some tax breaks.
But, critically :
(i) there is no difference between a CIC and an ordinary company for CT purposes
(ii) dividends can be paid, but there are restrictions.

To be honest, it struck me that as a "third way" (not a "tooth and claw" capitalist commercial company, and not a charity) the sad underlying reality is that CICs are a non-event.
If you read the regulator gumpf carefully, it will become apparent that it is mainly smoke and mirrors, and little substance.
A lot of effort and money for not much, in the final analysis. It might make some people feel better, but ........

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By NeilW
13th Jul 2006 10:41

Not quite
My understanding is that a CIC is sort of a halfway house between a commercial company and a charity.

The asset lock on a CIC is controlled by regulations, and therefore allows a CIC to be any of the company types - including Limited by shares.

Primarily the CIC is there so that charities can trade, but in a way that is guaranteed by law to be in the interest of the community.

See http://www.companieshouse.gov.uk/promotional/cics.shtml

NeilW

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