What a CIC Is and How to Set One Up in the UK

A CIC, or Community Interest Company, is a special type of limited company in the UK designed for businesses that want to use their profits and assets for the public good. It is often chosen by social enterprises, community projects, and purpose-led founders who want the flexibility of a company structure while showing a clear commitment to social impact.

What makes a CIC different from a standard limited company is the community interest test and the asset lock. The community interest test means the company must exist to benefit a community or pursue a social purpose. The asset lock helps make sure the company’s money, assets, and profits are mainly used to support that mission, rather than being distributed freely for private gain.

Why people choose a CIC

A CIC can be a strong option if you want to:

• run a business with a social purpose

• build trust with funders, partners, and the public

• reinvest profits into your mission

• create a formal structure for community-focused work

• combine commercial activity with social impact

  
  

CICs can be limited by shares or limited by guarantee. A company limited by shares may suit founders who want ownership shares and the ability to pay limited dividends. A company limited by guarantee is often used where there are no shareholders and profits are mainly reinvested into the organisation.

How to set up a CIC in the UK

Setting up a CIC is similar to forming a limited company, but there are a few extra steps.

1. Choose your company structure

Decide whether your CIC will be:

• limited by shares

• limited by guarantee

This affects ownership, profit distribution, and governance, so it is worth choosing carefully based on how you plan to run the organisation.

2. Pick a company name

Your company name must be unique and follow Companies House rules. Most CICs include “Community Interest Company” or “CIC” in the registered name.

3. Prepare your governing documents

You will need:

• a memorandum of association

• articles of association

These set out how the company will be run. CICs often use model articles, but these may need adjusting depending on your structure and goals.

4. Complete the community interest statement

You must submit form CIC36, which explains:

• what your company will do

• who it will benefit

• how its activities will serve the community

This is a key part of the application because it shows that your business meets the community interest test.

5. Register with Companies House

To form the company, you usually submit:

• form IN01

• your memorandum of association

• your articles of association

• form CIC36

• the registration fee

Your application is reviewed by Companies House and the CIC Regulator.

6. Set up your operations

Once approved, you can move on to the practical side of launching your CIC, such as:

• opening a business bank account

• registering for Corporation Tax

• setting up bookkeeping and reporting

• arranging insurance

• creating contracts and policies

• applying for grants or funding if relevant

Ongoing responsibilities

A CIC has ongoing legal and reporting duties. These usually include:

• filing annual accounts

• submitting a confirmation statement

• preparing an annual CIC report

• keeping proper financial records

• continuing to act in the community interest

Because a CIC is regulated, it is important to stay compliant and keep your social purpose clear in both your operations and reporting.

Is a CIC right for you?

A CIC can be a great fit if you want to build a mission-led organisation that trades like a business while protecting its social purpose. It offers credibility, structure, and a clear public benefit focus. That said, it is not the right choice for every business, especially if your main goal is maximising private profit or attracting traditional equity investment.

If your aim is to create impact, serve a community, and build something sustainable in the UK, a CIC could be a smart and meaningful structure to explore.

If you would like support setting up your CIC and securing your first grant, feel free to contact me for more information about my Start-Up Package. It is designed to help purpose-led founders get set up properly, build strong foundations, and take the next steps with confidence.