Community Interest Companies (CICs) were introduced in 2005 as a structure to enable social enterprises to carry out commercial activity and deliver social benefits. The Regulator of Community Interest Companies (CIC Regulator) recently reported that between July 2005 and March 2009, 2781 applications for CIC status have been approved across the UK, with 260 applications having been received in the last two months of the period. The figures for the last two months of the period are interesting, as they suggest that take-up of the CIC structure may currently be on the increase.
The CIC enables social enterprises to carry out commercial activity and deliver social benefits. In particular, the structure allows for investment in CICs, subject to the operation of regulated caps on returns. The CIC Regulator issued a consultation on the operation of these caps at the end of March 2009.
The consultation seeks views from CICs, investors and others on whether the various caps (the share dividend cap; the aggregated dividend cap and the performance related interest cap) should be altered. The consultation makes reference to one report which notes that social enterprises appear to make only limited use of equity (shares) finance and that this may be a barrier to growth for the sector as a whole.
The CIC Regulator has powers, under Regulation 22(3) of the Community Interest Company Regulations 2005, to set a new share dividend, aggregated dividend or interest cap.
The consultation document also reveals that of the 2507 approved and registered Community Interest Companies in the UK as at February 2009, approximately one quarter are companies limited by shares, the rest being companies limited by guarantee.
Existing Community Interest Companies, investors in Community Interest Companies and those considering establishing Community Interest Companies may wish to consider responding to the consultation which closes on 19 June 2009.