Proposals to
create Community Interest Companies (CICs) form
part of the UK Companies (Audit, Investigations
and Community Enterprise) Act 2004, which received
Royal Assent on 28 October 2004. The CIC will be
a new type of company, intended to be used by social
enterprises who want to use their profits and assets
for the benefit of the public. CICs will be simple
to establish, with the advantages of the usual
corporate format, coupled with additional characteristics
which will ensure they are working for the benefit
of the community. An independent regulator will be set up to whom CICs will report.

The Department
of Trade and Industry consulted last year on draft
Regulations for CICs. The timetable for commencement
of the legislation should allow CICs to register
from July 2005.

Businesses that
trade with a social purpose are to be found in
a large number of sectors such as childcare, social
housing, renewable energy and fair trade. They
can be established in a variety of ways, including
incorporation as companies or industrial and provident
societies although many social enterprises function
within less formal legal structures. The CIC is
expected to be a popular alternative to existing
types of structure and will permit organisations
to operate within the flexibility of a limited company framework but without either
the private profit motive or charity status.

The Department
of Trade and Industry is currently responsible
for setting up the CIC regime and has already produced
a Factsheet providing an overview of CICs to help
those who may want to consider registering as this
type of body. Registration of CICs requires the
relevant sections of the Companies (Audit, Investigations
and Community Enterprise) Act 2004 and Regulations
to be brought into force, and the new independent Regulator to be appointed and become operational. This week sees the Publication
by the DTI of a further Factsheet which explains
the role of the Regulator.



The introductory DTI Factsheet on CICs is available
from the DTI website at:

http://www.dti.gov.uk/cics/pdfs/cicfactsheet1.pdf

The Factsheet
on the role of the Regulator is also available
from the DTI website at:

http://www.dti.gov.uk/cics/pdfs/cicfactsheet2.pdf

The draft regulations
which will apply to CICs can be viewed on the DTI
website at:

http://www.dti.gov.uk/cics/pdfs/DraftCICRegulations1110041.pdf

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