Office of Public Sector Information
(1) There is to be a new type of company to be known as the community interest company.
(2) In accordance with this Part—
(a) a company limited by shares or a company limited by guarantee and not having a share capital may be formed as or become a community interest company, and
(b) a company limited by guarantee and having a share capital may become a community interest company.
(3) A community interest company established for charitable purposes is to be treated as not being so established and accordingly—
(a) is not a charity, and
(b) must not be given such intimation as is mentioned in section 1(7) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40) (Scottish charities).
(1) There is to be an officer known as the Regulator of Community Interest Companies (referred to in this Part as “the Regulator”).
(2) The Secretary of State must appoint a person to be the Regulator.
(3) The Regulator has such functions relating to community interest companies as are conferred or imposed by or by virtue of this Act or any other enactment.
(4) The Regulator must adopt an approach to the discharge of those functions which is based on good regulatory practice, that is an approach adopted having regard to—
(a) the likely impact on those who may be affected by the discharge of those functions,
(b) the outcome of consultations with, and with organisations representing, community interest companies and others with relevant experience, and
(c) the desirability of using the Regulator’s resources in the most efficient and economic way.
(5) The Regulator may issue guidance, or otherwise provide assistance, about any matter relating to community interest companies.
(6) The Secretary of State may require the Regulator to issue guidance or otherwise provide assistance about any matter relating to community interest companies which is specified by the Secretary of State.
(7) Any guidance issued under this section must be such that it is readily accessible to, and capable of being easily understood by, those at whom it is aimed; and any other assistance provided under this section must be provided in the manner which the Regulator considers is most likely to be helpful to those to whom it is provided.
(8) Schedule 3 (further provisions about the Regulator) has effect.
(1) There is to be an officer known as the Appeal Officer for Community Interest Companies (referred to in this Part as “the Appeal Officer”).
(2) The Secretary of State must appoint a person to be the Appeal Officer.
(3) The Appeal Officer has the function of determining appeals against decisions and orders of the Regulator which under or by virtue of this Act or any other enactment lie to the Appeal Officer.
(4) An appeal to the Appeal Officer against a decision or order of the Regulator may be brought on the ground that the Regulator made a material error of law or fact.
(5) On such an appeal the Appeal Officer must—
(a) dismiss the appeal,
(b) allow the appeal, or
(c) remit the case to the Regulator.
(6) Where a case is remitted the Regulator must reconsider it in accordance with any rulings of law and findings of fact made by the Appeal Officer.
(7) Schedule 4 (further provisions about the Appeal Officer) has effect.
(1) There is to be an officer known as the Official Property Holder for Community Interest Companies (referred to in this Part as “the Official Property Holder”).
(2) The Regulator must appoint a member of the Regulator’s staff to be the Official Property Holder.
(3) The Official Property Holder has such functions relating to property of community interest companies as are conferred or imposed by or by virtue of this Act or any other enactment.
(4) Schedule 5 (further provisions about the Official Property Holder) has effect.
(1) Community interest companies must not distribute assets to their members unless regulations make provision authorising them to do so.
(2) If regulations authorise community interest companies to distribute assets to their members, the regulations may impose limits on the extent to which they may do so.
(3) Regulations may impose limits on the payment of interest on debentures issued by, or debts of, community interest companies.
(4) Regulations under this section may make provision for limits to be set by the Regulator.
(5) The Regulator—
(a) may set a limit by reference to a rate determined by any other person (as it has effect from time to time), and
(b) may set different limits for different descriptions of community interest companies.
(6) The Regulator must (in accordance with section 27)—
(a) undertake appropriate consultation before setting a limit, and
(b) in setting a limit, have regard to its likely impact on community interest companies.
(7) Regulations under this section may include power for the Secretary of State to require the Regulator to review a limit or limits.
(8) Where the Regulator sets a limit he must publish notice of it in the Gazette.
(1) Regulations may make provision for and in connection with the distribution, on the winding up of a community interest company, of any assets of the company which remain after satisfaction of the company’s liabilities.
(2) The regulations may, in particular, amend or modify the operation of any enactment or instrument.
(1) The memorandum of a community interest company must state that the company is to be a community interest company.
(2) Section 7(1) of the Companies Act 1985 (c. 6) (articles) applies in relation to a community interest company limited by shares as if it were a company limited by guarantee (so that articles must be registered).
(3) The memorandum and articles of a community interest company of any description—
(a) must at all times include such provisions as regulations require to be included in the memorandum and articles of every community interest company or a community interest company of that description, and
(b) must not include such provisions as regulations require not to be so included.
(4) The provisions required by regulations under subsection (3)(a) to be included in the memorandum or articles of a community interest company may (in particular) include—
(a) provisions about the transfer and distribution of the company’s assets (including their distribution on a winding up),
(b) provisions about the payment of interest on debentures issued by the company or debts of the company,
(c) provisions about membership of the company,
(d) provisions about the voting rights of members of the company,
(e) provisions about the appointment and removal of directors of the company, and
(f) provisions about voting at meetings of directors of the company.
(5) The memorandum and articles of a community interest company are of no effect to the extent that they—
(a) are inconsistent with provisions required to be included in the memorandum or articles of the company by regulations under subsection (3)(a), or
(b) include provisions required not to be included by regulations under subsection (3)(b).
(6) Regulations may make provision for and in connection with restricting the ability of a community interest company under section 4 of the Companies Act 1985 (c. 6) to alter its memorandum with respect to the statement of its objects.
(1) The name of a community interest company which is not a public company must end with—
(a) “community interest company”, or
(b) “c.i.c.”.
(2) But the name of such a company may (instead) end with—
(a) “cwmni buddiant cymunedol”, or
(b) “c.b.c.”,
if the memorandum of the company states that the company’s registered office is to be situated in Wales.
(3) The name of a community interest company which is a public company must end with—
(a) “community interest public limited company”, or
(b) “community interest p.l.c.”.
(4) But the name of such a company may (instead) end with—
(a) “cwmni buddiant cymunedol cyhoeddus cyfyngedig”, or
(b) “cwmni buddiant cymunedol c.c.c.”,
if the memorandum of the company states that the company’s registered office is to be situated in Wales.
(5) Section 25 of the Companies Act 1985 (company name to end with “public limited company” or “limited” or equivalent) does not apply to community interest companies.
(6) Schedule 6 (further provisions about names) has effect.
(1) The directors of a community interest company must prepare in respect of each financial year a report about the company’s activities during the financial year (a “community interest company report”).
(2) Section 242(1) of the Companies Act 1985 is to be treated as requiring the directors of a community interest company to deliver to the registrar of companies a copy of the community interest company report.
(3) Regulations—
(a) must make provision requiring community interest company reports to include information about the remuneration of directors,
(b) may make provision as to the form of, and other information to be included in, community interest company reports, and
(c) may apply provisions of the Companies Act 1985 (c. 6) relating to directors' reports to community interest company reports (with any appropriate modifications).
(4) The registrar of companies must forward to the Regulator a copy of each community interest company report delivered to the registrar by virtue of this section.
(1) This section has effect for the purposes of this Part.
(2) A company satisfies the community interest test if a reasonable person might consider that its activities are being carried on for the benefit of the community.
(3) An object stated in the memorandum of a company is a community interest object of the company if a reasonable person might consider that the carrying on of activities by the company in furtherance of the object is for the benefit of the community.
(4) Regulations may provide that activities of a description prescribed by the regulations are to be treated as being, or as not being, activities which a reasonable person might consider are activities carried on for the benefit of the community.
(5) “Community” includes a section of the community (whether in Great Britain or anywhere else); and regulations may make provision about what does, does not or may constitute a section of the community.
(6) A company is an excluded company if it is a company of a description prescribed by regulations.
(1) If a company is to be formed as a community interest company, the documents delivered to the registrar of companies under section 10 of the Companies Act 1985 (memorandum, articles and statement of names and particulars of directors and secretary) must be accompanied by the prescribed formation documents.
(2) “The prescribed formation documents” means such statutory declarations or other declarations or statements as are required by regulations to accompany the documents delivered under that section, in such form as may be approved in accordance with the regulations.
(3) On receiving the documents delivered under that section and the prescribed formation documents the registrar of companies must (instead of registering the memorandum and articles)—
(a) forward a copy of each of the documents to the Regulator, and
(b) retain the documents pending the Regulator’s decision.
(4) The Regulator must decide whether the company is eligible to be formed as a community interest company.
(5) A company is eligible to be formed as a community interest company if—
(a) the memorandum and articles comply with the requirements imposed by and by virtue of section 32 and the company’s name complies with section 33, and
(b) the Regulator, having regard to the documents delivered under section 10 of the Companies Act 1985 (c. 6), the prescribed formation documents and any other relevant considerations, considers that the company will satisfy the community interest test and is not an excluded company.
(6) The Regulator must give notice of the decision to the registrar of companies (but the registrar is not required to record it).
(7) If the Regulator gives notice of a decision that the company is eligible to be formed as a community interest company, section 12 of the Companies Act 1985 (registration of memorandum and articles) applies; and if the registrar registers the memorandum and articles he must also retain and record the prescribed formation documents.
(8) The certificate of incorporation under section 13 of the Companies Act 1985 (effect of registration) is to contain a statement that the company is a community interest company.
(9) The fact that the certificate of incorporation contains such a statement is conclusive evidence that the company is a community interest company.
(10) If the Regulator decides that the company is not eligible to be formed as a community interest company, any subscriber to the memorandum may appeal to the Appeal Officer against the decision.
(1) If a company is to become a community interest company, the company must—
(a) by special resolution alter its memorandum to state that it is to be a community interest company,
(b) by special resolutions under the Companies Act 1985 make such alterations of its memorandum and articles as it considers necessary to comply with requirements imposed by and by virtue of section 32 or otherwise appropriate in connection with becoming a community interest company, and
(c) by special resolution change its name to comply with section 33.
(2) Section 380(1) of the Companies Act 1985 (forwarding of copies of special resolutions to registrar of companies) must be complied with in relation to each of the special resolutions at the same time.
(3) If the special resolutions include one under section 4 or 17 of the Companies Act 1985 (alterations of memorandum)—
(a) copies of the special resolutions must not be forwarded to the registrar of companies before the relevant date, and
(b) section 380(1) has effect in relation to them as if it referred to 15 days after the relevant date.
(4) If an application is made under section 5 of the Companies Act 1985 (c. 6) (objection to alteration of memorandum under section 4 or 17), the relevant date is—
(a) the date on which the court determines the application (or, if there is more than one application, the date on which the last to be determined by the court is determined), or
(b) such later date as the court may order.
(5) If there is no application under section 5 of that Act, the relevant date is the end of the period for making such an application.
(6) The copies of the special resolutions forwarded to the registrar of companies must be accompanied by—
(a) a copy of the memorandum and articles of the company as altered by the special resolutions, and
(b) the prescribed conversion documents.
(7) “The prescribed conversion documents” means such statutory declarations or other declarations or statements as are required by regulations to accompany the copies of the special resolutions, in such form as may be approved in accordance with the regulations.
(1) On receiving under section 37 the copies of the special resolutions, the memorandum and articles as altered by the special resolutions and the prescribed conversion documents, the registrar of companies must (instead of recording the special resolutions and entering a new name on the register)—
(a) forward a copy of each of the documents to the Regulator, and
(b) retain the documents pending the Regulator’s decision.
(2) The alterations of the memorandum and articles made by the special resolutions are to take effect only as provided by this section.
(3) The Regulator must decide whether the company is eligible to become a community interest company.
(4) A company is eligible to become a community interest company if—
(a) the memorandum and articles as altered by the special resolutions comply with the requirements imposed by and by virtue of section 32 and the company’s name as so altered complies with section 33, and
(b) the Regulator, having regard to the special resolutions, the memorandum and articles as altered, the prescribed conversion documents and any other relevant considerations, considers that the company will satisfy the community interest test and is not an excluded company.
(5) The Regulator must give notice of the decision to the registrar of companies (but the registrar is not required to record it).
(6) If the Regulator gives notice of a decision that the company is eligible to become a community interest company, section 28(6) of the Companies Act 1985 (registration of new name) applies; and if the registrar of companies enters the new name of the company on the register the registrar must also retain and record the special resolutions and the prescribed conversion documents.
(7) On the special resolutions being recorded, the alterations to the company’s articles and memorandum made by the special resolutions take effect.
(8) The certificate of incorporation under section 28(6) of the Companies Act 1985 (c. 6) is to contain a statement that the company is a community interest company.
(9) The fact that the certificate of incorporation contains such a statement is conclusive evidence that the company is a community interest company.
(10) If the Regulator decides that the company is not eligible to become a community interest company, the company may appeal to the Appeal Officer against the decision.
(1) A charitable company may not by special resolution change its name to comply with section 33 without the prior written consent of the Charity Commissioners.
(2) If a charitable company contravenes subsection (1), the Charity Commissioners may apply to the High Court for an order quashing any altered certificate of incorporation issued under section 28(6) of the Companies Act 1985.
(3) If a charitable company becomes a community interest company, that does not affect the application of—
(a) any property acquired under any disposition or agreement previously made otherwise than for full consideration in money or money’s worth, or any property representing property so acquired,
(b) any property representing income which has previously accrued, or
(c) the income from any such property.
(4) “Charitable company” means a company which is a charity, other than one to which section 40 applies.
(1) A Scottish charitable company may not become a community interest company.
(2) If a Scottish charitable company purports by special resolution to change its name to comply with section 33, the Commissioners of Inland Revenue may apply to the Court of Session for an order quashing any altered certificate of incorporation issued under section 28(6) of the Companies Act 1985.
(3) Regulations may repeal subsections (1) and (2); and subsections (4) to (7) have effect on and after the day on which regulations under this subsection come into force.
(4) A Scottish charitable company may not by special resolution change its name to comply with section 33 without the prior written consent—
(a) if the company’s registered office is situated in Scotland, of the Scottish Charity Regulator, or
(b) if the company’s registered office is situated in England and Wales (or Wales), of both the Scottish Charity Regulator and the Charity Commissioners.
(5) If a Scottish charitable company contravenes subsection (4)(a), the Scottish Charity Regulator may apply to the Court of Session for an order quashing any altered certificate of incorporation issued under section 28(6) of the Companies Act 1985 (c. 6).
(6) If a Scottish charitable company contravenes subsection (4)(b), the Scottish Charity Regulator or the Charity Commissioners may apply to the High Court for such an order.
(7) If a Scottish charitable company becomes a community interest company, that does not affect the application of—
(a) any property acquired under any disposition or agreement previously made otherwise than for full consideration in money or money’s worth, or any property representing property so acquired,
(b) any property representing income which has previously accrued, or
(c) the income from any such property.
(8) In this section “Scottish charitable company” means a company which—
(a) is a Scottish charity, or
(b) not being a Scottish charity, is registered in Scotland and established for charitable purposes only.
(9) Regulations under subsection (3) may define the expression “the Scottish Charity Regulator” for the purposes of this section.
(1) In deciding whether and how to exercise the powers conferred by sections 42 to 51 the Regulator must adopt an approach which is based on the principle that those powers should be exercised only to the extent necessary to maintain confidence in community interest companies.
(2) No power conferred on the Regulator by—
(a) section 45 (appointment of director),
(b) section 46 (removal of director),
(c) section 47 (appointment of manager), or
(d) section 48 (property),
is exercisable in relation to a community interest company unless the company default condition is satisfied in relation to the power and the company.
(3) The company default condition is satisfied in relation to a power and a company if it appears to the Regulator necessary to exercise the power in relation to the company because—
(a) there has been misconduct or mismanagement in the administration of the company,
(b) there is a need to protect the company’s property or to secure the proper application of that property,
(c) the company is not satisfying the community interest test, or
(d) if the company has community interest objects, the company is not carrying on any activities in pursuit of those objects.
(4) The power conferred on the Regulator by section 49 (transfer of shares etc.) is not exercisable in relation to a community interest company unless it appears to the Regulator that the company is an excluded company.
(1) The Regulator may—
(a) investigate the affairs of a community interest company, or
(b) appoint any person (other than a member of the Regulator’s staff) to investigate the affairs of a community interest company on behalf of the Regulator.
(2) Subsection (1)(b) is in addition to paragraph 5 of Schedule 3 (powers of Regulator exercisable by authorised members of staff) and does not affect the application of that paragraph to the Regulator’s power under subsection (1)(a).
(3) Schedule 7 (further provision about investigations under this section) has effect.
(1) The Regulator may by order require a community interest company to allow the annual accounts of the company to be audited by a qualified auditor appointed by the Regulator.
(2) A person is a qualified auditor if he is eligible for appointment as a company auditor under section 25 of the Companies Act 1989 (c. 40) (eligibility for appointment as auditor).
(3) Sections 389A and 389B of the Companies Act 1985 (c. 6) (auditor’s rights to information) apply in relation to an auditor appointed under this section as in relation to an auditor appointed under Chapter 5 of Part 11 of that Act.
(4) On completion of the audit the auditor must make a report to the Regulator on such matters and in such form as the Regulator specifies.
(5) The expenses of the audit, including the remuneration of the auditor, are to be paid by the Regulator.
(6) An audit under this section is in addition to, and does not affect, any audit required by or by virtue of any other enactment.
(1) The Regulator may bring civil proceedings in the name and on behalf of a community interest company.
(2) Before instituting proceedings under this section the Regulator must give written notice to the company stating—
(a) the cause of action,
(b) the remedy sought, and
(c) a summary of the facts on which the proceedings are to be based.
(3) Any director of the company may apply to the court for an order—
(a) that proposed proceedings are not to be instituted under this section, or
(b) that proceedings instituted under this section are to be discontinued.
(4) On an application under subsection (3) the court may make such order as it thinks fit.
(5) In particular the court may (as an alternative to ordering that proposed proceedings are not to be instituted under this section or that proceedings instituted under this section are to be discontinued) order—
(a) that the proposed proceedings may be instituted under this section, or the proceedings instituted under this section may be continued, on such terms and conditions as the court thinks fit,
(b) that any proceedings instituted by the company are to be discontinued, or
(c) that any proceedings instituted by the company may be continued on such terms and conditions as the court thinks fit.
(6) The Regulator must indemnify the company against any costs (or expenses) incurred by it in connection with proceedings brought under this section.
(7) Any costs (or expenses)—
(a) awarded to the company in connection with proceedings brought under this section, or
(b) incurred by the company in connection with the proceedings and which it is agreed should be paid by a defendant (or defender),
are to be paid to the Regulator.
(1) The Regulator may by order appoint a director of a community interest company.
(2) The person appointed may be anyone whom the Regulator thinks appropriate, other than a member of the Regulator’s staff.
(3) A person may be appointed as a director of a company under this section—
(a) whether or not the person is a member of the company, and
(b) irrespective of any provision made by the memorandum or articles of the company or a resolution of the company in general meeting.
(4) An order appointing a person to be a director of a company under this section must specify the terms on which the director is to hold office; and those terms have effect as if contained in a contract between the director and the company.
(5) The terms specified must include the period for which the director is to hold office, and may include terms as to the remuneration of the director by the company.
(6) A director appointed under this section has all the powers of the directors appointed by the company (including powers exercisable only by a particular director or class of directors).
(7) A director appointed under this section may not be removed by the company, but may be removed by the Regulator at any time.
(8) Where—
(a) a person is appointed to be a director of the company under this section, or
(b) a person so appointed ceases to be a director of the company,
the obligation which would otherwise be imposed on the company under section 288(2) of the Companies Act 1985 (c. 6) (requirement that company notify change among directors to registrar) is instead an obligation of the Regulator.
(9) But if subsection (10) applies, section 288(2) applies as if the period within which the Regulator must send a notification to the registrar of companies is 14 days from the date on which the Regulator receives notification under that subsection.
(10) Where a person appointed to be a director of the company under this section ceases to be a director of the company (otherwise than by removal under subsection (7)), the company must give notification of that fact to the Regulator in a form approved by the Regulator before the end of the period of 14 days beginning with the date on which the person ceases to be a director.
(11) If the company fails to comply with subsection (10) it commits an offence.
(12) A person guilty of an offence under subsection (11) is liable on summary conviction to a fine not exceeding level 5 on the standard scale.
(13) The company may appeal to the Appeal Officer against an order under this section.
Companies (Audit, Investigations and Community Enterprise) Act 2004