Focusing the Company: Community Interest Companies in the UK

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    Focusing the Company: Community Interest Companies in the UK - Presentation Transcript

      • Stephen Lloyd
      • Bates Wells & Braithwaite London LLP
      • Re Focusing the Company :
      • Community Interest Companies
      • in the UK
      • 18 November 2008
    1. Community interest company (CIC)
      • Tailored for social enterprise*
      • Asset lock
      • Community interest test
      • Payment of directors
      • Equity finance
      • Cannot be a charity
      • * Social enterprise – a profit making business set up to tackle a social or environmental need
      © Bates Wells & Braithwaite 2007
    2. CICs – The Raw Statistics
      • 2225 CICs since its inception in 2005
      • Number of CICs in the UK
      • Incorporations 1,617
      • Conversions 274
      • Total 1,891
      • Conversion to Charity 3
      • Conversion from Charity 3
      • Dissolutions 21
      • Figures from CIC Regulator Quarterly Report April –June 2008
      • Compare approximately 8000 industrial & provident societies
    3. Types of CICs in the UK
      • Public Companies 0
      • Incorporations limited by guarantee 1,258
      • Incorporations limited by shares 359
      • Conversions limited by guarantee 125
      • Conversions limited by shares 146
      • Charities converting to a CIC 3
      • Total 1,891
      • Figures from CIC Regulator Quarterly Report April - June 2008
    4. Analysis by Sector of CICs in the UK
      • Group A - Agriculture, Hunting and Forestry 7
      • Group B - Fishing 0
      • Group C - Mining & Quarrying 0
      • Group D - Manufacturing 49
      • Group E - Electricity, Gas and Water Supply 18
      • Group F - Construction 9
      • Group G - Wholesale, Retail; Certain Repair 66
      • Group H - Hotels and Restaurants 38
    5. Analysis by Sector of CICs in the UK (cont)
      • Group I - Transport, Storage & Communication 53
      • Group J - Financial Intermediation 19
      • Group K - Real Estate, Renting & Business 377
      • Group L - Public Administration & Defence 19
      • Group M - Education 402
      • Group N - Health and Social Work 308
      • Group O - Other Social & Personal Services 667
      • Group P - Private Households with Employees 1
      • Group Q - Extra Territorial Organisations 1
      • Total 2,034
      • Figures from CIC Regulator Quarterly Report April - June 2008
    6. CIC test
      • Might a reasonable person consider that its activities are being carried on for the benefit of the community?
      • Community includes a section of community, but not just employees
      • Cannot have political purpose
      • Cannot be a charity
      © Bates Wells & Braithwaite 2007
    7. Formation and regulation of CICs
      • Companies House
      • Incorporation/conversion
      • Community interest statement on formation
      • Annual report to CIC Regulator
      © Bates Wells & Braithwaite 2007
    8. Asset lock
      • No transfer or distribution of assets except
        • at full value
        • to specified asset locked body
        • to another asset locked body with consent of Regulator
        • for the benefit of the community
        • payment of limited dividends
        • Restrictions on performance related interest
      © Bates Wells & Braithwaite 2007
    9. Debt
      • Loans – secured or unsecured
      • No cap on normal interest
      • Cap on performance-related interest
      • 4% above base rate
      © Bates Wells & Braithwaite 2007
    10. Equity
      • Dual cap on dividend flow:
        • maximum annual dividend
        • 5% above base rate
        • Total 35% net distributable profits
      • Winding up/sale of shares to company:
        • shareholders get par value
      • Can sell to third party at market rate
      © Bates Wells & Braithwaite 2007
    11. Governance
      • Paid board
      • Not volunteers
      • Owner managed
    12. Case Study 1: The Expert Patients Programme CIC
      • Former government programme established as a CIC in October 2006
      • Programme for and delivered by people with chronic or long-term health condition e.g. arthritis, heart failure, diabetes, MS.
      • Aims to:
        • promote patient awareness and self-management of their condition
        • Reduce reliance on medical profession
    13. Case Study 1: Expert Patients Programme CIC (cont)
      • Course topics include healthy eating, dealing with pain and fatigue, coping with depression
      • Currently 12,000 course places per year with aims to increase this to over 100,000 by 2012
      • Courses aimed at people with different long-term conditions, of varying ages and ethnicity across England.
    14. Case Study 1: Expert Patients Programme CIC (cont)
      • Funded by initial government grant
      • Would not have gone to a for profit business
      • Volunteer board not appropriate
      • Aims to be financially self standing
    15. Putting the “Social” in Social Enterprise
      • Relationships with staff
      • Relationships with stakeholders
      • Establishing the triple bottom line
    16. Tax Issues
      • Need for reform
      • UK tax breaks for giving/investment in high risk high growth commercial businesses
      • Nothing yet for slow return, capped return or low capital growth
    17. Uses of CICs
      • Taking over state assets
      • Joint ventures, charity and commercial partner
      • New community focused businesses
    18. CIC Reform
      • Drop the 5% + Base Rate cap on dividends
      • Suggest 25% max income return on investment
      • Stephen Lloyd
      • Senior Partner
      • Charity and Social Enterprise Department
      • Bates Wells & Braithwaite London LLP
      • 2-6 Cannon Street
      • London
      • EC4M 6YH
      • Tel: 020 7551 7711
      • Email: [email_address]

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