Converting to a Community Interest Company (CIC)
Increasingly, organisations which have been set up to benefit the community - but which are not already Community Interest Companies - are looking to convert in order to benefit from CIC status.
Converting to a CIC is sometimes a complicated process, and one which differs depending on the type of organisation which is looking to convert.
In order to convert an existing company, which is not a charity, to a CIC there are a variety of steps which need to be taken and documents which need to be delivered. The company, first, needs to pass a number of special resolutions in order to adopt new articles, change its name and to declare its intent to become a CIC. Of course, the new articles themselves must be drafted, including a suitable objects clause and containing the specific provisions required by the CIC Regulator. A community interest statement must also be completed and sent with the rest of the documents.
To convert to a CIC, a charity must already be incorporated (i.e. a 'charitable company'). Unincorporated associations, including charitable trusts, cannot convert to CIC status - though there is provision for an existing CIC to become, in effect, a charity trustee.
If the charity in question is a charitable company, then (with the exception of Northern Irish charities) it should be able to convert to become a CIC. (Note though that an organisation cannot be a CIC and a charity simultaneously - it must be one or the other. There is nothing, though, to stop a CIC being a subsidiary of a charitable company.) The conversion process is similar to that described above, except that prior written consent is required from the Charity Commission.
This is a two-stage process wherein the existing IPS is first converted into an 'ordinary' company, and that, in turn, is converted to a CIC. This is a complicated procedure, and requires discussion with the Charity Commission, as well as consent from the FSA in their role as the regulator of IPSs. When the IPS has been converted to a 'normal' company, the procedure is much the same as described above, and the application to convert will still be subject to the fulfilment of Companies House and CIC regulatory requirements.