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What a community interest company has to do
My Words is owned by C2 Discovery Labs CIC. A community interest company is a specific legal form with duties attached, and this page sets out what those duties are, so that the claim carries something a reader can check.
The legal basis
Community interest companies were created by the Companies (Audit, Investigations and Community Enterprise) Act 2004 and are governed by that Act together with the Community Interest Company Regulations 2005 and ordinary company law. A CIC is registered at Companies House like any other company, and is additionally overseen by the Office of the Regulator of Community Interest Companies.
A CIC is not a charity. It receives none of the tax reliefs a charity gets, and it cannot be registered as both at once.
The community interest test
A company can only be a CIC if it satisfies the Regulator that a reasonable person might consider its activities are carried on for the benefit of the community. That is tested on formation and it applies continuously afterwards. A company that stops meeting it is not simply left alone: the Regulator can act, and the powers available are set out below.
The asset lock
This is the part that matters most to anyone deciding whether to depend on a product.
- Assets cannot leave for private benefit. The company's assets, which here includes this product, may only be transferred at full market value, or to another asset-locked body named in the articles, or otherwise for the benefit of the community.
- It survives the company. If the company is wound up, residual assets pass to another asset-locked body rather than to members.
- It is in the articles and it is permanent. The asset lock cannot be removed by a later decision of the directors or the members.
The practical consequence for a service adopting My Words is that the product cannot simply be sold to whoever offers the most for it, which is the ordinary risk in depending on a small software company.
The annual report
A CIC files a community interest company report each year alongside its accounts, and that report is a public document. It has to describe what the company did that benefited the community, who it consulted and what difference that consultation made, and what the directors were paid. Where a CIC is limited by shares and has paid a dividend or interest, that has to be reported too, and any such payment is subject to the caps in the Regulations.
The obligation is worth understanding for what it is. It is not an award or an accreditation that can be displayed. It is a filing that has to be made every year and that anybody can read.
What the Regulator can do
The Regulator is not only a registrar. Where a CIC fails to meet its obligations, the powers available include investigating the company, requiring information, appointing or removing a director, appointing a manager, transferring or freezing assets, and applying to have the company wound up.
This is the answer to a fair question about any company describing itself as socially motivated: what happens if it stops behaving that way. For a CIC there is somebody whose job that is.
What this page does not tell you
It describes the form, not this company's filings. The company number, the registered office and the asset-locked body named in the articles are not yet published on this site, and they should be. Until they are, the way to check any of the above for yourself is the public register rather than this page.
How C2 Labs applies the form, including where any surplus goes and how staff are paid, is on social responsibility. What a buying authority can count under the Public Services (Social Value) Act is on social value.
This page is a plain description of a legal form and is not legal advice. If something here is wrong or out of date, tell us and it will be corrected.