CIC Association

Serving Community Enterprise

Hi, it has been a while since I have posted and things have moved on hugely in our organisation. We are now adding a charity to run alongside the CIC and the profits from the CIC will be donated to the charity. It has been such a long traumatic journey that is continuing currently with Charities Commission who keep asking more and more questions. We are now in the position that we need to change our governing document to reflect that the only member will be the charity. So....my questions here are
1. can the Directors stay as Directors without any voting rights and if so is there any benefit to having them?
2. Can the Directors resign from their position and become Trustees of the charity or will there be any conflict of interest?
3. If the CIC voting rights are given to the charity does that meant that the Trustees of the charity now essentially run the CIC?
4. If number 4 is actioned, will the ex-Trustees of the CIC be able to take part in discussions and voting for the CIC and or charity

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Hmm, im not sure why the Charity has to be the only member, do you know why Charity Commission are asking for this?

It is because 2 of the Directors will also be Trustees and to avoid there being a conflict of interest.

However, this is really pointless as the CIC will give the profits to the charity anyway so it is in the charity;'s best interest to buy services from the CIC.  I don't really know why they want this but they do

Can you explain how many other trustees there are? And why it is in the interests of the Charity to buy services from the CIC?

When you say it makes sense for the Charity to buy services from the CIC it will no doubt raise concerns, as the trustees must ensure the purposes of the Charity are exclusively charitable. 

 Its a bit chunky but this is a good read on the subject: 

https://assets.publishing.service.gov.uk/government/uploads/system/...

there are 4 Directors of the CIC and 5 Trustees of the charity, 3 are independent and 2 are also Directors of the CIC.

Some of the services that the CIC provide are unique and can not be found elsewhere in the UK so apart from being the only service available, the profits from the CIC will be donated to the charity.  This is why it is in the best interests of the charity.

We have provided many policies and documents to the Charities Commission including: Articles, Memorandum of Understanding, Confirmation of Separate Organisations, Links with other Organisations, Risk Assessment, Conflict of Interest Policy, Code of Conduct, Strategic Plan.  All these show why we will buy services from the CIC and why it is in the best interest of the charity.

Will the Charity own the CIC?  What is the service that isnt available elsewhere? From the sound of it you have provided all the necessary information.

I think at this level of technical detail you should try and receive some expert legal advice, have you looked at using LawWorks? They have been excellent for us and other CICs over the years

Sorry I cant be of more help, please do update us here as we can learn from your experience to help CICs in the future

Best regards

John

We run several services for children with additional needs and their siblings and whole family (the and siblings and whole family is the pertinent part) such as Lego Club, Sensory Stay and Play and the UKs only therapeutic mobile sensory room.  These can't be found in our area anywhere else and are vital to wellbeing and addressing social isolation.

Essentially once the members are changed from 4 members, the current directors, to one member, that being the charity, it will be owned by the charity.

Our issue here is finding a solicitor who has expertise in both charity and CIC.  I have approached a few already who do charity but are not sure on the CIC part but thanks for the heads up on LawWorks, I will take a look now and yes I will come back to let you know what happens when this whole mess gets sorted out.  Where would be the best place to post it?

On this thread would be best.

A general point to note when discussing with legal advisers is that the CIC status doesnt make any difference (in the vast majority of instances anyway) whatsoever. The advice should be the same as for normal Ltd companies.

Very best of luck

John

To update.... I contacted LawWorks who said they couldn't help us as it is specialist knowledge and too difficult to place.  They gave me several other organisations to try but none of them could help for free.  I have resorted to going back to a charity solicitor who has given us free advice previously who is helping us once again.  We have been really lucky to find him and him to give us some free advice.  Hopefully these will be the last questions we need answering before we get charity status sorted.

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