CIC Association

Serving Community Enterprise

CIC statement for CIC 37 form - converting from Ltd to CIC

I am in the process of chaning from Ltd to CIC, i have some questions i need to know as my accountant is away and I can't find the answer.

1) Is there any samples of the statement I need to put in for the CIC 37 form to get an idea of what needs to go in.l

2) what will happen to all the profit I have made while being a Ltd company, do i take that out now and share amongst the direcotors or will i need to transfer it to the CIC, which will then get locked into asset lock?

any info on the above is much appreciated.

Thank you.

Views: 1321

Reply to This

Replies to This Discussion

Hi
Ive attached an example of the CIC37 conversion below, hope it helps. Re your existing profit etc, its up to you as directors/shareholders to decide whether to put any asset into the asset lock. It very much depends what your own individual company circumstances are, you also have the option of loaning the asset to the CIC by way of a seperate loan agreement, which would need approval from the regulator. This might be relevant if you have an asset such as a building with a mortgage secured against it, but again it depends upon individual circumstance.

Feel free to get technical, these questions are helping us build a central knowledge bank.

Good luck!

John
Attachments:
John, you say that the loaning of an asset to a CIC needs approval from the regulator - you sure about this? This would seem to hamper commerciality quite considerably if any loan/commercial contract I enter into has to be "approved" ?
I always assumed the Regulator had the power to enquire into a contract restrospectively if it chose to, but did not have to give up front approval for such things?
well corrected Alastair, i didnt mean to say it had to approved beforehand, i was suggesting he send it to her for comments and any obvious problems before he proceeded......following the old stitch in time saves nine logic :-)

its also good for us to get her opinion on such matters so we can share the learning.
John,

Many thanks for the form, provided me with an understanding on information needs to go onto the form.

I have completed our form and is on the way to the agent, our accountant is kinda useless and has been dragging conversion since December 09, & now is away sick! so i can't even ask him for assistance or anyone else in his organisation.

I wanted to ask you another question, i hope you don't mind and able to provide some insight. We are a limited company who has traded for 3 years, delivering a sub contract for another company, we make profit on this, since we are converting to CIC, are we allowed to register another company and take the profit making contract over to the new company?

the reason for conversion was to be able to apply for funding to work with unemployed people and develop health and leisure facilities for the local community.
John is right - anything left in the Co will fall into the asset lock so you need to decide now how much to leave in and how much to take out. This is not just taking out the cash - this means deciding on how much dividend or bonus to pay (depending on individual circumstances).
After CIC status, the removal of this Profit will be subject to the asset lock/market value considerations.
You have already made the necessary changes to your Mem&Arts right?

Re: moving contracts.
You can registered another company and sell the contract to it, but for corporation tax purposes this will be a connected party transfer and so will be deememd to be done at market value (whether you do this before or after the company converts to a CIC).
Commercially (and as far as the accounts go) BEFORE CIC status you could transfer this contract at whatever value you like; AFTER CIC status you will have to transfer it at market value.
Determining what market value of the contract is, is a whole other ball game.

Before you go down any of these routes, you need to speak to the company who sub-contracted the work to you to check they don't mind it being delivered by a different legal entity. I also wonder why you want to move it? And if you want it separate, it probably would have been easier to set up the new company as the CIC and leave the existing one alone?

Lastly - you need a new accountant (just in case you didn't already realise this) Most accountants won't have done a CIC conversion, but there are a few who have :)
Thanks for all the information, its all becoming a little more clear now, i have approached 2 accountants in London, neither were able to provide the information I am getting on the CIC association forum, its much appreciated.

I am moving into CIC for a few different reasons:
1) We work with individuals from the community & assist them back into employment, education and training

2) The centre we taking a lease out on is a community centre, we are interested in applying for funds to develop the community centre and need to have social enterprise status

3) The profit making contract is what will fund the venture in the first instance, I will be able to move the contract to a new ltd company, this will still support the CIC with finance too.

The reason for moving the existing ltd company is that funders usually ask for 3 years accounts or require an organisation to trading for at least 1 year.

I just want to be sure that I am able to be a Director of a CIC and at the same time be a Director of LTD.

Also, I have a meeting set up with my accountant tomorrow (he is finally back!) to send of the CIC 37 form & other paperwork to to convert the exisiting company to CIC.

I will then register a new company & move the profit making contract to this, I will finalise the account for the old Ltd and take the money as dividend and pay the the tax.

I am on the right order track to complete this? any reputable accountants in London you can recommenced?
Yes, you can be Director of as many companies as you like.

If I were you I would move the contract before sending off the forms to become a CIC. Then the Regulator is unable to pry into the sale of the contract from one company to the other, as it happened before the company became a CIC.

If taking profit as dividend, make sure you do your sums right and don't take out so much money from the company that you cannot afford the corporation tax liabilities (if there are any).

Obviously, I recommend me at Baker Tilly (alastair.irvine@bakertilly.co.uk) :-)
Hi, hope you well, you may remember me from a while back, just wanted to brief you in, we converted to CIC and moved into our new community centre.

I wanted to ask you if I was allowed to form another CIC company, which will work from the centre, working with the youth and developing the centre it self?

is one allowed to be a director of more then 1 cic?

appreciate your feedback.

thanks
As long as there is nothing within the Mem&Arts of any of the CICs in question, or the employment contracts [if there are any]; one can be Director of as many CICs as you like.
One could even own all of them too (if they were 'by shares').

But, beware the income streams. You sound like you're proposing 1 CIC owns the centre (or the lease of it) and this might sub-lease part of the centre to a different CIC which will 'work with the youth' and develop the centre? Why do you want to bother?
This is possible but complicated!
Congragulations!
as Alistair has confirmed you can be a director of multiple CICs, one point to consider is ensuring you dont create a conflict of interest, a little pedantic but you wouldnt want any perception to cause problems in future funding plans.

Good luck!
Hi again, thanks for the feedback, makes sense, its that I have taken over a community centre, my existing training company i have transferred to cic and moved in upstairs, still delivering a contract which makes money which will be reinvested back into the community.

The downstairs I want to develop a community based programme, ie a community gardent project, maybe a community cafe, a youth project and also health and fitness programme/sessions. I need funding, i can't apply for funding in the other company name as its separate and also since it exceeds the income limit to apply for small bids. hence the 2 cic companies. its totally separate.

my converted cic company is limited by shares (2 directors), the new one will be limited by guarantee, i want to know if members can be employed and paid? is this allowed, i know charities can't do this so i am confused. let me know your thoughts.

I appreciate all the info you have provided me, its all new to me and you guys have been very helpful!
I believe that Charities cannot employ members due to the Charity rules that basically say that Trustees cannot be paid (other than basic expenses).
I do not believe this applies to CICs.

RSS

Groups

From Funding Central

Events

© 2019   Created by John Mulkerrin.   Powered by

Badges  |  Report an Issue  |  Terms of Service