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Hello CIC Community!

I am writing with a question about CIC subsidiary question, which I would be grateful for your input on!



I currently have a CIC (Rhythm of Change).  Am considering making another Limited Company of mine (Change Music Ltd.) a subsidiary of Rhythm of Change CIC.
If Change Music Ltd, becomes a (whole or partial) subsidiary of Rhythm of Change CIC, is it then subject to operating under CIC regulation (i.e. asset lock and dividend cap)... OR can it continue operating under Limited Company regulation (i.e. without an asset lock and dividend cap)?
Your input on the matter would be very much appreciated!
Look forward to hearing from you soon.

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It's the phrase: making ... a subsidiary' that troubles me. They will remain two separate legal entities, each with their own art & mems, which state the aims and objectives of that company - and that alone. Only the CIC will be restricted; asset lock, CIC 34 etc. The limited company works alone.

Now: if you want to disband Change Music Ltd and add its activities to Rhythm of Change - then it will become part of your CIC.

In theory the subsidiary non-CIC would be a non-CIC as Trevor states, however the standard Mem&Arts from the CIC Regulator incorporate wording that effectively applies some CIC regs to all assets owned by the CIC. There is/was wording something along the lines of all asset transfers between all subs of the company would be at market value or to an asset locked body.

I removed this wording from my CIC - you should check the exact wording in your CIC's Mem&Arts.

Also, not knowing how commercial you're planning on becoming, I can envisage the CIC being held to apply the general principles of asset locks to any subs. Simply put, a CIC cannot sell its land at a 90% discount on Market Value, it would be too easy if it were able to transfer it to a sub which then sells it at 90% discount.


If you're going to sell your own company to the CIC, make sure you do it for new shares in the CIC so you can get capital gains tax relief on the disposal of your company. Ask your accountant.



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