CIC Association

Serving Community Enterprise

Can someone please give some help/guidance surrounding the assest locked body section in the articles of association.
We are looking to set up a CIC involving live stock that we already own. Is there a way to protect them if the worst should happen, as in, do they become asessts of the business/project if we already owned them prior, and if the business/project was unsuccessful and should dissolve for any purpose are they vulnerable? The assest locked body section has us worried, although I'm not sure if we are over thinking it. Can anyone please advise.
Many thanks :)

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Replies to This Discussion

The CIC is a legal person, separate from the individuals who own or run the company. The asset lock only applies to assets that are owned directly by the CIC. If you transfer ownership of the livestock to the CIC, then they could be sold off the settle outstanding debts if the company were to go bust, or they would have to be disposed of in accordance with the dissolution clause if the company were to wind up voluntarily. The transfer of ownership (from yourselves to the CIC) can’t happen automatically: you would have to actively give or sell the livestock to the company.

If you retain ownership of the livestock then they are not caught by the asset lock, because they don’t belong to the CIC. Would it be possible to have an agreement between yourselves as individuals and the CIC as a corporate body whereby the company can make use of livestock while it remains your property? E.g. the company pays you a royalty or ‘rent’ or something. (I guess this depends on the role of the livestock in the CIC’s business.) Otherwise you could sell the livestock to the CIC so, even if the livestock were to be lost somehow, you would at least have had the equivalent value in money.

 ....which you could use to buy them back.

Keep them outside the asset lock to avoid what is obviously a concern to you.

Alternatively make an agreement with the CIC to use/rent them for a fee that covers their medical bills and feed etc.

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