CIC Association

Serving Community Enterprise

Replying to the question copied below which was posted as a comment:

Comment by Trevor Saunders 5 minutes ago
Hello, I'm so glad I have found this group. Setting up a CIC. Ltd by shares or guarantee? Is their a difference in terms of being able to apply for grants ?

As long as a CIC limited by shares has the asset lock required by the funder (i.e. that funds cannot be distributed to members), funding should be available. However, it's very rare to hear of a CLS receiving Big Lottery funding, and I would recommend a CLG unless there is a particular reason you want to have shareholders.

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Ive been told that CLG means that all 3 directors have the same voting writes ? Which would worry me if sometime down the road you could be voted out ? I was told that CLS means you can own 51% (or so) shares meaning you have final say as founder ?

Hi Trevor

Directors voting rights will be the same in a CLG/CLS. Members/shareholders voting rights may be different in a CLS, but CICs are generally used for socially democratic social enterprises, which are generally socially democratic and each member has one vote. I'm not sure how funders would look at an application if you have a set up where one individual can overrule everyone else and never be voted out, even if their performance is poor. I understand you not wanting to be voted out of a company you have founded, but giving someone the 'final say' is more like practice in a private business than a social enterprise.

Regards

James

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