Finance: New model will turn community interest companies into co-ops

A new business model to convert community interest companies into co-operatives has been developed.

The new 'co-operative CIC' is the brainchild of the umbrella body Co-operatives UK.

The community interest company, a new form of company launched by the Government last year, is for businesses that provide a public benefit.

All CICs must pass a community interest test and submit to an 'asset lock', which obliges them to retain any profits for use towards their original community purpose. So far, a total of 180 have been registered.

But Co-operatives UK says there hasn't been an easy way to set up a CIC as a co-operative since the form became available a year ago.

The new model enables CICs to convert to co-operative status and be democratically controlled by their workforces in the same way as traditional co-operatives, such as the Eighth Day vegetarian health food shop in Manchester. At the same time, they can still demonstrate their benefit to the wider community.

Helen Barber, legal services manager at Co-operatives UK, said: "Because co-operatives already have a social and community dimension, we believe it is important that those interested in setting up a CIC have the option of choosing a co-operative structure."

The model was developed in conjunction with John Hanlon, the CIC regulator.

The model memorandum and articles of the co-operative CIC state that the surplus of the co-operative shall be applied in furtherance of an organisation's community benefit. It must also abide by "co-operative identity and values of equality, solidarity and caring for others".

The model for companies limited by guarantee is available now. One for share companies will be launched later this year.

"I warmly support this initiative," said Hanlon. "We've had interest from people wishing to establish CICs as co-operatives, and now there is a proven model.

"We will welcome applications from co-operatives whose main objective is to be of benefit to the wider community."

Among the bodies that have registered as CICs are the Isle of Skye Ferry, Women of Purpose and Citizens Advice Africa. Registered charities cannot be CICs.

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