The Community Interest Company Regulations 2005
| Jurisdiction | UK Non-devolved |
| Citation | SI 2005/1788 |
| Year | 2005 |
2005 No. 1788
COMPANIES
The Community Interest Company Regulations 2005
Made 30th June 2005
Coming into force 1st July 2005
Whereas a draft of these Regulations has been laid before and approved by a resolution of each House of Parliament;
Now therefore, in exercise of the powers conferred upon her by sections 30(1) to (4), 30(7), 31, 32(3), (4) and (6), 34(3), 35(4) to (6), 36(2), 37(7), 47(12) and (13), 57(1) and (2), 58, 59(1) and 62(2) and (3) of and paragraph 4 of Schedule 4 to the Companies (Audit, Investigations and Community Enterprise) Act 20041, the Secretary of State hereby makes the following Regulations:
PART 1
Citation, commencement and interpretation
Citation and commencement
1. These Regulations may be cited as the Community Interest Company Regulations 2005 and shall come into force on 1 July 2005.
Interpretation
2. In these Regulations—
“the 1985 Act” means the Companies Act 19852;
“the 2004 Act” means the Companies (Audit, Investigations and Community Enterprise) Act 2004;
“aggregate dividend cap” means a cap set under regulation 22 for the purposes of determining maximum aggregate dividends;
“appellant” means, in respect of an appeal to the Appeal Officer, the person bringing the appeal;
“applicable share dividend cap” has the meaning given in regulation 18(2) and (3);
“applicable interest cap” has the meaning given in regulation 21(3);
“asset-locked body” means—
(a) a community interest company, charity or Scottish charity; or
(b) a body established outside Great Britain that is equivalent to any of those persons;
“community interest statement” means a statement in a form approved by the Regulator which—
(a) contains a declaration that the company will carry on its activities for the benefit of the community or a section of the community; and
(b) indicates how it is proposed that the company’s activities will benefit the community (or a section of the community);
“distributable profits” means, in relation to a company, its accumulated, realised profits, so far as not previously utilised by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of capital duly made, and is to be interpreted in accordance with the provisions of section 263(3) of the 1985 Act relating to the meaning of a company’s profits available for distribution;
“election” means any election to public office held in Great Britain or elsewhere;
“employee” means a person who has entered into or works under (or, where the employment has ceased, worked under)—
(a) a contract of service or apprenticeship; or
(b) a contract for services under which it is agreed that a specified individual is to perform services,
whether express or implied, and (if it is express) whether oral or in writing;
“employer” means the person by whom an employee is (or, where the employment has ceased, was) employed;
“exempt dividend” has the meaning given in regulation 17(3);
“governmental authority” includes—
(a) any national, regional or local government in Great Britain or elsewhere, including any organ or agency of any such government;
(b) the European Community, or any of its institutions or agencies; and
(c) any organisation which is able to make rules or adopt decisions which are legally binding on any governmental authority falling within sub-paragraph (a) or (b);
“interest cap” means a cap set under regulation 22 for the purpose of determining the maximum rate of interest payable under regulation 21;
“manager” means a person appointed by order under section 47(1) of the 2004 Act;
“maximum aggregate dividend” has the meaning given to it in regulation 19;
“maximum dividend per share” has the meaning given to it in regulation 18(1);
“paid up value” means, in respect of any share in a company, the sum of—
(a) so much of the share’s nominal value as has been paid up; and
(b) any premium on that share paid to the company;
“performance-related rate” means any rate which is linked to the company’s profits or turnover or to any item in the balance sheet of the company;
“political party” includes any person standing, or proposing to stand, as a candidate at any election, and any person holding public office following his election to that office;
“political campaigning organisation” means any person carrying on, or proposing to carry on activities—
(a) to promote, or oppose, changes in any law applicable in Great Britain or elsewhere, or any policy of a governmental or public authority (unless such activities are incidental to other activities carried on by that person); or
(b) which could reasonably be regarded as intended to affect public support for a political party, or to influence voters in relation to any election or referendum (unless such activities are incidental to other activities carried on by that person);
“public authority” includes—
(a) a court or tribunal; and
(b) any person certain of whose functions are functions of a public nature;
“referendum” includes any national or regional referendum or other poll held in pursuance of any provision made by or under the law of any state on one or more questions or propositions specified in or in accordance with any such provision;
“relevant company” means a community interest company which is a company limited by shares or a company limited by guarantee with a share capital;
“share dividend cap” means a cap set under regulation 22 for the purpose of determining maximum dividends per share;
“subsidiary” has the meaning given to it in section 736 of the 1985 Act3; and
“unused dividend capacity” has the meaning given to it in regulation 20(2).
PART 2
The community interest test and excluded companies
Political activities not to be treated as being carried on for the benefit of the community
3.—(1) For the purposes of the community interest test the following activities are to be treated as not being activities which a reasonable person might consider are activities carried on for the benefit of the community:
(a)
(a) the promotion of, or the opposition to, changes in—
(i) any law applicable in Great Britain or elsewhere; or
(ii) the policy adopted by any governmental or public authority in relation to any matter;
(b)
(b) the promotion of, or the opposition (including the promotion of changes) to, the policy which any governmental or public authority proposes to adopt in relation to any matter; and
(c)
(c) activities which can reasonably be regarded as intended or likely to—
(i) provide or affect support (whether financial or otherwise) for a political party or political campaigning organisation; or
(ii) influence voters in relation to any election or referendum.
(2) But activities of the descriptions prescribed in paragraph (1) are to be treated as being activities which a reasonable person might consider are activities carried on for the benefit of the community if—
(a)
(a) they can reasonably be regarded as incidental to other activities, which a reasonable person might consider are being carried on for the benefit the community; and
(b)
(b) those other activities cannot reasonably be regarded as incidental to activities of any of the descriptions prescribed in paragraph (1).
Other activities not to be treated as being carried on for the benefit of the community
4. For the purposes of the community interest test, an activity is to be treated as not being an activity which a reasonable person might consider is an activity carried on for the benefit of the community if, or to the extent that, a reasonable person might consider that that activity benefits only the members of a particular body or the employees of a particular employer.
Section of the community
5. For the purposes of the community interest test, any group of individuals may constitute a section of the community if—
(a) they share a readily identifiable characteristic; and
(b) other members of the community of which that group forms part do not share that characteristic.
Excluded companies
6. For the purposes of section 35(6) of the 2004 Act, the following are excluded companies:
(a) a company which is (or when formed would be) a political party;
(b) a company which is (or when formed would be) a political campaigning organisation; or
(c) a company which is (or when formed would be) a subsidiary of a political party or of a political campaigning organisation.
PART 3
Requirements concerning the memorandum and articles
Company without share capital
7. A community interest company which is a company limited by guarantee without a share capital must include in its memorandum or articles the provisions prescribed by Schedule 1.
Company with share capital
8. A community interest company which is a company limited by shares or a company limited by guarantee with a share capital must include in its memorandum or articles either—
(a) the provisions prescribed by Schedule 2; or
(b) the provisions prescribed by Schedule 3.
Alternative provisions
9.—(1) For paragraph 1(4)(a) of the provisions prescribed by Schedule 1, 2 or 3 a community interest company may substitute—
““charitable body” means a charity, Scottish charity or a body established outside Great Britain that is equivalent to any of those persons;”
(2) If a community interest company makes the substitution permitted by paragraph (1), it must also for every reference to “asset-locked body” in paragraph 1(2) of the provisions prescribed by Schedule 1, 2 or 3...
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