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Legal structures: which one?
Erica CrumpJoanna Stokes
Charitable Company Limited by Guarantee
Key points:
• Established as a company limited by guarantee at Companies House (no shares, just members)
• Needs to have exclusively charitable purposes and be for the public benefit
• Then apply to the Charity Commission to become a registered charity
• Regulated by Companies House and the Charity Commission
Charitable Company Limited by Guarantee
May be the right choice for you if:
• What you want to do falls within a charitable purpose and benefits the public
• You need charitable status to obtain funding
• It is important for you to be able to claim tax reliefs
• You want to raise money through donations from the public, and need a registered charity number
May not be the right choice for you if:
• You want to be employed by the organisation and be a director
• You want to carry out extensive commercial activities or activities which are not charitable
• You want to make all of the decisions in relation to the organisation yourself
Community Interest Company (CIC)
Key points:
• Can be established as a company limited by guarantee or a company limited by shares at Companies House
• Needs to have a purpose which benefits the community (widely interpreted) and certain restrictions on asset distribution
• The CIC Regulator needs to approve the establishment
• Regulated by Companies House and the CIC Regulator
Community Interest Company (CIC)
May be the right choice for you if:
• You want to carry out more commercial activities than a charity can, but still for community benefit
• You want to benefit from the social enterprise ‘brand’
• You want to raise equity finance and pay dividends (but only up to certain limits)
• You want employees to be directors
May not be the right choice for you if:
• Organisations you are likely to seek funding from will only fund charitable organisations
• You need to benefit from charitable tax reliefs
• You want more flexibility in terms of activities
Non-charitable Company Limited by Guarantee (CLG)
Key points:
• Established at Companies House as a company limited by guarantee (no shares, just members)
• No specific requirements as to what purposes or activities the company has
• Only regulator is Companies House
Non-charitable Company Limited by Guarantee (CLG)
May be the right choice for you if:
• You do not want to be subject to restrictions on your activities
• You want to have employees who are directors, or be the sole director
• You want to minimise regulation and the burden of filing with different regulators
• You want to set up your organisation very quickly
May not be the right choice for you if:
• You need to have charitable status to obtain funding
• You want to raise equity finance and pay dividends
• You want to have the brand of a charity or CIC
Contact details
Erica Crump
Senior Associate
Charity & Social Enterprise Department
Bates Wells & Braithwaite London LLP
2-6 Cannon Street
London EC4M 6YH
Tel: 020 7551 7796
Joanna Stokes
Solicitor
Charity & Social Enterprise Department
Bates Wells & Braithwaite London LLP
2-6 Cannon Street
London EC4M 6YH
Tel: 020 7551 7793