If you’re already running a limited company but your work is clearly benefiting the community, you may be thinking about formalising that purpose. This is where cic formation through conversion comes in.
Converting your existing business into a Community Interest Company (CIC company) can strengthen credibility, open doors to funding, and embed your mission into the structure of your organisation. But this is not a simple name change. It is a regulated legal process reviewed by the CIC Regulator, and getting it wrong can lead to delays or rejection.
This guide explains, in plain English, how to convert an existing company into a CIC in the UK, what you need to submit, and what to check before you start.
Quick Answer: Converting a Company to a CIC
- A Community Interest Company (CIC) is a business designed to benefit the community rather than private individuals
- It is suitable for organisations with a clear social purpose
- To convert, you must submit:
- Special resolutions
- New Articles of Association (with a CIC asset lock)
- Form CIC37 (conversion application)
- Applications are filed via Companies House and reviewed by the CIC Regulator
- You can apply online or by post
Contents
- What conversion actually means
- Is your company suitable?
- Before you start checklist
- Step-by-step conversion process
- Common mistakes
- CIC vs charity
- Frequently asked questions
What Does It Mean to Convert an Existing Company to a CIC?
When you convert a company into a CIC, you are not starting again. The same company continues, but its legal purpose and restrictions change.
The key change is the introduction of the CIC asset lock, which ensures that profits and assets are used for community benefit rather than private gain.
This is a long-term commitment. Once your company becomes a CIC, reversing that decision is not straightforward.
Is Your Company Suitable for CIC Conversion?
Conversion works best where:
- Your activities already benefit a defined community
- You are willing to reinvest profits into that purpose
- Shareholders support the asset lock
- You want to access grants or public sector opportunities
It may not be suitable if:
- Your business is primarily commercial
- The social impact is unclear or secondary
- Shareholders expect unrestricted dividends
The CIC Regulator focuses on what your company actually does, not just how it is described.
Before You Start — Essential Checklist
Before you begin CIC registration UK conversion, check:
- Do all shareholders agree to the conversion?
- Are directors aligned on the long-term mission?
- What happens to existing profits and assets?
- Will contracts or funders be affected?
- Is a CIC more suitable than a charity?
Important (often missed):
The asset lock applies to existing assets, not just future income.
Step-by-Step: Convert an Existing Company to a CIC
Step 1: Board and Shareholder Approval
Directors must agree to proceed, and shareholders must approve the conversion — particularly the introduction of the asset lock and restrictions on profit distribution.
Step 2: Pass Special Resolutions
At a general meeting, you must pass special resolutions to:
- Change the company name to include “CIC” or “Community Interest Company”
- Adopt new Articles of Association
- Confirm the intention to convert
Step 3: Update the Articles of Association
Your Articles must include:
- A clear community benefit purpose
- The statutory CIC asset lock
- Governance and member provisions
- Share transfer rules (if limited by shares)
Many companies use model Articles as a starting point.
Step 4: Complete Form CIC37
Form CIC37 is the key document for conversion. It includes your Community Interest Statement, which explains:
- Who benefits
- What your company does
- How it delivers community impact
This is one of the most common areas where applications fail.
Step 5: Submit to Companies House and the CIC Regulator
You must submit:
- Form CIC37
- New Articles
- Special resolutions
These are reviewed by the CIC Regulator. There are no guaranteed timelines, and queries are common.
Step 6: Respond to Any Queries
If the Regulator asks for clarification:
- Ensure responses are consistent with your documents
- Avoid vague or conflicting explanations
What Goes Wrong (Common Mistakes)
Common issues include:
- Generic or unclear social purpose wording
- Mismatch between CIC37 and Articles
- Not understanding shareholder implications
- Assuming approval is automatic
Most delays come from poorly drafted Community Interest Statements.
CIC Conversion vs Charity
A CIC is often compared to a charity, but they are different:
- CICs can trade freely and pay corporation tax
- Charities have tax relief but stricter regulation
Choosing between them depends on your long-term goals, funding plans, and governance preferences.
Frequently Asked Questions about CICs
Can a CIC make a profit?
Yes. A CIC can generate profits, but these must be used primarily for community benefit.
How much tax does a CIC pay?
A CIC pays corporation tax like a normal company. There are no automatic tax exemptions.
Is it better to be a CIC or a charity?
It depends. CICs offer flexibility for trading, while charities provide tax advantages but tighter restrictions.
Can I pay myself from a CIC?
Yes. Directors can receive salaries. Dividend payments (if applicable) are restricted.
How many directors are needed for a CIC?
At least one director is required, although more are often recommended for governance.
Why Specialist CIC Support Matters
Converting a company into a CIC involves legal, structural, and regulatory considerations. Getting support can help by:
- Reducing stress and decision fatigue
- Ensuring your CIC36/CIC37 wording is correct
- Making your organisation funder-ready
- Avoiding rejection or rework
- Providing clear, fixed pricing
- Giving long-term peace of mind
Conclusion
Converting an existing company into a CIC is a powerful step if your business is genuinely community-focused. However, it is not suitable for every organisation and should be approached carefully.
Taking the time to understand the process — and getting the structure right — will save time, cost, and frustration later.
How we can help
Setting up a Community Interest Company (CIC) is not just about registering a company — the wording of your Community Interest Statement (CIC36), the structure you choose, and how your social purpose is presented all have long-term regulatory and funding implications.
At KG Accountants, we draft your Community Interest Statement to meet CIC Regulator requirements while reflecting the language and priorities commonly expected by grant funders and local authorities. This gives your organisation a funder-ready foundation from the outset and reduces the risk of delays, clarification requests, or repeated rewrites when applying for grants or public funding.
Our fixed and transparent CIC fees remove uncertainty, allowing you to move forward with confidence and focus on running your organisation, not worrying about compliance or hidden costs.
Arrange a FREE CIC initial consultation
Call us on 0207 078 7477 or complete our enquiry form to book a FREE CIC consultation and discuss your plans with a specialist.