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Companies (Audit, Investigations and Community Enterprise) Act 2004

Companies (Audit, Investigations and Community Enterprise) Act 2004

2004 CHAPTER 27

Commentary on Sections

Part 2: Community Interest Companies

Summary and background

Requirements

Section 34 - Community interest company reports

220.This section introduces a requirement for the directors of CICs to provide an annual community interest company report to the registrar of companies, who will forward a copy of it to the Regulator (subsections (1) and (4)).  A copy of the report will be placed on the companies register.  The time limits for compliance with the requirement, and the penalties for non-compliance, will be the same as those applying to the filing of annual accounts under section 242(1) of the Companies Act 1985 (subsection (2)).  The relevant time limits and penalties are set out in sections 244 and 242A of that Act.

221.Subsection (3) provides for regulations to set out what information is to be included in the report.  Subsection (3)(a) requires the regulations to provide that the report must include information about the remuneration of directors of the CIC.  Subsection (3)(b) allows regulations to provide for the inclusion of other information.   It is intended that the content of the report will include statements of:

  • what the CIC has done during the year to benefit the community;

  • the steps, if any, that the company has taken to involve in its activities those affected by the activities (its "stakeholders"); and

  • the dividends paid on any dividend-bearing shares issued by the CIC, and equivalent information in respect of other financial instruments the return on which is capped under the provisions of section 30.

222.Regulations may apply to the report the same procedural requirements as apply to directors’ reports (subsection (3)(c)).  These requirements are set out in Part 7 of the Companies Act 1985, and include provisions as to the approval of the report, the laying of the report before any general meeting of the company, the revision of the report and the distribution of the report to members.

Change of status

Section 52  - Re-registration

258.This section brings together provisions on the re-registration of CICs.  Subsection (1) provides that once a company is registered as a CIC, it will not be able to re-register as an unlimited company.  Such companies are able to take advantage of reduced regulatory and reporting requirements under the Companies Act 1985, and this would be inconsistent with the reporting requirements placed on CICs by section 34, which are intended to complement the requirements on ordinary limited companies.  Subsection (2) ensures that any certificate of incorporation issued in respect of a private limited CIC upon re-registration as a public limited CIC or vice versa will contain a statement that the company is a CIC.

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