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Legal structures: which one?. Erica Crump Joanna 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
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Legal structures: which one? Erica Crump Joanna 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 e.crump@bwbllp.com Tel: 020 7551 7796 Joanna Stokes Solicitor Charity & Social Enterprise Department Bates Wells & Braithwaite London LLP 2-6 Cannon Street London EC4M 6YH j.stokes@bwbllp.com Tel: 020 7551 7793