Page 96 - Social Enterprise A New Business Paradigm for Thailand

3.2.1 Community Interest Company (CIC)

Among the various organizational forms mentioned, the Community Interest Company (CIC) is
the legal structure most directly designed to accommodate social enterprises. It was introduced
under Part 2 of the Companies (Audit, Investigations and Community Enterprise) Act 2004, which
established a new type of company specifically aimed at serving community interests.

Acting under the authority of this law, the Secretary of State for the Home Department issued a
supplementary regulation in 2005 titled The Community Interest Company Regulations, which
outlines special rules governing CICs. The core provisions include the following:

(1.1) A company seeking CIC registration must pass what is known as the “community interest

test” and must not fall under the category of “excluded companies,” which are prohibited from
registering as CICs. Excluded companies include, for example, political parties or organizations
engaged in political campaigning. The community interest test is assessed according to the
standard of a reasonable person, who must determine whether the company’s activities are of
benefit to the community. Activities that benefit a specific group within society may still be
considered socially beneficial under this standard.

However, the law explicitly excludes certain activities from being recognized as “in the community
interest.” These include campaigning for or against legislation, supporting political parties,

encouraging voting behavior in favor of one side in an election or referendum, serving only the
interests of the members of a specific organization, and operating for the exclusive benefit of
employees of a single employer. These exclusions are intended to ensure that CICs maintain a
genuine and inclusive community focus rather than serving narrow or political agendas.

(1.2) The assets of a CIC must be preserved and used exclusively to advance the social objectives
for which the CIC was established. This requirement is commonly known as the “Asset Lock,” and
it is a defining feature of CICs. Transferring assets out of a CIC is only permitted under specific
conditions, as follows:

• The transfer is made at full market value, thereby ensuring that the CIC retains the equivalent
value of the asset being transferred.
• The asset is transferred to another asset-locked body, which may be another CIC or a
registered charity, as specified in the company’s governing documents.
• The asset is transferred to another asset-locked body with the approval of the CIC Regulator,
the authority responsible for overseeing CICs.
• The asset is transferred in a manner that provides benefit to the community.

(1.3) A CIC must be incorporated either as a Company Limited by Guarantee (CLG) or a Company

Limited by Shares (CLS). Once registered, the company cannot switch between these two
structures. Therefore, founders must carefully consider which structure best suits their enterprise

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