Page 97 - Social Enterprise A New Business Paradigm for Thailand

from the outset. If the company intends to distribute dividends, the CLS model should be chosen.
If no dividend distribution is desired, often the case with charitable organizations, the CLG form

is more appropriate. Additionally, funders and donors are generally more inclined to support CLGs
than other company types.

(1.4) To register as a CIC, an application must be submitted to the UK government’s Companies
House, just like any other company formation. However, the application must include an
additional document called the “community interest statement.” This statement must declare
that the company will carry out activities that benefit the community or a specific group within
it, and it must explain how the company’s activities will provide such benefit.

(1.5) Once submitted, the Companies House forwards the community interest statement to the
CIC Regulator, who assesses whether the company’s objectives satisfy the requirements of the

community interest test. If the Regulator approves, the Companies House will proceed to officially
register the company as a CIC.

(1.6) Once a company is registered as a CIC, it cannot convert into a standard commercial company.
If it no longer wishes to operate as a CIC, the only available options are to dissolve the company
or to convert it into a registered charity.

(1.7) A CIC is legally permitted to pay dividends to shareholders, similar to an ordinary company.
As of now, the law allows CICs to pay a dividend per share not exceeding 5% above the Bank of
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England’s base lending rate. Furthermore, the maximum aggregate dividend cap , i.e., the total
dividends or profit shares a company may distribute to shareholders or members in a given year,
must not exceed 35% of its distributable profits.

However, the CIC Regulator, with the approval of the Secretary of State for the Home Department,
may revise this cap at its discretion. The purpose of the dividend cap is to ensure that at least 65%
of profits are reinvested into the business or used for social benefit, consistent with the CIC’s
founding mission. This regulation also seeks to strike a balance between encouraging investment
in CICs and upholding the principle that the company’s assets and profits should be used primarily
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for community benefit.

(1.8) If a CIC provides remuneration to its directors, such payments must be reasonable and
appropriate, and all compensation arrangements must be transparent. Should director

36 The Community Interest Company Regulations 2005, Regulation 22.
37 GOV. UK, Community Interest Companies Guidance, updated 9 February 2024, Source: https://www.gov.uk/
government/publications/community-interest-companies-how-to-form-a-cic/community-interest-companies-
guidance-chapters
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