Can a CIC and Ltd company work together with the same director?

I run a limited company that could fit into the social enterprise bracket. I'm thinking about setting up a separate CIC for the community services side of the business. The CIC may require services that my Ltd can provide, so I want to know if the CIC Regulator would have a problem with using the same director for both.

The CIC Regulator writes:

The Regulator of Community Interest Companies would be satisfied with a relationship between a community interest company (CIC) and an ordinary limited company as long as consideration is made to the following points:

  • Where the directors of the CIC and the private limited company are the same individuals, consideration needs to be given to the avoidance of conflict of interest when carrying out their fiduciary duties. In the interests of best practice, the Regulator would welcome at least one director on the board of the CIC that is not a director of the limited company but this is a matter for the company to consider, it is not a requirement.
  • The directors must make sure that the fiscal structures of the limited company and the CIC are kept separate to avoid any breach of the asset lock.
  • The separate identities of the private limited company and the CIC should be clear in all public material and, in dealings with suppliers.  There should be no confusion with the general public with which company they are dealing with.  In stating this, the Regulator would welcome there being no confusion between the names of the companies.
  • The Regulator would also expect any contracts between the limited company and the CIC to be fair, reasonable and competitive ensuring that the assets of the community (which includes profits and surpluses) are used to benefit the community for which it was set up and not for the personal gain of directors.

The key thing is to ensure the CIC’s dealings with the limited company are open, transparent and accountable and the bank accounts and books are completely independent of each other. 

More information on the Office of the Regulator of Community Interest Companies can be found here

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