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CICs seek to attract investment

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by David Masters
CICs seek to attract investment

New measures to make it easier for Community Interest Companies (CICs) to attract investment are to be introduced later this year.

From April, CICs, a form of social enterprise, will be able to pay dividends to investors of up to 20%.

The cap on interest for loans to CICs will also be increased to 10% of the loan’s value.

The total proportion of profits a CIC can redistribute will be held at 35%.

Previously, the dividend cap was five percentage points above the Bank of England’s base rate, and the loan interest cap was four percentage points above the base rate.

The CIC regulator decided to increase to caps following consultations with CICs last year.

During the consultation, CICs said investors were being put off because the caps on dividends and interest rates were too low and too complicated.

John Mulkerrin, spokesperson for the CIC Association, said: “There’s not a lot of money going into CICs in share capital at the moment.

“The new, higher dividend could open up new opportunities to attract investors – something the negativity of the cap prevented before.”

He added that the increased rates are designed to appeal to investors without being “aggressively commercial”.

“The utility of CICs has been improved for social enterprises and community-led organisations and we expect the move to have a positive impact on the social programme,” Mulkerrin concluded.

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News posted: January 11, 2010

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