A company I work for is a CIC but they no longer meet the requirements and are going to become a Ltd Co. I know that you can't convert the CIC. It will have to be closed down and anything left will be given to the nominated charity. The company are fine with that, however as they are going to doing a very similar business using the same premises apparently the Ltd co will have to buy all of the office furniture, computers etc. My question is, would anybody know, wlll they have to get everything officially valued or can the Ltd co just hand over a nominal amount?
I am so sorry, I forgot to check back!! I'm afraid that I don't know, I didn't know that there was more than one method, then again I don't actually know very much about this. Their accountant is helping them with it, they are just trying to find legitimate ways of using their money up before it winds up. They don't want to waste the money and obviously don't mind giving it to charity, but is it pointless to invest in office equipment as the new ltd company will have to purchase it back off them?
Hi Nicola
The old CIC cannot swap cash for assets that they then sell on the cheap to the new limited. The CIC has a duty of care to achieve the aims it was set up to achieve so by doing such would be surely de-frauding the charity/section of society it was set up to help. Unless of course it buys desks and computers and gifts these to the section of society that it meant to be helping.
Plus (and Im assuming at least some of the directors of the CIC will be directors of the limited) the directors have a fiduciary duty of care to the CIC, rather than aiming to line the pockets of their own new money making business.
Besides the fact that there are regulations to be followed upon the cessation of a CIC, dependent on the way it is dissolved, which need to be followed. A copy of these can be obtained from the regulator or from the CIC website and I believe info is contained with the law.
Reference to the regulator may be appropriate.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
