Legal Structures

Most individuals and enterprises get stuck when it comes to legal structures. There is an element of fear, because it’s legal information and the fear of the unknown.

There is a myth that a social enterprise [or Community Enterprise] has a specific legal structure; this is not true. Social enterprise is not a legal structure, it’s purely and simply a ‘way of doing business. See definition here.

There are a number of legal structures that are appropriate for a social enterprise and the right one depends on what you’re trying to do. See a one page Overview of Legal Structures.

There is however a structure that is designed for social enterprises, the Community Interest Company [CIC]. The CIC structure is essentially a limited company with additional restrictions. The CIC structure ensures that the organisation:

  • has a community benefit
  • is distributing most of its profits for its social purpose and
  • is locking the value of its assets into its social [or environmental] purpose.

Whilst the CIC is a structure designed for social enterprise it’s not the only one and isn’t right for everyone. An organisation should consider its strategy [what it is trying to do] first and foremost structure follows strategy’ see Business Planning section.

Once you know your strategy, the structure will most likely identify itself. See a simple structure Structure_Decision_Tree

Below we have identified a number of resources that will help you to consider the legal structure that is right for your organisation. If you are unsure you should consider taking legal or qualified [SFEDI] business advice as to the most appropriate structure for your organisation.

Remember: for organisations in Solihull the Community Enterprise for Success project can provide you with qualified free business advice and guidance email us.

  • Gain a quick understanding of the possible legal structures available see ‘legal structures at a glance’ Download Here
  • See a slightly more detailed [3 page] overview of legal structures Download Here
  • See the guidance on legal forms Download Here
  • See legal structures decision making tree Structure_Decision_Tree
  • See a full guide on Community Interest Companies Download Here
  • See a guide to setting up a social enterprise Click here
  • See Social Enterprise UK’s guide: Start your Social Enterprise Download Here