Are you thinking of starting or running a Community Interest Company (CIC)? In this episode, we’ll delve into the concept of Asset Lock in Community Interest Companies, and its importance, especially in the world of social enterprises.

Asset Lock in Community Interest Companies Defined

Asset lock, a safeguard that ensures funds received by a CIC are used solely for their intended community purposes, promotes transparency and prevents personal enrichment of directors or founders.

Implications for CICs

Now, let’s have a look at the implications of asset lock for Community interest companies. CICs must effectively manage and retain assets to benefit the community. When transferring or selling assets, they need to meet strict requirements, including conducting transactions at fair market value and ensuring direct benefit to the community. Transfers to other asset lock bodies require consent from the regulator.

Incorporating Asset Lock

To ensure clarity and compliance, you should include provisions for asset lock in the Articles of Association. These provisions should clearly identify the beneficiaries, seek permission, and provide an explanation to the designated asset lock body

Asset Locked Body and Alternatives

While CICs are commonly recognized as asset locked bodies, it’s worth noting that other organizational structures, like charitable incorporated organizations, can adopt asset lock principles. Nominating asset lock bodies in the Articles of Association is a best practice for smooth asset transfers.

Dissolution and Residual Assets

When it comes to dissolution, handle residual assets with care and inform the nominated asset lock body as a courtesy, ensuring continued community benefit.

Considerations and Compliance

Exercise caution when selecting asset recipients and avoid self-nomination. Regulatory approval is necessary for transferring or selling assets below market value to non-nominated asset lock bodies.


In conclusion, asset lock plays a vital role in safeguarding communities and ensuring accountability in CICs. Understanding its implications empowers CICs to fulfil their mission and make a lasting positive impact. Whether you’re starting or running a CIC, embracing asset lock is a crucial step toward building a successful and socially responsible organization.

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