3.4.1.3 The financial structure of the CIC

The ‘asset-lock’ scheme is a set of restrictions in the Companies Act of 2004 and the CIC Regulations of 2005. The asset-lock prohibits – as a rule in general – any distribution of assets, profits or dividends to the CIC’s members and/or shareholders and other investors in order to safeguard the CIC’s assets for the pursuit of the community objectives. A right is conferred on the Regulator to impose certain limits on the distribution of assets and profits. Indeed, the CIC Regulator has adopted an aggregate dividend distribution cap. This is a determined percentage of the CIC’s distributable profits. The cap is at 35% of the CIC’s distributable profits. Moreover, the Regulator can determine that the distribution of the CIC assets is prohibited either during the active and operational period of the CIC or during the winding-up of the company. Essentially, the asset-lock scheme also prohibits the CIC from transferring the company’s assets to other organisations or individuals, other than for full consideration. The CIC assets can be distributed to a certain extent only: (i) to other asset-locked bodies, which are specified in the CIC’s AoA; (ii) to other asset-locked bodies with the consent of the Regulator; or (iii) for the benefit of the community, i.e. following the CIC objectives.1