1. What do we need from a legal entity?
Issue
City Block cohousing needs:
Contracts, Risks, Debt
Yes - We will need to enter into major contracts: house buying, professional fees, permanent staff.
Limit liability
Yes - We would like to limit the liability of Directors
Primary purpose
Benefit members only, or wider community and members equally.
Membership
We will have members in addition to our management board. We may have different categories for tenants, lease holders, owners, and investors
Member involvement
We want democratic member control ie one member one vote at AGM. Members vote for Board so control/influence every aspect of the development and management.
Charitable
No – trading not charitable, not for particular disadvantaged group
Asset Lock
Proceeds from assets can only be used to further objects. (No CLT, but no surplus for members)
Assets on dissolution
If we get wound up we give the assets to a similar organization (ie keep them in some form of common ownership).
Would Directors be paid?
Yes - It needs to have sufficient scale to run services well so management would need to be paid. Board members would be paid if they are running the business. Maybe not for governance though.
Will it trade
Yes - we will be selling housing and property related services.
Use of surplus
For social mission
Raise finance
Yes - we want maximum flexibility to take out mortgage and other bank finance, loans from members and others, and community share offer (probably withdrawable shares, not transferable).
Pay interest / dividends
We expect to pay interest on loans, maybe interest to shareholders but no dividends
Key: orange = questions / discussion needed
Key: green = clear / decided

2. Legal entity options CIC register Financial Conduct Authority
Charity Commission
Companies House
CIC register
Financial Conduct Authority
Ltd Liability Partners
Plc
Registered Societies (used to be IPS)
Companies
Charitable Incorporated Organisation
CIC
Co ltd by guarantee
Co ltd by share
Bencom
Must be charitable
Can register <£5k
Bone fide
No regulator
One member one vote
One share one vote
Members
Community
Unincorporated Organisation
Not charitable
Not charitable
Potentially has
charitable status
Can be charitable
Can register as charity > £5k
Can be charitable
Can register as charity > £5k

3. Membership (involvement) YES depends on rules YES (acc % shares)
This table only includes limited liability options
Charitable Incorporated Org
Community Interest Company
Company Ltd by
Shares
Company Ltd by Guarantee
Registered society: for Benefit of Members
Registered society: for Benefit of the Community
Example:
Community Centres
Threshold
Springhill
Barracks Lane, Lancaster
Phone Coop
LILAC
Cultivate, Bridport cohousing, LCH
Contracts
YES
Primary purpose
Charitable
Social mission
Not charitable
Can be charitable
Benefit members
Benefit comm & members
Membership (involvement)
YES depends on rules
YES (acc % shares)
YES (typically 1 member 1 vote)
YES (1 member 1 vote)
YES (1 member 1 vote) optional stakeholders NO
Usually
Can be
Asset Lock
Maybe
Assets on dissolution
To other similar
To shareholders
As defined in rules
To members
Pay directors
Will it trade
Use of surplus
Charitable objects
Social purpose
Shareholders
Members
Members or as defined in rules
Able to raise finance?
YES but no share capital
YES can issue share capital
YES withdrawable shares 100k limit
YES withdrawable shares 100klimit
Interest/div-idends?
YES but capped
Interest, no div
Limited int and div
Limited int, no div
Regulator (and applicable law)
Charity Commission (Charity law)
Companies House & CIC regulator (Co law)
Companies House
Charity Commission
& Co House
FCA
FCA & poss Charity Comm in future if charitable
Taxation
Exempt
Not exempt
Exempt if charitable

4. City Block cohousing options
A co-operative society is set up to pursue the interests of its members. Does this rule it out? (NB recent FCA guidance confirmed that coops can have investor members).
Other options with social and community mission and asset lock are:
Community Interest Company (asset lock)
Community Benefit society (may have asset lock)
Company limited by guarantee
Ben comm: Conduct of business must be entirely for the benefit of the community. Can be a defined community but this must not inhibit benefit to society at large. Benefits must not be contingent upon membership. No capital gains for members. (FCA definition).
Coop: An autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. Must follow cooperative principles. No asset lock. Members can benefit. (FCA definition)
Co (limited by guarantee): A private company but controlled by members not shareholders. Can be charitable. Usually not-for-profit.
CIC: Non-charitable and non-political form of private company with assets locked for use to further social mission. Must meet community interest test. May have charitable objects but cannot register as a charity or gain exemption from tax.

5. Pros and cons Community Benefit society Cooperative society
Highly democratic one member one vote
Registration process slower (15 days, need sponsor, £450-£900)
Less cumbersome legislative requirements than ltd company
No member/shareholder dividends (interest ok)
Easy to demutualise ie change to ltd company
Can have asset lock (removes investor speculation)
Asset lock can be added to rules but can never be removed
Cooperative society
Pros
Cons
Highly democratic one member one vote
Registration process slower (15 days, sponsor needed, £450-£900)
Less cumbersome legislative requirements than ltd company
No asset lock – members can benefit on dissolution
Easy to demutualise ieg change to ltd company
Operates on cooperative principles
Company limited by guarantee
Pros
Cons
No restrictions on how to operate
Cannot issue shares
Cheap and easy to register
Less beneficial and inspiring
Asset lock
Legislative requirements same as for private company
Well known
Community Interest Company
Pros
Cons
No restrictions on how to operate
Report to CIC regulator as well as Co House
Cheap and easy to register
Cannot transfer to a company structure later
Community interest test and asset lock
Legislative requirements same as for private company