Should your GP federation be a community interest company?
In response to increasing interest and enquiries about Community Interest Companies (CICs), corporate solicitor Sophie Birkbeck of healthcare law firm Hempsons outlines their structure and explores their growing relevance for GP Federations.
What is a Community Interest Company (“CIC”)?
A CIC is a limited company (and not a charity) that provides a benefit to the community in which the company is based. For example, the company may use its profits to help a local community initiative or business that could in turn benefit the community it serves.
A CIC will operate in a very similar way to other limited companies. It can be used as a separate legal identity from the owners that can borrow and lend money, enter into contracts, act as an employer, deliver services and still distribute some funding.
All CICs are asset locked – this means that all assets owned by the CIC (including profit) cannot be used for private gain or transferred to another company for their own benefit, and instead, the assets must remain within the CIC for the benefit of the community. The only exception being the ability to pay dividends at a fixed percentage of profits.
In practice this means that the CIC can demonstrate significant social value and this can attract additional funding support from alternative sources from traditional NHS commissioning.
Why this may be relevant for GP federations?
As CICs are limited companies they can hold NHS contracts (provided they satisfy the eligibility requirements).
Like the NHS, CICs are value driven and exist for the benefit of the community rather than the owners. They are well place to understand issues being faced by those that live locally and can act as a voice for the community. This creates strong foundational principles which can be used to develop neighbourhoods.
Whilst commissioners rarely expressly state that they require contracts to be issued to CICs, the Provider Selection Regime includes five key criteria which commissioners need to consider when making decisions. These include quality and innovation; economic value; integration, collaboration and sustainability; improved access and reduced health inequalities; and social value. A CIC can demonstrate that its core purpose is designed in a way which aligns with these key factors.
Actions speak louder than words and commissioners will need to consider evidence of compliance based on the actions the federation takes but the principles of the CIC can be important starting point in this process.
Regulation
The Office of the Regulator of Community Interest Companies (“the Regulator”) must be satisfied that a reasonable person considers the activities of the CIC are or will be carried out for the benefit of the community (“the community interest test”).
This test is important when a CIC is incorporated, or a company is converted to a CIC, and the obligation remains throughout the life of the CIC. The CIC will be required to provide evidence that the test is satisfied each year via the mandatory Community Interest Report.
The company will have directors that are bound by the same duties under the Companies Act and can either be limited by shares or by guarantee.
Useful resources
Community Interest Companies Guidance – GOV.UK
First published in GP Business in October 2025.