Definition
An asset-locked body is an organisation whose own assets are legally protected for community or charitable purposes: a community interest company, a charity, or a registered society with a restriction on the use of its assets.
Why it matters
A CIC can only give assets away, or sell them for less than they are worth, to an asset-locked body (or otherwise for the benefit of the community). The idea is that value protected by one asset lock should only move to somewhere it stays protected.
Which bodies qualify
- Another community interest company.
- A charity.
- A registered society, such as a community benefit society, whose rules restrict the use of its assets.
- A body outside the UK that is equivalent to one of these.
Where it comes up
- A CIC’s articles usually name the asset-locked body that would receive its remaining assets if it closed.
- Dividends paid to an asset-locked body are outside the dividend cap.
- Part 4 of the CIC34 report asks whether the recipient of any transfer was an asset-locked body.