Can CICs Limited by Shares Apply for Grants?

The short answer

There is no general rule that CICs limited by shares cannot receive grants. Whether you can apply depends on each funder's own eligibility rules. Some accept both CIC types, some accept shares-based CICs with conditions, and some exclude them.

What a CIC limited by shares is

A Community Interest Company can be formed as a company limited by guarantee or limited by shares. A CIC limited by shares has shareholders who own the company and can, in some circumstances, receive dividends. It's a common choice when founders want to bring in investors or keep an ownership stake.

A CIC limited by guarantee has members who guarantee a nominal amount rather than holding shares. It has no shareholders to pay, so it cannot distribute profit as dividends.

Dividends, the asset lock and why funders care

Every CIC has an asset lock: its assets and profits must be used for the community benefit it was set up for, and can't be transferred out except as the rules allow. For a CIC limited by shares, the rules do allow a capped dividend. Under the CIC Regulator's guidance, total dividends declared in a year are capped at a proportion of distributable profits (currently 35%), and only where the CIC's articles permit it.

That cap is what funders focus on. A grant is intended for a public or charitable purpose. Some funders are comfortable that the asset lock and cap protect that purpose; others are not permitted, or not willing, to fund a body that could pass any surplus to private shareholders.

Real examples: accepted and excluded

Accepted with conditions: National Lottery Awards for All England

The National Lottery Community Fund's Awards for All England programme lists community interest companies limited by guarantee or limited by shares as eligible. Its guidance adds that, if limited by shares, you must follow the CIC Regulator's guidance on sharing profits.

Excluded: Cambridge City Council Sustainable City Grants

Cambridge City Council's Sustainable City Grants will fund a CIC with an asset lock that delivers public benefit, but states that CICs limited by shares are not eligible because they are permitted to distribute a proportion of their profits to shareholders. Applicant CICs must be limited by guarantee.

Both examples were checked against the funders' pages in October 2026. Scheme details can change between rounds — confirm them before applying.

Common reasons funders exclude shares-based CICs

• The funder is a charity that may only make grants for charitable purposes and decides it cannot be sure the benefit stays public.
• Public funding rules or council policy restrict grants to "not-for-profit" bodies with no distribution of profit.
• Concern about private benefit — a grant increasing the value of shares held by individuals.
• Simplicity: some funders choose to accept only structures they can assess quickly.

How to find funds that accept CICs limited by shares

1. Go to the funder's "who can apply" or eligibility page, not a directory summary.
2. Look for the exact words "limited by shares". "CICs welcome" may still mean guarantee only.
3. Check for conditions such as no dividends during the grant, or following the Regulator's guidance.
4. Read the application form questions — they sometimes reveal restrictions the summary page doesn't.
5. If it's still unclear, ask the funder before writing the application.

Questions to ask a funder before applying

• Do you accept CICs limited by shares, or only CICs limited by guarantee?
• Are there conditions on dividends during or after the grant period?
• Do you need to see our articles of association or shareholder register?
• Does it matter whether any shareholder or director holds a controlling interest?

Checklist: assessing a funder's legal-structure requirements

1. Note your CIC's company type exactly as shown at Companies House.
2. Check whether your articles permit dividends, and whether any have been paid.
3. Confirm the funder names CICs limited by shares as eligible, or doesn't exclude them.
4. Note any conditions on profit distribution and whether you can meet them.
5. Check the other criteria — location, income, age, directors — before you go further.
6. Keep a record of where you found the answer and the date you checked.

For the wider set of checks funders run, read CIC grant eligibility: what funders actually look for.

This guide is general information, not legal advice. If a funder's rules interact with your articles in a way you're unsure about, take professional advice.

Frequently asked questions