Special Purpose Vehicles (SPV) and Community Interest Companies (CIC)


SPVs and CICs for Landscape Recovery Schemes on Common Land

You should take independent legal advice on setting up an SPV or CIC.

Landscape Recovery (LR) schemes are likely to be required to seek private finance as part the project. Common land is often designated land and many commons are owned by statutory bodies so you may need to consider:  

  • What designations are placed on all/some of the common land e.g. SSSI, SPA etc.?  

  • Who owns the common e.g. Local Authority, FE, private landowner?  

  • Is the common landowner subject to S40 NERC duties? If they are a statutory body and the common holds SSSI status then there is a duty to conserve and enhance so it is unlikely that private finance will be applicable.   

If there are no constraints to private funding due to designation or ownership type then a review of legal structure and governance of the common is advisable. To attract private finance, it will likely be necessary to set up an entity that can receive finance in a way that is familiar to private investors.     

Working with a leading law firm FCL suggest two structures which are suitable for the conduit of private finance to your common:  

Special Purpose Vehicle (SPV)   

Community Interest Company (CIC)  


Setting up an SPV  

What is a Special Purpose Vehicle (SPV)?   

A special purpose vehicle, also called a special purpose entity (SPE), is an entity created by an organisation to isolate financial risk. Its legal status as a separate entity makes its obligations secure even if the parent organisation goes bankrupt. For this reason, a special purpose vehicle is sometimes called a bankruptcy-remote entity.   

An SPV can be formed as a limited partnership, a limited liability corporation, a corporation, a trust and other business types.  

SPVs have their own balance sheet, which is entirely separated from the parent organisation(s) that created them.   

An SPV may be created in order to undertake a risky project while protecting the parent organisation(s) from the most severe risks of its failure. It is possible to form several different SPVs for different projects to keep projects independent.  

SPVs have a number of key utilitarian features and benefits that allow investors access to investment opportunities which would otherwise not exist. These include financing, risk sharing and raising capital to name a few. In the absence of SPVs, these objectives would not be possible without putting the organisations at some risk.   

Regulators take strong measures that subject these vehicles to even more scrutiny than before. Stronger governance, increased oversight and more transparent reporting are some of the measures that form part of a tighter regulatory framework governing current SPVs.   

Benefits of SPVs   

Asset Ownership – An SPV allows the ownership of a single asset often by multiple parties and allows for ease of transfer between parties.   

Clarity of documentation – It is easy to limit certain activities or to prohibit unauthorised transactions within the SPV documentation.   

Legal protection – By structuring the SPV appropriately, the sponsor may limit legal liability in the event that the underlying project fails.   

Isolation of Financial Risk– By structuring the SPV as an ‘orphan company’, the SPV assets may not be consolidated with the firm’s on-balance sheet assets and are ‘bankruptcy remote’ in the event of bankruptcy or a default.   

To set up an SPV you need to:  

  • Appoint at least one director and one shareholder  

  • Prepare your company name, address, and details of director(s)  

  • The Memorandum of association (MOA) and Articles of association (AOA) should define the company as an SPV  

  • Define your SIC code (standard industrial classification) https://resources.companieshouse.gov.uk/sic/  

  • Submit all information to the Companies House   

You will need to incorporate and register your business first, then submit all relevant documents. It is not that much different from the process you’d go through to incorporate a business entity but it is a complicated process and it’s important to know exactly what it entails before you get started.  


Setting up a CIC  

What is a CIC?  

A CIC is a special type of limited company which exists to benefit the community rather than private shareholders.  The CIC has to define its specific objectives and they are attractive to investors as they provide protection that the funds will only be used for the stated purpose.  

However, a CIC must continue to satisfy community interest and must deliver an annual company report with annual accounts.  

To set up a CIC, you’ll need:  

  • a ‘community interest statement’, explaining what your business plans to do  

  • an ‘asset lock’- a legal promise stating that the company’s assets will only be used for its social objectives, and setting limits to the money it can pay to shareholders  

  • a constitution - you can use the CIC regulator’s model constitutions  

The CIC regulator has guidance on setting up a CIC.  

Set up a CIC online  

Register your CIC online with Companies House.  

It costs £27.  

You’ll need to create a Government Gateway user ID and password for your company. You cannot use your personal Government Gateway ID.  

Set up a CIC by post  

Use the forms from the CIC regulator to register a CIC by post.  

Further information  

Get advice and case studies from Social Enterprise UK,Inspire2Enterpriseand UnLtd or download guidance on business structures for social enterprises.  

Find out about legal forms for social enterprise.  

There are also opportunities to invest in local enterprise with community shares or to bid to run a local service.  

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Conservation Covenants

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Working With Others at Landscape Scale