2.8.2 The points of difference

Each of the jurisdictions comprises a tailor-made legal form for social enterprises aimed at pursuing a social purpose. However, the exact essence and content of that purpose varies, in terms of its social, collective and community- based dimensions. From one point of view, the purpose prescribed by law can be broad with respect to its scope, covering activities that could benefit the community and society based on human considerations. The purpose may also be much narrower, promoting activities that facilitate public policies regarding social issues or activities to promote collective needs and protect collective/ common goods. The purpose may have either a collective and universal character addressing the society-community as an entirety and/or it may cover smaller groups of individuals as distinctive parts of a society and/or community, vulnerable groups for example. However, the introduction of the notion of social impact-making activities, as opposed to profit-making activities, has not been developed in any of the examined legal frameworks, nor has it been elaborated upon in policy documents.

Furthermore, the manner in which the social purpose is legislated in each of the three legal regimes differs. As such, the implementation of the social purpose should vary in accordance with the legal system of each examined country. The social purpose is either: (i) explicitly contained in legislation and as such, must be embodied in the SoA of the social enterprise to fulfil the registration criteria; (ii) included only in the constitutional documents (AoA/memorandum) but subject to the consideration of a Regulation on the basis of a legislated mechanism/ test; or (iii) subject to the scrutiny of the national courts on the basis of a laissez- faire approach which requires the members of the social enterprise to define the social purpose as the case may be.

The essence of participatory and inclusive governance also differs in the examined legal regimes, i.e. it can be realised either by multi-stakeholder ownership of shares and membership and subsequently multi-stakeholder governance, or by consultation with various types of stakeholders alongside the company’s decision-making processes. Additionally, the correlation between share capital ownership and control and the exercise of voting rights (number of votes) by stakeholders varies in the three examined legal frameworks. In the jurisdictions where multi-stakeholder ownership of shares, membership and governance is permitted, no strong correlation is found between capital ownership and control. For instance, the decision-making processes can be characterised by both equality and democratic decision-making with the application of the rule of ‘one man, one vote’ and/or subjected to a voting cap, which eliminates the number of votes of the participants in the decision-making processes.

The accountability of the decision-makers is safeguarded via legislated mechanisms that scrutinise the activities of social enterprises in pursuit of the social purpose. However, the enforcement mechanisms differ in the different national legal systems including, i.e. the courts, the Registry, and the Regulator. A different emphasis is placed on the content of reporting that is directed mainly to safeguard transparency concerning activities in pursuit of the social purpose, rather than activities that are undertaken in governance with stakeholders and/or the outcome of activities in terms of social impact. Finally, the financial instruments prescribed in legislation to support social enterprises are also different.