Social enterprises in the EU (IVOR nr. 111) 2018/3.5.1.4:3.5.1.4 The role of stakeholders in the CIC

Social enterprises in the EU (IVOR nr. 111) 2018/3.5.1.4

3.5.1.4 The role of stakeholders in the CIC

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

The role of community stakeholders in the CIC legal framework comprises: (i) community stakeholders as members and owners of the CIC; (ii) community stakeholders as decision-makers of the CIC; (iii) community stakeholders as consultants of the CIC; and (iv) community stakeholders as recipients of information from the CIC.1

Community stakeholders as members and owners of shares in the CIC

The role ‘members’ and ‘owners of shares’, entails the participation of stakeholders in the ownership of shares and in the membership of the CIC. Accordingly, the acquisition of membership and the ownership of shares from stakeholders could allow for the participation of the community in the realisation of the CIC objectives.2 Hence, stakeholders can exercise particular rights and obligations prescribed in the CIC legislation for the CIC’s members. Indeed, this may extend the community’s participation in the CIC’s affairs and decision- making.3 Such rights include amongst others:

(i)

the right to participate in the decision-making processes of the CIC’s governing bodies (board of directors and annual general meeting of members);

(ii)

the right to appoint and scrutinise decision-makers following a prohibition for the CICs to permit any person other than a member and/or director and/or the Regulator to appoint a director.4 All members have a responsibility to uphold the community objectives of the company through scrutinising the directors’ activities;5

(iii)

the right to participate in decision-making processes of the board of directors concerning financial distributions, as well as in the processes of the general meeting concerning the change of the AoA and the company’s strategy.6

Community stakeholders as decision-makers

The role of ‘decision-maker’ entails the participation of stakeholders in the main decision-making processes of the community interest company, e.g. the board of directors and the CIC’s general meeting. Such a role is accomplished through the exercise of voting rights and the adoption of the most appropriate governance model. Accordingly, community stakeholders may shape and direct the governance model of the CIC towards a democratic and stakeholder based governance model, which accommodates the interests of various representative stakeholder sub-groups of the community on an equal basis. Alternatively, a stewardship governance model could be used to facilitate the appointment of trustful managers and decision-makers bound by the overarching community objectives in the increase of organisational performance.7

Community stakeholders as consultants

The role of ‘consultant’ entails the participation of stakeholders in various stakeholder consultation mechanisms adopted by CICs with different characteristics. Such a role can be accomplished in furtherance of the organisation’s downward accountability, i.e. the downward accountability of a social enterprise to its community beneficiaries and stakeholders. Downward accountability is achieved by means of stakeholder mechanisms, which accommodate scrutiny over the decision-making processes, enhance transparency, and could increase the legitimacy of the CIC to the community that it serves.8

Community stakeholders as recipients of information

The role of ‘recipient of information’ entails the participation of stakeholders in the acquisition of information regarding the affairs of the CIC and its decision-making especially when stakeholder participation through membership and decision-making is not an option. Such a role reduces existing asymmetries of information regarding decisions that are decided and/or pending to be decided between the decision-makers and the community stakeholders.9 Accordingly, decisions, which may seem inappropriate or incompatible to community stakeholders, i.e. the use of various business methods for the maximisation of a community and/or social benefit are thus legitimised and balanced.10

Deze functie is alleen te gebruiken als je bent ingelogd.