Einde inhoudsopgave
Social enterprises in the EU (IVOR nr. 111) 2018/1.2.2
1.2.2 Tailor-made legal forms for social enterprises
mr. A. Argyrou, datum 01-02-2018
- Datum
01-02-2018
- Auteur
mr. A. Argyrou
- JCDI
JCDI:ADS588092:1
- Vakgebied(en)
Ondernemingsrecht / Rechtspersonenrecht
Voetnoten
Voetnoten
Defourny and Nyssens (n 2) 33, 36-37; Galera and Borzaga (n 2) 218-219; T. Lambooy and mr. A. Argyrou, ‘Improving the Legal Environment for Social Entrepreneurship in Europe’ [2014] 11(2) European Company Law, 71-76; European Commission, ‘A Map of Social Enterprises and their Ecosystems in Europe: Synthesis Report’ (European Union, 2015) 52 available at:
Lambooy and Argyrou (n 23) 71-76.
This is what Fici (n 2) characterises as the vital role of organisational law. According to Fici, ‘organizational law plays a vital and irreplaceable role in defining the specific identity of the organizations, which is defined (first of all) by their particular goals. Therefore, the primary, essential and irreplaceable role of social enterprise law is (and should be) to establish a precise identity of social enterprises and to preserve their essential features (…) operating with an identity distinct from those of other organizations and appearing different under a legal designation that conveys objectives and modes of action that meets the interests of social enterprises’ founders and members and is, consequently, a precondition for the existence and development of this particular type of business organization’. See Fici (n 2) 648. See alsoH. Hansmann and R. Kraakman, ‘The Essential Role of Organizational Law’ [2017] 110(3) Yale Law Journal, 387.
Cafaggi and Iamiceli (n 3) 26.
ibid.
T. Lambooy, ‘Leadership, Entrepreneurship and Stewardship in Corporate Law’ (Inaugural Lecture of Prof. Tineke Lambooy, Nyenrode Business University, 21 September 2016) 43 available at: <www.nyenrode.nl/FacultyResearch/research/Documents/Inaugurallectures/Tineke_Lambooy_Inaugural_Lecture.pdf> accessed 11 July 2017.
B. Sjåfjell, ‘Sustainable Public Procurement as a Driver for Sustainable Companies?’ inB. Sjåfjell and A. Wiesbrock (eds), Sustainable Public Procurement under EU Law: New Perspectives on the State as Stakeholder (Cambridge University Press 2015) 183. Sjåfjell also mentions the important role that other legal areas could play, such as public procure-ment law, competition law and state aid law. She argues that these legal areas could enable a shift ‘from non-sustainable to sustainable industries’ using the example of public procurement law and its significant importance – together with company law – in shifting businesses into the paradigm of sustainability. See also B. Sjåfjell and B. Richardson, ‘The Future of Company Law and Sustainability’ in B. Sjåfjell and B. Richardson (eds), Company Law and Sustainability: Legal Barriers and Opportunities (Cambridge University Press 2015) 388. The same point is made by other scholars, by the European Commission and the European Parliament. See T. Lambooy, Corporate Social Responsibility: Legal and Semi- legal Frameworks Supporting CSR (Kluwer, 2010) 97-99; Fici (n 20) 7; Galera and Borzaga (n 2) 218-219; Haugh (n 6) 2-3; European Parliament, ‘Report on Social Entrepreneurship and Social Innovation in Combating Unemployment (2014/2236 (INI))’ (Committee on Employment and Social Affairs, 30 July 2015) available at: <www.europarl.europa.eu> accessed 30 April 2017. SBI Communication of 2011 (n 11); European Commission, ‘Social Entrepreneurs: Have Your Say!’ (16th May 2014) available at:
Lambooy and Argyrou (n 23) 71-73; Cafaggi and Iamiceli (n 3) 27-28.
K. Alter, Social Enterprise Typology (Virtue Ventures LLC 2007) 53.
ibid.
C. Borzaga and J. Defourny, The Emergence of Social Enterprise (Routledge 2001).
Defourny and Nyssens (n 2) 44; Galera and Borzaga (n 2) 218-223.
C. Travaglini, F. Bandini and K. Mancinone, ‘An Analysis of Social Enterprises Governance Models Through a Comparative Study of the Legislation of Eleven Countries’ (EMES International Conference on Social Enterprise, Trento, 1 July 2009) available at:
T. Kelley, ‘Law and Choice of Entity on the Social Enterprise Frontier’ (2009) 84(2) Tulane Law Review, 337-378. G. Cox, ‘Co-operative Social Firms Research Report’ (Economic Partnerships Ltd/Social Firms 2005); Alter (n 31) 53; Argyrou et al. (n 35) 493.
ibid.
C.C. Williams and S. Nadin, ‘Re-reading Entrepreneurship in the Hidden Economy: Commercial or Social Entrepreneurs?’ (2011) 14(4) International Journal of Entre-preneurship and Small Business, 441-455.
Cafaggi and Iamiceli (n 3) 26; Fici (n 2) 648; L. Timmerman, M. De Jongh and A. Schild, ‘The Rise of the Social Enterprise: How Social Enterprises are Changing Company Law Worldwide’ in S. Muller, S. Zouridis. M. Frishman and L. Kistemaker (eds), The Law of the Future and the Future of the Law (TorkelOpsahl Academic EPublisher 2011) 305-319; Kelley (n 36). mr. A. Argyrou, P.A. Anthoni and T. Lambooy, ‘Legal Forms for Social Enterprises in the Dutch Legal Framework: An Empirical Analysis of Social Entrepreneurs’ Attitudes on the Needs of Social Enterprises in the Netherlands’ [2017] 12(3) International and Comparative Corporate Law Journal, pp. 1-46.
F.M. Doeringer, ‘Fostering Social Enterprise: A Historical and International Analysis’ [2010] 20(2) Duke Journal of Comparative and International Law, 291-330; A. Noya, ‘Policy Brief on Social Entrepreneurship Entrepreneurial Activities in Europe’ (OECD Publishing 2013); Kelley (n 36).
Timmerman et al. (n 39) 313; Fici (n 2) 648.
ibid.
A. Ebrahim, J. Battilana and J. Mair, ‘The Governance of Social Enterprises: Mission Drift and Accountability Challenges in Hybrid Organizations’ (2014) 34(1) Research in Organizational Behavior, 96. Ebrahim et al. mention ‘further research is necessary on the conditions under which social entrepreneurs opt for new legal forms, and how the choice of legal form influences their functioning and governance’. See also Cafaggi and Iamiceli (n 3); Fici (n 2).
Apparently, one of the Commission aims is to introduce a tailor-made legal form for social enterprises in the EU. But it is not barren ground the Commission is entering. Several EU countries have already developed legal frameworks and/or legal forms for social enterprises. Such a development is also promoted by several scholars. National legal frameworks and legal forms tailor-made to social enterprises have been developed in several EU jurisdictions to accommodate the hybrid nature of social enterprises, such as their social purpose and commercial activity.1 The tailor-made laws are either autonomous or contributory by virtue of being attached to existing national company and civil legislation.2
The purpose of regulating the concept of social enterprises in national tailor- made legislation has been expressed by Cafaggi and Iamiceli. They have noted that the laws pertaining to social enterprises – in particular based on company and/or civil law – can be used to serve several functions for the benefit of social enterprises and accordingly for the benefit of society. Such functions are: (i) to legitimise and recognise a ‘social phenomenon’ that can be enlarged to a significant ‘legal concept’, such as the social enterprise concept;3 (ii) to incentivise the social enterprise legal concept’s development among other legal concepts (for instance, in several areas of law, such as in company law);4 and (iii) to promote the effectiveness of the given social enterprise concept, by providing legal rules, which shape its legal form and organisational functioning.5
Legal scholarship has also discussed the important role that company law, and particularly tailor-made social enterprise law, can play in pursuit of sustainability. Lambooy stresses that the tailor-made legal forms for social enterprises can provide a pathway for mainstreaming sustainability among regular companies.6 Sjåfjell affirms Lambooy and states that ‘company law [has] a crucial role to play in the transformation towards sustainability because it provides the legal framework for the internal workings of the company, including its decision-making’.7 Accordingly, Chapter 2 provides a comprehensive understanding of the provisions contained in tailor-made laws that adhere to certain legal characteristics for the social enterprise mentioned above in the Commission’s definition. These are: (i) the maintenance of a social purpose; (ii) a participatory system of governance which is open and inclusive to the participation of stakeholders and third parties; (iii) high standards of accountability and responsibility towards the stakeholders based on fiduciary duties and social reporting; and finally (iv) profit distribution constraints and the application of asset-lock schemes.8
However, there is scholarship in other disciplines, which has placed the discussion regarding the legal characteristics of social enterprises in an arbitrary sphere that is not related to the definitive elements of social enterprises. As such, it is claimed that the legal characteristics of social enterprises do not relate directly to the elements that influence the development of a social enterprise’s performance.9 Alter for instance, argues that the legal status of a social enterprise is the manifestation of its regulatory environment, which could be either conducive or less enabling on a per-country basis.10
Nonetheless, other scholars, such as Borzaga and Defourny, demonstrate the existence of a relationship between the emergence of social enterprises and their legal characteristics in the legal systems of various countries in the EU.11 They note that tailor-made legal forms enable social enterprises to achieve their purpose.12 Scholarship also notes that the very existence of legislation and legal forms on this topic has contributed to the shaping of the concept of social enterprises and to providing clarity in the entrepreneurial transactions of social entrepreneurs accordingly.13 For instance, scholarship explains that the grey areas in the applicable legislation that apply to the transactions of social enterprises may generate risks, challenges and barriers for social enterprises.14 Such barriers could result in a deprivation of legal and tax privileges for social enterprises.15 The same problem may contribute to the development of ‘hidden social entrepreneurs’ who trade legitimate goods and services without fully disclosing their transactions.16
In response to the claims concerning these grey legal areas, other scholarship notes that tailor-made legislation for social enterprises could stimulate and legitimise social enterprises.17 Legislation could enhance the legal certainty of transactions for the social entrepreneur.18 In this respect, Timmerman et al., amongst others, argue that legal certainty provides the social entrepreneur with vast knowledge concerning ‘rights and obligations’ in governance, expected ‘transaction or incorporation costs’ and the promotion of a strong ‘identity in the market place’.19 Subsequently, this knowledge offers a significant ‘competitive advantage’ to social enterprises.20 Consequently, a closer examination of the tailor-made legal forms for social enterprises and its effect on the social enterprise is important.21 This is important for existing social enterprises and social entrepreneurs, and also for policy-makers and lawmakers. That was duly demonstrated in this Sub-section and in Sub-section 1.2.1 above.