2.5.4 Intermediate comparative conclusions: the participatory governance of social enterprises in the Belgian, Greek and UK social enterprise law

To conclude and compare, the three examined legal frameworks have revealed various similarities and differences with respect to the legal variable of governance. Primarily, although Greek and Belgian legislation has tailor- made legal provisions regulating the governance of the Koinsep and the VSO, the UK legal framework does not contain special provisions for the CIC legal form (see Table 2.2). Accordingly, multi-stakeholder governance is fostered in Greek and Belgian legislation (see Table 2.2). Consequently, employees are allowed to become owners of cooperative shares and members of the organisation and to assume ownership of shares and membership by purchasing shares. Pursuant to provisions stipulated in the legislation, employees are also eligible to exercise the rights that ownership of shares and membership confers. They are eligible to participate in the decision-making processes that take place in the social enterprise, i.e. to participate in the general meeting and/or to appoint or to be appointed as members of the governing bodies that exercise daily management, such as the board of directors and the managing committee.

However, unlike the Greek legal framework, the conferral of ownership of shares and membership in favour of employees in the Belgian legal framework is restricted by particular legal requirements. Belgian legislation requires a certain level of nexus/relationship developed and maintained between the employees and the organisation prior to acquiring membership rights, i.e. they should have completed one working year and their employment relationship with the organisation must be active. Similar legal requirements were not identified in the Greek legal framework. Moreover, a common identifiable characteristic in the Belgian and Greek legal frameworks is that only one type of stakeholder is eligible to participate in multi-stakeholder governance, namely the employees. Unlike the Greek and the Belgian legal framework, the UK regime does not specifically encourage multi-stakeholder ownership of shares and membership in the 2004 Act or the CIC Regulations of 2005. However, in light of a broad definition for stakeholders, i.e. as ‘those affected by the CIC activities’, the UK legal framework encourages the involvement of various types of stakeholders in consultation processes alongside the CIC’s decision-making processes.

The legal analysis also showed that the participation of stakeholders in decision- making processes may vary (Table 2.2). It can be formal in the sense of being based directly either on legal provisions (in Belgium, Greece and the UK) or on the social enterprises’ constitutional documents, for instance its memorandum, AoA or SoA (in Belgium, Greece and the UK). As for informal participation, this takes place when a legal or contractual basis for the exercise of participatory rights is absent. The legal analysis also revealed that some legal frameworks (in Belgium and Greece) permit the direct participation of stakeholders in the decision-making processes. By assuming ownership of shares and membership, stakeholders are allowed to directly and/or physically participate in the decision- making process of a social enterprise, i.e. in the annual meeting (in Belgium and Greece) or in the managing committee (in Greece). Stakeholders are also permitted to participate indirectly in a social enterprise’s governance via representation by other (natural or legal) persons (in Belgium and Greece). In view of the fact that participation may take place either formally and directly, it can be deduced that formal and direct participation is also structural when it takes place on a regular basis (in Belgium, Greece and the UK), for instance via participation in the annual meeting. Participation may also be non-structural (ad hoc) when it occurs in an irregular way that tends to be based on spontaneous communication between stakeholders and the decision-making body.

As regards the exercise of voting rights by stakeholders in the decision-making processes of social enterprises, the examination of the three legal frameworks has demonstrated that these differ in terms of ownership of share capital-membership and exercised control (Table 2.2). The Greek legal framework requires equality and democratic participation in decision-making. Equality and democracy is manifested in the rule of ‘one man one vote’. The voting rule differs in the Belgian VSO legal framework. The correlation between share capital ownership-membership and the number of votes cast is eliminated and is based on a voting cap of 10%, which prohibits anyone from having votes exceeding one tenth of the votes deriving from all shares represented in the general meeting. The voting cap is reduced to one twentieth when employees are members and participate in the general meeting. Unlike in the Greek and the Belgian legal frameworks, stakeholders in the UK legal framework have no stake in ownership of shares, membership and control, and thus no stake in decision- making.1