2.4.4 Intermediate comparative conclusions: the social purpose of social enterprises in the Belgian, Greek and UK social enterprise law

To conclude and compare, the examined tailor-made legal forms for social enterprises exhibit a great deal of variety in the prescribed and permitted content of the purpose of the legislated forms (Table 2.1). The purpose is determined mainly by non-financial and non-economic elements (Table 2.1). However, the commercial (entrepreneurial) element of the purpose of social enterprises, reflected in the production of goods and/or the provision of services to the market, was similarly encountered in the content of the social purpose in all of the examined legal frameworks. Furthermore, in the examined laws that establish the tailor-made legal forms for social enterprises the legal provisions governing the social purpose do not stimulate or prohibit profit-making activities or the generation of profit (Table 2.1). Only a limited reference is made to the potential for profit as an element of the social purpose in the Belgian legal framework where the notion of not-for-profit was a determinant of the social purpose.

The content of the ‘social purpose’ can be conceptualised in terms of three dimensions, namely: (i) a social dimension; (ii) a collective dimension; or (iii) a community-based dimension (Table 2.1). However, it is only in an implicit manner that these dimensions insinuate any primacy for the generation of social impact rather than making a profit, as the Commission’s definition for social enterprises requires. The concept of a tangible and measureable social impact adopted in the objectives of social enterprises as introduced by the SBI Communication of 2011, remains an area that needs to be addressed by national legislation. By way of explanation, the social dimension of the content of the purpose was identified in both the Belgian and Greek legal frameworks. However, the meaning of the term ‘social’ in the two legal frameworks differs (Table 2.1). In Article 661 of the Belgian Companies Code of 1999, the term ‘social’ in the social purpose is not defined. However, the purpose in the legislation refers to the notion of ‘profit’, i.e. a social purpose should result in a ‘not- for-profit’ activity. As such, a social purpose – in Article 661 – has, primarily, a not-for-profit meaning. However, it may have the connotation of a broader meaning, in the sense of the conferral of no economic benefits in favour of owners of shares and members, or at the very most, the assignment of only a number of such entitlements to them.

The position differs in the Greek legal provisions. Here, the social purpose does not refer to the notion of profit. Nonetheless, it entails a narrow scope of activities to promote public policies regarding social issues, such as unemployment, work integration, social care or the promotion of social cohesion for example (Table 2.1). The above-mentioned difference is also clearly reflected in the principal addressees of the purpose. For example, the social purpose in the Belgian legal framework addresses the owners of shares and members in order to define what ‘social’ entails. However, in the Greek legal framework the social purpose is directly defined to address society, either as an entire entity or as specific groups of individuals, such as the elderly and the disabled who belong to defined and distinct societal groups, i.e. vulnerable groups of the population.

Society as an entirety, i.e. ‘collectivity’ is mainly addressed in the context of the objectives, which belong to the collective dimension. A collective purpose has been placed under the umbrella term ‘social purpose’ in the Greek legal provisions. It is also a concept that was identified in the Greek legal provisions but also in the UK legal provisions related to the idea of community broadly understood as a collective notion. A collective purpose of a social enterprise in the Social Entrepreneurship Law of 2011 has a universal character, which allows for activities that promote the fundamental needs of collectivity- universality (perceived as the totality of life), i.e. the preservation of humanity, the alleviation of poverty, the promotion of culture, the protection of the environment and the protection of collective and common goods that are shared and beneficial to all people, such as water. The collective character of the Koinsep purpose, however, is more narrowly defined later in Law 4430/2016, which amends the Social Entrepreneurship Law of 2011. There the collective character of the Koinsep regards mainly the collective interests of the Koinsep members. Distinguishable from the social and collective dimension is the community- based dimension narrowly understood in the content of the purpose prescribed by the UK legal framework. Similar to the Greek legal framework is the UK legal framework, which prescribes that the content of the community objective is not correlated with the notion of profit. On the contrary, it is defined as containing any activity that a reasonable person would consider benefitting the community, either as: (i) an entirety; (ii) a group of people with common and identifiable characteristics; or as (iii) a geographically defined area.

The social, collective or community dimensions of the ‘social purpose’ in the three selected legal regimes constitute a legal requirement for the corresponding legal forms. However, the manner in which the purpose of the social enterprise is legislated in these three legal regimes differs. There are three different legal approaches governing how the relevant legislation expresses the purpose of social enterprises.1 The Greek legislation prioritises the social and collective objectives in the legal provisions regulating the three different legal types of Koinsep. As such, it is essential for the social objectives prescribed in the legislation to be embodied in the SoA of every different type of Koinsep, in order for an organisation to acquire separate legal personality. The legality and completeness of the social purpose is subject to the scrutiny of the Registry prior to registration. The Greek provisions can be contrasted with the UK legal framework, where the community objectives included in the CIC’s constitutional documents are subject to the Regulator’s scrutiny under the CIC test. If the applicant organisation is deemed to have met the CIC test, it will then be incorporated as a CIC with legal personality. Meanwhile, the framework for the VSO differs from the CIC and the Koinsep. Unlike Greece and the UK, where the social purpose of a social enterprises is scrutinised and can be denied by an applicant body in furtherance of providing legal personality ex ante and ab initio, in Belgium, a legal entity can be deprived of such legal personality by the Belgian courts ex post facto.

Accordingly, the social purpose of the VSO is neither explicitly defined in legislation nor subject to any external test. Instead, a laissez-faire approach is adopted, to the extent that it is devolved to the owners of shares and members of the social enterprise to define and describe the content and the scope of the social objective in the AoA as a not-for-profit entity, or a for-profit body to a limited extent only, as the case may be. The social objectives are subsequently subject to the scrutiny of the Belgian courts on an ex post facto basis.