1.4.2.1 Methodological considerations in relation to the comparative approach

Chapter 2 relies on an explanation and a comparison of tailor-made legal forms and participatory governance structures, which is subject to certain methodological limitations explained in the methodological Sub-section 2.3 of Chapter 2. An important methodological consideration in Chapter 2 regards the question if the employed methodology, i.e. the comparative legal method, meets the objectives and the intentions of the study. For instance, the identification of the best approach in law is not the objective of the comparison of tailor-made legal forms employed in Chapter 2.1 Rather, the study in this Chapter aims to introduce, demonstrate and explain the existence of multiple legal possibilities of tailor-made legal forms provided in selected jurisdictions, and to indicate their similarities and differences with respect to certain legal variables, including stakeholder participation in the governance of social enterprises.

In addition, Chapter 2 does not aim to contribute to theoretical debates developed in comparative company law studies, i.e. the convergence versus divergence of company law systems to a most efficient type of company, the legal origins theorem, and the legal transplants debate, for the reason that they have been already developed by scholarship.2

In particular, the debate concerning the convergence versus divergence of the company law systems initiated by Hansmann and Kraakman in 20013 occupies comparative company law scholarship. This scholarship disagrees on whether company law rules and systems from different jurisdictions may eventually converge into a most efficient type of company or diverge due to institutional pressures.4 With respect to the ‘legal origin theorem’, comparative company law scholarship elaborates on the wider distinction and classification of company law regimes in generic families and origins, such as e.g. common law versus civil law. However, Chapter 2 does not touch upon the correlations between the similarities and differences in the substantive rules of tailor-made legal frameworks for social enterprises and the ‘legal families’ to which they belong. Neither does Chapter 2 aim to discuss the ‘legal origins’ of the examined legal rules tailor-made to social enterprises by producing conclusions with respect to the economic outcomes of their legal content.5 Additionally, it is not the objective of Chapter 2 to examine how different rules tailor-made to social enterprises from different legal systems may have been transplanted from one jurisdiction to another. Such a hypothesis has its origins in the ongoing theoretical discourse regarding legal transplants, which poses questions on whether it is feasible for (company law) rules and systems from certain jurisdictions to be used, adopted and transplanted into other jurisdictions.6

The contribution to these theoretical debates is not materialised in Chapter 2. Primarily, because this Chapter does not elaborate on rules and concepts stemming from the classical company law tradition concerning mainstream companies. It elaborates on rules and principles identified in social enterprise laws tailor-made for hybrid organisations. Some of these sets of rules have been included in a company act, such as is the case in the UK, where the CIC is regulated in the UK Companies (Audit, Investigations and Community Enterprise) Act of 2004. Other tailor-made laws for legal forms for social enterprises are included in cooperative law, e.g. in Greece, in the Social Entrepreneurship Law of 2011 and in its latest amendment of 2016.

Furthermore, Chapter 2 examines specific concepts introduced into tailor- made legal frameworks for social enterprises, such as the social purpose, participatory governance, the asset-lock, and the profit distribution constraint. All of these concepts are included in the Commission’s definition of social enterprises.

Nonetheless, despite of the limitations accounted for above, the content and the conclusions of Chapter 2 may be used to inspire future research to consider whether these ongoing theoretical debates could find ground in the area of tailor- made legislation for social enterprises. Moreover, the systematic comparison provides EU Member State legislators with a clear overview of the variations and possibilities available for formulating the social enterprise characteristics as required in the Commission’s definition provided in the SBI Communication of 2011. Finally, also social enterprises can profit from this analysis and use the findings in their search for an appropriate way to embed stakeholders participation in their governance.