Einde inhoudsopgave
Social enterprises in the EU (IVOR nr. 111) 2018/2.1
2.1 Introduction: Legal frameworks for social enterprises in the EU
mr. A. Argyrou, datum 01-02-2018
- Datum
01-02-2018
- Auteur
mr. A. Argyrou
- JCDI
JCDI:ADS592830:1
- Vakgebied(en)
Ondernemingsrecht / Rechtspersonenrecht
Voetnoten
Voetnoten
J. Defourny and M. Nyssens, ‘Conceptions of Social Enterprise and Social Entrepreneurship in Europe and the United States: Convergences and Divergences’ (2010) 1(1) Journal of Social Entrepreneurship, 33-38; J.A. Kerlin, ‘Social Enterprise in the United States and Europe: Understanding and Learning from the Differences’ (2006) 17(3) Voluntas: International Journal of Voluntary and Nonprofit Organisations, 247; J. Defourny, ‘From Third Sector to Social Enterprises’ in C. Borzaga and J. Defourny (eds), The Emergence of Social Enterprise (Routledge 2001); J. Defourny and M. Nyssens, ‘The EMES Approach of Social Enterprise in a Comparative Perspective’ (2012) EMES Working Paper No. 12/03, 3-4 available at: <https://emes.net/publications/working-papers/the-emes-approach-of-social-enterprise-in-a-comparative-perspective/> accessed 24 September 2017.
H. Haugh, ‘A research agenda for social entrepreneurship’ (2005) 1(1) Social Enterprises Journal, 2-3; G. Galera and C. Borzaga, ‘Social Enterprise: An International Overview of its Conceptual Evolution and Legal Implementation’ (2009) 5(3) Social Entrepreneurship Journal, 212; Defourny (n 1) 15; C. Liao, ‘Limits to Corporate Reform and Alternative Legal Structures’ in B. Sjåfjell and B. Richardson (eds), Company Law and Sustainability: Legal Barriers and Opportunities (Cambridge University Press 2015) 275; A. Fici, ‘Recognition and Legal Forms of Social Enterprise in Europe: A Critical Analysis from a Comparative Law Perspective’ [2016] 27(5) European Business Law Review, 639-640.
Galera and Borzaga (n 2) 211; J. Austin, H. Stevenson and J. Wei-Skillern, ‘Social and Commercial Entrepreneurship: Same, Different, or Both?’ (2006) 30(1) Entrepreneurship Theory and Practice, 2-3; J.G. Dees, ‘The meaning of ‘Social Entrepreneurship” (Kauffman Foundation and Stanford University 1998) 1.
Galera and Borzaga (n 2) 212 and 215.
Defourny and Nyssens (n 1) 33-38.
ibid 33, 36-37; Galera and Borzaga (n 2) 218-219; European Commission, ‘A Map of Social Enterprises and their Eco-systems in Europe (Synthesis Report)’ (European Union 2015) 42, 51 and 55 available at: <https://ec.europa.eu/social/main.jsp? langId=en&catId=89&newsId=2149> accessed 24 September 2017.
Defourny (n 1) 17; Galera and Borzaga (n 2) 218.
Galera and Borzaga (n 2) 218-219; Defourny (n 1) 5-6; Defourny and Nyssens (n 1) 32-53; Defourny and Nyssens, 2012 (n 1) 9-10; F. Cafaggi and P. Iamiceli, ‘New Frontiers in the Legal Structure and Legislation of Social Enterprises in Europe: A Comparative Analysis’ in A. Noya (ed) The Changing Boundaries of Social Enterprises (OECD Publishing 2009); Kerlin (n 1) 247.
Galera and Borzaga (n 2) 218-219; Defourny and Nyssens (n 1) 34-37.
R. Spear, C. Cornforth and M. Aiken, ‘The Governance Challenges of Social Enterprises: Evidence from a UK Empirical Study’ (2009) 80(2) Annals of Public and Cooperative Economics, 261-262; Defourny (n 1) 14.
D. Brakman Reiser, ‘Theorizing Forms for Social Enterprise’ [2013] 62(4) Emory Law Journal, 681-740; Defourny (n 1) 14; Galera and Borzaga (n 2) 219; Defourny and Nyssens (n 1) 44; Liao (n 2) 275; Fici (n 2) 647.
ibid. See also R.T. Esposito, ‘The Social Enterprise Revolution in Corporate Law: A Primer on Emerging Corporate Entities in Europe and the United States and the Case for the Benefit Corporation’ (2013) 4(2) William and Mary Business Law Review, 672-673. See Synthesis Report (n 6) 52.
Galera and Borzaga (n 2) 218-219; Haugh (n 2) 2-3; Synthesis Report (n 6) 49-50, 97.
The UK was still a member of the EU when this article was developed and drafted. See Part 2 of the Companies (Audit, Investigations and Community Enterprise) Act of 2004(c. 27) BS; Community Interest Company Regulations 2005 (SI 2005/1788). In the UK and Scotland there is a growing number of legal forms which are tailor-made to social enterprises. Other legal forms for social enterprises carrying out business activity particularly in the UK and in Scotland are the Community Benefit Society (BenCom) introduced by s. 2(1)(b) of the Cooperative and Community Benefit Societies Act 2014 and the Scottish Charitable Incorporated Organisation (hereafter ‘SCIO’), introduced by s. 47 of the Charities and Trustee Investment (Scotland) Act 2005 and the Scottish Charitable Incorporated Organisations Regulations 2011 (SSI 2011/44). BenComs are business organisations that are not companies but registered societies. They conduct business activities only for the benefit of society by operating in a democratic way following the principles of open and voluntary membership, while also applying the principle of ‘one member, one vote’ in decision-making. BenComs are also bound to a statutory asset-lock, which prohibits the distribution of profits, dividends or other surpluses to the members of the society and which is rather reinvested in the primary function of the business or in other activities that may benefit the community. BenComs also enjoy a charitable status. SCIOs are corporate legal forms that are incorporated and operated in Scotland. Under Scottish law, a SCIO is a corporate legal entity with the same status and eligibility to transact and to be protected as a natural person, i.e. an individual. A SCIO entity must be registered with the Scottish Charity Regulator known as OSCR and its existence is dependent on the charitable status provided by OSCR. It means that once the charitable status is withdrawn a SCIO ceases to exist. Additionally, SCIOs are required to produce a constitution and establish a principal office in Scotland with two or more members who may overlap with the charity’s trustees subject to the content of its constitution. Additional information is available on the website of OSCR, SCIOs: ‘A Guide on the Scottish Charitable Incorporated Organisation for Charities and their Advisers available at:
Belgian Companies Code of 1999, arts. 661-669, Boek X, Hoofdstuk I, Wetboek Van Vennootschappen van 7 mei 1999 (BS 06.08.1999).
The overarching objective of the study was to examine defining characteristics across social enterprises in the EU that demonstrate how social enterprises are distinguished from mainstream enterprises, traditional non-profit organisations and social economy entities. See the Synthesis Report (n 6) 9, 4 and 52 including the country reports of 29 countries. Figure 2.1 is retrieved from the Synthesis Report. It illustrates the different legal regimes applicable to social enterprises in the different countries in the EU.
Synthesis Report (n 6) 51-52; Fici (n 2) 641.
ibid at 57-58.
ibid at 55-56.
ibid at 56-57.
During the past 20 years, new entrepreneurial forms referred to as social enterprises, have developed in various countries of the European Union (EU).1 Social enterprises are business organisations that engage in (for-profit) economic activities, i.e. commercial and entrepreneurial activities, and that also seek to fulfil societal (social and environmental) objectives of a non-profitable character.2 They pursue commercial activities, such as the sale of goods and the supply of services to the market, which aim to benefit the community and to serve the general interests of society. Given their hybrid character, social enterprises combine for-profit activities with not-for-profit objectives that are either directed at markets and/or are destined to serve society.3 Whether they are market-oriented and/or societal, the activities of social enterprises aim to provide for innovative and entrepreneurial solutions to tackle economic, social and environmental problems.4 Moreover, their hybridity enables social enterprises to develop financing schemes by combining market and non-market resources and by generating profits and revenues for example. Those resources are combined with donations, grants and subsidies and they are reinvested into a social purpose. Social enterprises are business organisations inspired by motives and values, which are not driven solely by the generation of profit or profit-maximisation. Rather social enterprises aspire to principles, such as solidarity, democracy, equality, the primacy of society over capital, inclusion, transparency and societal (social and environmental) responsibility.5
In the EU, social enterprises adopt a variety of legal forms to be found in the civil and company laws of national legislation, such as the association, the foundation, the limited liability company, the cooperative, the partnership and the mutual society.6 The legal forms generally enable a social enterprise to assume a legal personality and carry out entrepreneurial and commercial activities with a social goal.7 In the 1990s, social entrepreneurs had the tendency of making use of legislation that was designed specifically for associations and cooperatives. In France and Belgium, for example, social entrepreneurs predominantly adopted the legal form of the association.8 However, in Italy and Finland, the applicable national legal framework did not enable associations to undertake commercial activities. Hence, social entrepreneurs would commonly use the legal form of the cooperative to conduct business activities.9 However, in practice, social entrepreneurs have experienced challenges in selecting the most appropriate legal form amongst the many available.10
Consequently, various EU countries have started to introduce legislation for social enterprises in their national jurisdictions by means of tailor-made legal forms. This type of legislation is demonstrably better adapted to the entrepreneurial activities and the social objectives of social enterprises.11 A key exampleis the Italian tailor-made legal form for social enterprises named the ‘social cooperative’ that was introduced in 1991. The social cooperative model was eventually replicated and adopted by various other EU countries, such as Portugal, Spain, France and Greece.12
The development of tailor-made legal forms for social enterprises in the national legal systems of EU countries was also supported by the introduction of additional conducive secondary legislation and policy frameworks for these enterprises. Regulatory and policy frameworks supported social enterprises in participating in public procurement or in applying a special tax regime.13 A prime example is the United Kingdom (hereafter ‘UK’) that introduced a tailor-made corporate form for social enterprises known as the Community Interest Company (hereafter ‘CIC’).14 For the development of CICs, the UK’s national legislation lays down a comprehensive regulatory and policy framework. Various other countries have advanced legal frameworks and public policies for companies with a social purpose. In 2005, Belgium introduced a legal label (also known as a transversal legal status for social enterprises) that all business organisations can adopt.15
In 2015, the European Commission (hereafter ‘Commission’) completed a broad-based study mapping out social enterprises and their ecosystems in the 28 Member States and in Switzerland. The study identified amongst others: (i) the legal frameworks that are designed exclusively for social enterprises as opposed to legislation regarding mainstream enterprises; (ii) the corporate law aspects most commonly used by social enterprises; and (iii) the legal labels and certification systems designed for social enterprises (see Figure 2.1).16
Figure 2.1: A map of special legal frameworks for social enterprises in the EU
The study concluded that tailor-made legislation has been introduced in the majority of EU countries (19 out of 28, including Italy, Greece, Belgium, Portugal, the UK, and France).17 Such legislation comprises various types of tailor- made legal forms for social enterprises. We identified three prevalent sub-groups and corresponding legal forms for social enterprises. They include:
the legal label form/legal status for social enterprises.18 An indicative example is the social purpose label (i.e. Vennootschap met Sociaal Oogmerk – the Company with a Social Purpose in Belgium; here termed the ‘VSO’). According to the Commission, similar approaches have been introduced in Denmark, Italy, Finland, Slovenia and Lithuania, for example (see Figure 2.1). The legal label transcends existing legal forms for companies as it can be adopted by various types of organisations if they satisfy a minimum threshold of legal requirements prescribed by their Articles of Association (hereafter ‘AoA’) (see Sub-section 2.4).
the cooperative legal form for social enterprises,19 which is a cooperative with a social purpose in countries with a cooperative legal tradition (mostly in Southern – European countries, such as Greece, Italy, Spain, France, and Portugal). An indicative example is the Kοινωνική Ʃυνεταιριστική Eπιχείρηση, i.e. the Greek term for the Social Cooperative Enterprise in Greece (here termed the ‘Koinsep’); and
the company legal form for social enterprises,20 which is a private or public limited liability company (hereafter ‘plc’) in the UK, i.e. the Community Interest Company (CIC).