Section x:Social Enterprises in Europe

May 23, 2017

What are the main legal systems in Europe?

Main Commercial Companies in Europe

Continental Europe (civil law): Ø  “Anonymous” Companies

•  Board of Directors + Shareholders (one-tier system) •  OR •  Management Board + Supervisory Committee + Shareholders (two-tier

system) •  Highly regulated (for large companies)

Ø  Private Companies •  Governance depends on the country of origin

United Kingdom (common law): Ø  CompanyLimitedbyGuarantee

•  Trustees for Charities or Directors + MembersØ  CompanyLimitedbyShares

•  Board of Directors + ShareholdersØ  PublicLimitedCompany

Main Legal Forms for Impact Investing in France •  SociétéparAc,onsSimplifiée(privatecompany):

§  Nominimumcapital§  Execu0ve(Président)+Shareholders(onlyrequirement)§  Veryflexible

•  SociétéàResponsabilitéLimitée(privatecompany):

§  Nominimumcapital§  Gérant(manager)and/orco-managers+members§  Notveryflexible

•  SociétéAnonyme(rare):

§  37.000eurosminimumcapital§  BoardofDirectors+Shareholdersor§  ManagementBoard+SupervisoryCommiMee+Shareholders§  Notveryflexible

What is a Social Enterprise in Europe?

Definition of Social Enterprise in Europe : 5 characteristics

MappingStudyESELA,SocialEnterpriseinEurope.Developinglegalsystemwichsupportsocialenterprisegrowth(2015).

Legal Form vs. Legal Status

Main Legal Forms for Social Enterprises in Europe

ESELA,SocialEnterpriseinEurope.Developinglegalsystemwichsupportsocialenterprisegrowth.

Legal Forms for Social Enterprises in Europe

Legal Statuses for Social Enterprises in Europe

Comparison Chart – Examples of Social Enterprise Legal Statuses

Maincriteria EuropeanSE ESS-ESUSEnterprise

(Fr)

SIS(Lux)

SocietaBenefit(It)

CIC(Uk)

EconomicAc0vity

✔ ✔ ✔ ✔ ✔

PrimarySocialAim

✔ ✔ ✔ ✔ ✔

AssetandProfit

Limita0on

✔ ✔ ✔ ✔

Inclusivegovernance

✔ ✔

Organiza0onalAutonomy

✔ ✔ ✔ ✔

Compensa0onLimit

✔ ✔ (reasonable)

ImpactRepor0ngandMeasurement

✔ ✔ ✔

Examples of Social Enterprises in Europe

ESUS Company in France “Entreprise de l’économie sociale et solidiare”

ESUS Company in France

Entreprise Solidaire d’Utilité Sociale (ESUS) Lawn.2014-856of31July2014

Keyfeatures

SSECompanies

•  “Trad i0ona l” SSE Companies :assoc iaIons, foundaIons, mutualcompanies,cooperaIves);&

• Commercial companies with thefollowingstatutoryprovisions:•  Primarysocialaim(socialu0lity),•  Democratic governance, and •  Limits on distribution of profits

SocialUJlityandSolidarityEnterprise

•  Primarysocialaim(socialu0lity),•  Limita0ononcompensa0on,•  Ac0vity has a significant impact onfinancialreturnsorexpenses,

•  Sharescannotbetradedonregulatedmarket,

•  Renewableevery2or5years

ESUS Company in France

Entreprise Solidaire d’Utilité Sociale (ESUS) Lawn.2014-856of31July2014

Mainadvantages

SSECompanies

•  Image/Communica0on• Visibility/Funding• Subsidizedemploymentcontracts(insomeregions)

SocialUJlityandSolidarityEnterprise

• 90/10SolidaritySavingsFunds• Taxadvantagesoninvestment(taxreducIononinvestment)

• Subsidizedemploymentcontracts(insomecases)

• Civilservicevolunteers

ESUS Company in France

Democratic governance requirement The ESS company needs to have a democratic governance, defined and organized by its statutes, allowing information and participation, of shareholders, employees, and stakeholders, regardless of capital or financial contribution.

AdvisoryBoardorDecision-making

body

shareholders employees stakeholders

SIS Company in Luxembourg

SIS Company in Luxembourg

Société d’Impact Sociétal (SIS) Lawn.255of12December2016

Key features

CommercialCompanies

• CommercialandCoopera0veCompanies(SA,SARL,SConly)

SISCompany

•  Primarysocialaim(socialu0lity),• Autonomousmanagement,•  Limita0ononprofitandassetdistribu0on,

• Annualimpactreport+KPIstomeasureperformanceofsocialimpact,

•  Limita0ononcompensa0onforemployeesonly(6xmin.wage)

• Annualaudit

SIS Company in Luxembourg

Société d’Impact Sociétal (SIS) Lawn.255of12December2016

Main advantages

CommercialCompanies

SISCompany

SIScompanieswith100%ofimpactshares:•  Collec0vityincometaxexemp0on,•  Commercialcommunetaxexemp0on,•  Fortunetaxexemp0on,•  Incometaxdeduc0onfordona0ons(cash)grantedtoSIS(sameasFRUPandASBL),

•  Publicfunding

AnySIScompany:-Visibility,-Grants,-Publictenders(marchépublique)

Independent management requirement

•  SIScompanyrequiresindependentmanagementwherebythe

membersofthecompanyarefullycapabletochooseandrevoketheirowngoverningbodiesandcontrolandorganizeacIviIes

SIS Governance Requirement

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