Legal Structure In Europe
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Ireland! !
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Irish social enterprises adopt a variety of legal structures, including the company structure limited by guarantee or share, industrial and provident societies, and co-operatives. Social enterprises can also apply for charitable status, which provides them with certain exemptions from certain taxes. The Revenue Commissioners determine whether a body is entitled to charitable tax exemption under the Taxes Consolidation Act 1997. Charities legislation is currently under review with a view to reform as the charities sector in Ireland is unregulated. As a consequence there is no such thing as a registered charity in Ireland at present and no statutory definition of what a "charity" is.
! France !
A map of social enterprises and their eco-systems in Europe - europa.eu
In France, the concept of "social enterprise" (entreprise sociale) is still a new concept, whose use and understanding remain limited to a circle of experts and social entrepreneurs; it is not really used as a key concept by policymakers and is not well-known to the wider public. Indeed, the notion of social enterprise is far from having achieved a recognition similar to that gained by the concept of "social and solidaritybased economy", which has gathered coalitions of actors for the last twenty years. ‘Box 1: Law on Social and Solidarity Economy – main provisions The law on Social and Solidarity Economy was adopted by the Parliament on July 21st, 201424 . As defined by the Article I of the law, Social and Solidarity Economy (SSE) is a way of undertaking the economic activities. Rather than specifying narrow and restrictive definition of an organisation belonging to the SSE, it provides the set of criteria to appreciate whether an organization can or cannot be considered as the one providing a social utility and therefore whether it can be included into the perimeter of SSE. Those criteria include foremost25: ■ Existence of the objective other than just profit sharing; ■ Democratic governance (must be explicitly defined in the statute of the organisation) envisaging the access to information and the opportunity to take part in the decision making process (to all parties engaged in the running of the enterprise) which is not solely based on the capital contribution and/or ownership; ■ Management of the organisation complies with the following principles: – Majority of the profit is devoted to running and development of the company; – Existence of the obligatory reserves which are indivisible and can not be redistributed. Furthermore, the law stipulates that SSE consists of cooperatives, mutual (including insurance mutuals), foundations, associations and régies. Importantly though, SSE may consist also classical enterprise, which ensured in its statute, the fulfilment of the following conditions: ■ All conditions as stipulated by Article I of the law (see above); ■ Possess ‘social utility’ (based on Article 2 of the law) which encapsulates, inter alia: (i) support of vulnerable people whether because of their economic, social status or personal circumstances – those beneficiaries can be customers, members, employees, users or beneficiaries of such organisation, (ii) addressing the social exclusion and social inequality (economic, social, cultural, educational or in access to healthcare) as well as reinforcement of territorial cohesion, (iii) contribution to the sustainable development in economic, social ,environmental areas as well as energy transition and international solidarity. All under condition that it also meets (i) and (ii). In addition, the Article 3 of the law envisages that Supreme Council of Social and Solidarity Economy adopts, on a proposal of its members, a guide26 on good practices defining the conditions for continuous improvement of best practices of companies in the Social and Solidarity Economy as defined in Article 1 of this law. These conditions shall take into account the characteristics of each of the different legal forms of the social and solidarity economy sector and existing legal obligations, regulations and agreements. Law also envisages that once a year, General Assembly of enterprises of Social and Solidarity Economy presents during the debate the information on the application of the criteria included in the guide whereas every 3 years Supreme Council of Social and Solidarity Economy will publish the evaluation report from the application of criteria. The law equips Supreme Council of Social and Solidarity Economy27 with important competences. These include:
■ The consultation of Supreme Council of Social and Solidarity Economy regarding all legislative projects regarding Social and Solidarity Economy and Social Entrepreneurship; ■ Supreme Council of Social and Solidarity Economy contributes to the definition of the National Strategy for the Development of Social and Solidarity Economy; ■ Supreme Council of Social and Solidarity Economy publishes, every 3 years, report on the equality between women and men in the area of Social and Solidarity Economy. Furthermore, the law includes new measures regarding the employee participation e.g. it enables them to take up legal steps allowing the take-over of the company - either fully or by facilitating the increase in their share of total capital. The law also aims at encouraging the establishment of Territorial Centres for Economic Cooperation (Pôles territoriaux de coopération économique) creating the structure of cooperation between the Social and Solidarity Economy organisations, typical business, local governments, and centres of research and vocational training28 . Chamber of Social and Solidarity Economy is the body responsible for the promotion of the organisations of Social and Solidarity at the national level (as defined by the Article 5) while Regional Chambers of Social and Solidarity Economy are responsible for the promotion at the local level.
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Italy
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National report on social economy sector in Italy - South-East Europe What kind of legal structure do these enterprises have? Investigating the legal structure of social enterprises, given the definition of chapter 1, is nowadays less complicated then it was since 2006. In fact, until 2006, the legal framework regulating social economy in Italy was based on various legal acts of different range and types. The fundamental rights and principle that stand at the basis of the social economy are regulated by the Constitution of Italy (equal social dignity of citizens, right to work, right of association, etc.). As shown in the first section of this chapter, according to the legislative decree 155/2006 the social enterprise is rather a qualification / label than a special legal form that is assigned to the entities carrying out in a stable way an economic activity that consists in the production or the exchange of goods and services of public benefit, having general social aims. Furthermore the ownership‟s status of a social enterprise should ensure that the total profit of the enterprise is not distributed to the single shareholders but is reinvested in the social enterprise or used for the benefit of the community. Hence, social enterprises can have different legal forms. Social co-operative is the main legal form of social enterprise, however there are many subjects in Italy constituting the “third sector” that can be “roughly” defined as social enterprises: cooperatives, associations, foundations, Onlus organizations. Beside the general legislative framework defined by the Legislative Decree 155/2006 which regulates social enterprise, the single legal forms include: - the Civil code provisions regarding associations and foundations (Art.14-42), and co-operatives (Art. 2511-2548); - the Law 381/91 which defines and regulates social cooperatives; - the Presidential Decree n. 917/86 on non-commercial associations (entities). Other acts and laws include the tributary law (Legislative Decree 460/97, defining the characteristics of ONLUS (Organizzazione non lucrativa di utilità sociale - non-profit organizations for social aims). It is a cross-section category of non-business bodies applicable to social cooperatives, volunteering organizations and NGOs; being recognized as an ONLUS Organization gives right to some benefits related to tax regime (for more details, see the following specific paragraph).
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http://evpa.eu.com/wp-content/uploads/2013/02/ECNL-on-socent-in-Europe.pdf Registration. The article of incorporation must specify the filed of activity and the not-for-profit goal a SE purports to serve. A SE is entered into the Registry of Commercial Companies and must have a prefix: "social enterprise" in its name. Sanctions are not provided, however, for the breach of this obligation.18 The foregoing rules presumably apply to public benefit organizations which are entered into the PBO Registry with the Ministry of Finance, and which want to continue to operate as SE, as well as to social cooperatives without the public benefit status. Rules governing the groups of companies (including minority protection) apply to the group of SE accordingly.
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Spain
http://evpa.eu.com/wp-content/uploads/2013/02/ECNL-on-socent-in-Europe.pdf
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Social economy is the designation for the set of economic and entrepreneurial activities that are carried out in the private scope by those entities that pursue the collective interest of their members, whether the general economic or social interest or both, in accordance with the following principles:
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a) Primacy of the individual and of the social purpose over capital, which materializes in an autonomous and transparent, democratic and participative management, which leads to prioritizing the taking of decisions according to the individuals and their work contributions and services provided to the entity or according to the social purpose, over their contributions to the capital.
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b) Profits obtained from the economic activity shall be distributed mainly according to the work contributed or the service or activity performed by its partners or by its members and, if appropriate, according to the entity’s social purpose.
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c) Promotion of solidarity internally and with society, promoting commitment with local development, equal opportunities between men and women, social cohesion, the insertion of persons with the risk of social exclusion, the generation of stable and quality jobs, the conciliation of private, family and work life and sustainability.
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d) Independence with regard to the public authorities. The type of entities that can be considered as being part of the social economy are “cooperatives, mutual societies, foundations and associations engaged in an economic activity, employee-owned enterprises, work integration enterprises, sheltered employment centres, fishermen’s associations, agricultural processing companies and unique entities created under specific rules that are governed by the principles set forth in the previous article are part of the social economy”. Furthermore, “any entities that carry out economic and entrepreneurial activities and whose operating rules respond to the principles set out in the previous article (…) may be part of the social economy”.
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Source: Law 5/2011 on social economy, English version, available at http://www.eesc.europa.eu/resources/docs/the-spanish-law-on-social-economy.pdf Therefore, in Spain, while the concept of social economy has been regulated, this is not the case for social enterprises, which although emerging in reality, especially since the start of the economic crisis, have not yet been legally regulated. Furthermore, the decentralised nature of the Spanish state builds a diverse mosaic of policies and social economy movements at regional level.
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Austria
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Austria does not have a framework regulation for SE and generally has a rather narrow concept of the social economy, which is primarily concerned with social inclusion and work integration. Social inclusion is primarily carried out by two types of "social enterprises": socio-economic establishments (SÖB) and nonprofit employment projects/enterprise (GBP), which operate as associations or not-for- profit limited liability company (gGmbH). Sheltered workshops are governed by the Disabled Persons Employment Act; they operate as a regular commercial company (Gmbh) and thus fall out of the remit of this Report. Cooperatives are not used as forms for SE due to their mutual character. GGmbH is a limited liability company which is established to pursue public benefit (not-for-profit) goals, rather than generate profits. It is expected to become a viable legal form for SE in Austria, not least due to certain tax benefits it enjoys (infra, III).27 The gGmbH is principally governed by the Law on Limited Liability Company (GmbH-Gesetz) of 1906. The Law does not envisage the “public benefit (non-profit)” purpose (“gemeinnützige”) as one of the legitimate purposes of GmbH, rather, the public benefit concept of GmbH has been developed in tax law. Accordingly, tax benefits are provided for any organization (GmbH included), which pursues pubic benefit (nonprofit, charitable or religious goals) and its assets are solely and directly used to further those goals. A purpose is deemed for public benefit in case its implementation supports the community at large in intellectual, cultural, moral or material terms (promotion of health care, art and science, care for old, public education, nature etc.).
! Germany ! file:///Users/Sammi/Downloads/Country%20Report_Germany%20(1).pdf !
The delimitation of the term “social enterprises” is not easy in Germany – probably more difficult than in most other Member States, given the strong presence and traditions of the “third sector” comprising a colourful spectrum of organisations supplying social services instead of public bodies and state enterprises, or engaging in commercial activities with a social mission. Depending on the definitional approach taken, a smaller or larger part of these traditional organisations –cooperatives, a large mass of welfare organisations, commercially active foundations and associations, and self-help groups that adopt an entrepreneurial approach in their work and do not fully base their operations on state regulated fees, grants and donations – may be indeed labelled as “social enterprises”. Hence there is no clear, broadly accepted definition: responsible public bodies or traditional welfare organisations will generally have a broader set of organisation in mind when speaking about “social enterprises” (or “Sozialunternehmen”) than stakeholders from the rather new but vivid ecosystem around the ‘new-style’ enterprises which following the Anglo-Saxon approach to social entrepreneurship. These stakeholders may often refer to this new type of enterprises in English as “Social Enterprises”. Policy and legal framework There is no specific legislation on social entrepreneurship in Germany, not even a formal definition, and there are no plans to introduce such acts in the near future. Due to traditions and its exceptional significance, a large part of the policy discourse and legal framework concerns the traditional ‘third sector’: the delivery of social services as enshrined in the German Social Code, other social services and various forms of civic engagement dominated by a strong biotope of foundations and associations.
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POLAND
Recognition of the social enterprise concept The concept of social enterprise is an emerging notion in Poland; there is not yet a common definition of the concept, which originates in the concepts of third sector, non-profit sector and cooperatives. The specificity of social enterprises, compared to third sector, non-profit or cooperative organisations in general, lies in the fact that they are profit–makers, although not profit–maximizers, and that they focus more on general interest/community interests, and not only on mutual interest goals. Social enterprises are still rarely a subject of public discourse and they are only partially integrated into policies and laws. Only recently have a few policy debates recognized the potential of third sector and social enterprises as a vehicle for creating services for households and communities and jobs for hard-toemploy groups. Training structures Several Polish universities offer training programmes developed for social enterprise leaders and staff. One example is a pilot training/educational programme for social enterprise managers, which was launched in March 2006 at Warsaw University's Institute of Social Policy, within the framework of the EQUAL project "We Have Jobs". This innovative postgraduate programme for existing and would-be managers in social enterprises and local leaders is supplemented by winter and summer schools on social enterprises with a series of national and international visits. Various state and private universities also include the subjects of social economy and cooperative movement to the curricula of the general studies (mainly within the faculties/institutes of economics, management, law, social policy, economics and management of agriculture etc.); some of them also organize postgraduate studies on these topics. Some cooperatives and other social economy organizations themselves organize training courses for the managers/employees/elected leaders of social enterprises. Most of them focus on very concrete issues (accounting, taxes, marketing, quality control, personnel management etc.). Most of these courses are financed by the participants themselves (sometimes with the support of the organizations of which they are members/employees); sometimes they are organized in the framework of EU or national projects. ! ! ! ! ! ! ! ! !
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SWEDEN
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Social services and labour market integration The public sector’s increasing inability to satisfy demand and quality expectations stimulated the emergence of the first social enterprises in social services in the 1980s. Cooperative childcare was the first and most successful field, presently providing over ten percent of child-care services (Pestoff 1998). In other welfare services the trend peaked in 1992, only producing limited results (Stryjan 1996). Labour market integration in Sweden is steered by a separate set of institutions. The progressive erosion of these and the restructuring of mental health-care in the late 1980s fuelled an increase in openly marginalized groups (Stryjan and Wijkström 1996; Stryjan 2001). The first work-integration social enterprises (WISEs) were started as a response by those directly affected and/or by committed public employees; this grass-roots’ action produced new organizational models. No specific institutional/legal groundwork was laid beforehand, and formal financing agreements or rehabilitation contracts were negotiated locally with some municipalities. Likewise, relations with labour-market and social-insurance organs were developed locally, but never regulated nationally. On the whole, the level of institutionalization remains extremely low, which increases the enterprises’ vulnerability but also provides for a high level of innovation. WISEs gained increasing recognition, first at the directly involved county and municipal levels (which dispense medical care, social aid and residential care), and gradually at the national level as well. A 26 acknowledges social enterprises’ important contribution to rehabilitation but also notes the makeshift character of their financing, and the lack of adjusted tendering mechanisms as major development hinders, and recommends a review of WISEs’ situation. It is unclear whether this recommendation will be followed by the present government. Business-wise, WISEs are active in a broad variety of branches, ranging from technical ones (as logistics and a scrap yard) to services, gardening and janitoring (Stryjan 2006). Some enterprises provide services to the population, while others rely on business-to-business contracting. Only a handful have municipal contracts in their mainstream business activity, though contracts for rehabilitation placements and occupation are a source of additional revenue for some. No incentive for a commercial binding to public authorities exists, since the Swedish interpretation of EU public procurement legislation does not allow for preferred treatment for social enterprises, and periodic public tendering makes public agencies less reliable as business partners than the private ones.
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Portugal file:///Users/Sammi/Downloads/SE%20Mapping_Country%20Report%20Portugal%20(1).pdf
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In June 2013 a new law framing the sector, the "Social Economy Law", was enacted after a unanimous vote by the Portuguese parliament. Changes in the specific laws for four of the "families" of Social Economy (cooperatives, mutual societies, associations and foundations) are currently in preparation, with the exception of the "misericórdias" that are governed by the Roman Catholic Church law13 . The “Social Economy Law” identifies the organisations within these five "families" as those that integrate the Portuguese social economy, referring to whether other types of organisations may be integrated if they respect the principles set out in Article 5 of the law. This article effectively excludes more market-oriented organisations of being considered part of the Social Economy Sector, regardless of their social object and even when restricting the payment of dividends or the range of salaries. This shows that public policy for the social economy is entirely focused on the third sector or social organisations, but not enterprises as such. In reality, this ‘social economy’ stands in between a market and public economy, and its recognition alongside these other two spheres is explicit in the Portuguese Republic Constitution as the "Cooperative and Social Economy".
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Portugal also has a legal status for organisations in the social action area ("IPSS") from which may benefit, in special circumstances, cooperatives, foundations and philanthropic associations and that is assigned, by definition, to mutual associations and "misericórdias". The IPSS designation corresponds to the acronym for Private Institution of Social Solidarity, a status that allows fiscal advantages and access to public funds. This is a concept that has similarities with the "idea" of "social enterprise" being developed in the European Union, although the status of IPSS is limited to the Social Economy organisations, i.e. vetoed to market-oriented enterprises.
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Apart from a public and private sector the 1976 Portuguese constitution introduced a cooperative sector. In 1989 the revision of the constitution amended this cooperative sector to include the ‘communitarian’ and ‘self-management’ sub-sectors, thus creating the concept of social cooperatives. A further constitutional amendment in 1997 included the ‘solidarity’ sub-sector, which includes all non-profit legal persons that have the objective of social solidarity, making special references to mutuals.
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As the Portuguese "social solidarity co-operative" (cooperativa de solidariedade social) legal form was created in 1997, this type of cooperative provides services with an objective to foster the integration of vulnerable groups, such as children, people with disabilities and socially disadvantaged families and communities. Portuguese social solidarity co-operatives combine in their membership users of the services, workers and volunteers; they cannot distribute any profit to their members.
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Croatia
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The policy and legal framework for social enterprise Policy framework for social enterprise The Government Office for Cooperation with NGOs and the National Foundation for Civil Society Development are bodies which recognised the potential of and development possibilities for social entrepreneurship/ social enterprise in their strategic documents and programmes of cooperation with civil society organisations back in 20095 . For instance, in the National Strategy for the Creation of an Enabling Environment for Civil Society Development (2012 – 2016), social innovation by developing social entrepreneurship/ social enterprise was indicated as one of the ways in which civil society organisations (CSOs) can contribute to social and economic development. A working group for development of the Strategy for Social Entrepreneurship Development 2014 – 2020 was established by the Government of Croatia on 25 April 2013. The working group consists of 42 members including ministries, government agencies and stakeholders from non-government sector. The primary goal of the Working Group is to create a strategic document; to develop an action plan for the implementation of the Strategy; and to monitor the implementation and revise the Strategy after 2020. At the time of writing this Report, the Draft Strategy for the Development of Social Entrepreneurship in the Republic of Croatia for the period of 2014 – 20206 was undergoing final public consultations before its official adoption. The responsible ministry for the Strategy is the Ministry of Labor and Pension System. The draft Strategy sets out four specific objectives: ! To establish and improve the legislative and institutional framework for the development of social entrepreneurship; ! To establish a financial framework for social entrepreneurship; ! To promote the importance of and the role of social entrepreneurship through formal and informal forms of education; ! To ensure the visibility of the role and possibilities of social entrepreneurship in Croatia and provide information to the general public. Legal framework In Croatia, there is currently no specific law defining or regulating social enterprise. However, in March 2011, a new Act on Cooperatives was passed. Article 66 of the Act provides for the legal form of a social cooperative. According to the Act: “A Social cooperative is a cooperative established with the purposes of providing: ! assistance in meeting basic needs of the socially disadvantaged, disabled and other natural persons which they cannot otherwise meet on their own or with an assistance of other family members due to adverse personal, economic, social circumstances; ! work and economic integration for persons with reduced work capacity and other natural persons who lack resources for meeting basic needs, and are therefore unable to meet those needs by themselves, their work, non-labour income or any other sources. Members of a social cooperative may be users or providers of services or workers of the cooperative.”