Social Enterprises: How Should Company Law Balance Flexibility and Credibility?
37 Pages Posted: 30 Nov 2013
Date Written: November 28, 2013
In recent years, many countries have introduced special regimes to facilitate the organisation of social enterprises. Many of these include company law rules which may either provide for a special corporate form for social enterprises, or which are part of a certification scheme for such enterprises. This article analyses how these company law issues have been addressed. It focuses on the solutions of the US benefit corporation, the UK Community Interest Company and the recently proposed Danish certification regime for social enterprises. There is an analysis of how the different systems aim to find the right balance between flexible rules which are sufficiently attractive to entrepreneurs and (social) investors, and rules which ensure that the designation of ‘social enterprise’ is credible. It is pointed out that the three systems balance these requirements quite differently, and the advantages and disadvantages of each are discussed. It is concluded that a certification scheme seems preferable to a new corporate form, and several recommendations are made as to how to find a system that is more credible than the US solution and more flexible than the UK and Danish solutions.
Keywords: Social enterprises
JEL Classification: K22
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