Legal Structures for Social Enterprise12th October 2015

Robert FosterCo-Founder Red Ochrerobert@redochre.org.uk

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Agenda Social enterprise?

What are appropriate legal structures?

Triggers

Options Pros and cons

Delegate advice

Grab me at the

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Who am I?

robert@redochre.org.uk

T: 020-7250-8306

I use business models

to fix

social and environmental problems

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Definitions of social enterprise

“a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners”

UKTI, SE UK

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People and “bodies corporate”

vs.

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Triggers Taking on a lease

Buying a freehold property

Taking on employees

Raising finance

Entering into large contracts

Managing the risk associated with your service, product or intervention

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First steps: What do you want to achieve?

What resources do need to set up? Where will you get money from on a day to day basis?

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Personal liability

Management

Succession

Transparency

Constitution

Operations

Consider Branding

Scalability

Personal dynamics

Management flexibility

Stakeholders – internal and external

Required outcomes

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Consider also

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Regulation

Who is the regulator?

What are the reporting requirements?

Control

Ownership vs. stewardship

Board – management, trustees, directors, advisory, shadow?

Do directors get paid? Do you want to be CEO or a trustee?

Funding

Freedom to trade

Access to start-up funding

Tax and surplus implications

VAT exemptions?

Corporation tax?

Profit taking?

Comparison of typical legal forms

q.v. Social Firms, Royal Charter, B Corporation etc.© Red Ochre 2013-15

Unincorporated IncorporatedSole trader / free lancer / social entrepreneur

Limited Company – by Shares / Guarantee

Partnership Limited Liability PartnershipUnincorporated membership association / trust - unconstituted

Community Interest Company – by Shares / Guarantee

Unincorporated membership association / trust - constituted

Co-op forms – Co-operative Society / Community Benefit Society (replaces IPS)*

If wholly and exclusively charitable then Charitable Association or

Charitable company

Charitable Trust Charitable Incorporated Organisation

Choosing a structure

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