Subject: How does a ltd company that is not trading change to a social enterprise?

Dave, are you definately wanting to convert to a social enterprise?  Have you looked into CICs at all? http://www.cicregulator.gov.uk/aboutUs.shtml

You could also speak to the Social Enterprise Coalition or the nice people at UnLtd.

Registering with the CIC regulator is probably one way to go about it. Get Legal is a good website for information on legal structures and how to decide which is best for you: http://www.getlegal.org.uk/

Hi Dave. Is your ltd company  limited by shares?

If yes then  round up any shareholders and get them to approve social purpose.

agree a dissolution clause which prevents distribution of proceeds from winding up to shareholders  surpluses and , rather, applies such proceeds to similar purposes - this is an asset lock and is essential if you want to register as a CIC. 

 If not ltd by shares is it a co ltd by guarantee - if so put in an asset lock.

Nothing else is required - there is no legal definition of a social ent. and if you've got the asset lock in place and you have a declared social or ethical purpose, go for it. 

Of course you can enhance that status by being a more deliberate SE such as changing rules to comply with CIC regulator, becoming a co-op or other type of legal structure (IPS, Charitable company) but save it for when you have capacity to fiddle about. This is particularly important if you are driven to actually do something of social value get going while your enthusiasm is driving you and backfill the organisation around your activities!

Happy to help . J

J, sounds like  good advice;

seems to me there is too much energy being spent on SE definitions etc. especially by "officianados" when the work of the SE is what really matters

Have you seen this done successfully or done it yourself - IE be operational as an SE then without any difficulties further down the line "backfill" to get the org. structure properly defined and above board;

We are looking at a trust board overseeing one or more ltd companies, all making money for all the social enterprise causes; Have you come across any orgs. doing this?

Regards

Dre

Thanks HRBird - GetLegal is a helpful site; case studies of real world social orgs is especially useful

Dre

Hi Dre, 

Do you mean that you plan to have one board; many profit making enterprises. Does each enterprise have its own social purpose, or is each one contributing its activity towards the one purpose of the board. Can you clarify? 

Traditional model of two tier structure is to have a charitable organisation (lets call it a Trust for this purpose) wholly owning an/some enterprise arm/s. Profits (after running and develpment costs, etc) from these are passed to the Trust to help the Trust achieve its purpose. 

cf. Greenpeace Environmental Trust (charity): Greenpeace Ltd (business arm)

Salvation Army: Salvation Army Trading Company Ltd, etc

There is no explicit social goal for the trading enterprise in this set up, just making money to donate to the owning Trust. Its the Trust which has the social goal.  

Obviously if your trading enterprises make money and achieve a social goal that's two hits! 

J

Hi J,

Thanks for taking the time.

We are pioneering - again! Seems to be our thing! But we see no other SE doing what we want in terms of a coprorate structure so we will define it as we go along. To clarify:

Making money:

we have 2 or 3 or more profit-making activities,

.  each activity could be a seperate division in one Ltd Co. (easier accounting administering etc)

.  or each could be a seperate Ltd Co. (each more driven to succeed, so more profits)

Not decided yet. They exist to generate profits for the social purpose; I want to run them on a strict commercial business basis: books balanced - out to make money from the work; and all surplus profits go into the Social Enterprise causes. The more profit: the more social good we can achieve via the SE. May start as one Ltd Co. See how this goes then later split into 2 or 3 if justified

Social Enterprise - making change

The SE has a single cause that it is here for. But it is an ambitious cause for all ordinary people and will need to be financially and organisationally independent: not beholden any corporate, any pary, any governement. Independence is essential in order for the SE to be truly effective for people.

The entire group operation - one SE arm and one or more commercial arms will be accountable and strategically governed by the Trust Board.

But there is one further complication. Somewhere in or beside the SE organistation we have our own Charitable Foundation! The Foundation will also receive surplus profits and it's sole purpose is to support charitable causes in society mainly sponsoring one big charity each year. Not sure where this fits at this time and I'm looking at existing "Foundations" in large corporates to see what they've done. The profits all coming from the Group makes it important that the work of the Foundation is influenced by the direction of the Group but in no way will anyone dictate or expect anything in return from the charitable Foundation. My thoughts are that the Trust Board oversees the Foundation?

This is the ideal I am aiming for but we may have make-it-up along the way. That's fine by me. So many good things have been started on a shoestring, by the seat of the pants, and with the objective clearly known but how to get there not so clear! We are aiming to turn out to be one of those good things.

Regards

Dre

Hi Again, DreCharles. 

I can picture all that ( that says something about me and structures, i think) and can see how that would work. Here's a few more points:

• I think to start off you might be better off internalising the separate enterprises as divisions ( less admin and capacity overhead) You could perhaps look to float these as they become real and have their own dynamic (maintaining the relationship you want in terms of money making for the trust). There's no need to jump to numerous organisations at this point , particularly if no. of people is limited
• not sure how the Foundation is funded. Traditionally a foundation is started with a sizeable chunk of cash, the interest from which is then used for the charitable purposes of the Foundation. In your case this doesn't appear to be the case. Is it more of a case of second independent-minded charity funded by the enterprises directly or indirectly by the charitable trust. 
• if the objective is have independence of the foundation then why have the same trustees 

I'm dead curious now. What's the 'big idea'?  

Best wishes

J

J thanks for comments.

Will let you know who we are when we launch soon; keeping under wraps for now.

diagrammatically:

Ltd Co/s commercial operations --> generate surplus profits

all surplus profits --> funds several and all The SE projects and day to day operations

The SE also annually donates --> Our Charitable Foundation

Charitable Foundation sponsors one or more charities; one or more other SE's; donates in kind too;

think this covers it.

Regards

Dre

Good Luck with it all. you have your work cut out!

Keep me posted! here or johnny.denis at btinternet.com

J