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Mkt1019 social enterprise legal structures

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  • 1. (Some) Legal Structures for achieving social outcomes
  • 2.  
  • 3.  
  • 4.  
  • 5. AND IN MORE DETAIL
  • 6.  
  • 7. Unincorporated Association
    • group of people usually with a constitution who run the organisation for the members.
    •   no separate legal identity of its own .
    • the people who run the business are themselves liable for its debts and any leases or contracts it has.
    Advantages – what is good? Disadvantages – what is bad? “ Light touch” Regulation Personal Liability Some tax advantages Structure can be unclear Flexible and informal structure Little recognition for finance
  • 8. Company Limited by Guarantee
    • As a Limited Company the members’ liability is limited to the amount the members have contributed.
    • This can be a nominal amount, which is often just £1. If the company closed and owed money the members would only owe £1 each.
    • Can also register as a charity to gain tax benefits
    Advantages – what is good? Disadvantages – what is bad? Less tax to pay-(if charity) Restrictions on trustees Limited liability Restrictions on trading Public trust in charities Lots of rules and regulations Tried and tested model - lots of advice
  • 9. Industrial and Provident Society
    • Like a Limited Company an Industrial and Provident Society has limited liability.
    • There are two types of Industrial and Provident Society a Social Enterprise can be:
      • Co-operative Society – must have open and voluntary membership
      • Community Benefit Society – must be able to prove it will help the community
    • They are regulated by the Financial Services Authority & qualify as exempt charities so pay less tax .
    Advantages – what is good? Disadvantages – what is bad? Limited liability Some restrictions on trading Possible tax reduction Some rules and regulations One member , one vote Restrictions on eligibility- “special reasons” Flexible structure
  • 10. Community Interest Company
    • new type of company, limited by guarantee or shares, that is set up to benefit a community in some way.
    • regulated by Companies House and the Community Interest Company Regulator but don’t have many rules and regulations.
    • must pass the Community Interest Test.
    Advantages – what is good? Disadvantages – what is bad? “ Light touch” Regulation New and untried Limited liability Have to pay normal tax No restrictions on trading Can not be a charity No restrictions on members
  • 11. Mixed models Charity Trading Co 100% shares Charity Trading Co 51% shares Other investors 51% shares Charity 51% shares Other investors 51% shares Trading Co Asset Unincorporated Association Governance Leases from
  • 12.
    • Read “Legal formats for social enterprise”
    • And make notes for your portfolio