The social purpose of social enterprises : a research on typology and enforceability

The emergence of organizations who pursue a social purpose is a worldwide trend. This emergence is not limited to the classic not-for-profit organizations that pursue those purpose, nowadays more and more companies aim to combine generating profit with doing business for the greater good (profit, people and planet).

A first problem however is the lack of legal certainty for investors and directors of enterprises pursuing such a social purpose. A variety of conflicts are conceivable: e.g. a company goes bankrupt after having done excessive distributions to its additional social purpose, a social enterprise cuts her social purpose after ten years of business, … A proper institutional framework for social enterprises can offer (more) legal certainty to directors and investors.

Furthermore, it is important to recognize the reputational attribute of social enterprises. Outsiders can trust that the enterprise will at least partly distribute her profit to the social purpose of the enterprise. This reputational attribute however fades out when it is not protected against abuse. This protection can be offered by means of transparency obligations, rights to replace directors or standing-rights for the beneficiaries of the social purpose, … . Nevertheless, preliminary research has shown that the Belgian legal order does not provide adequate instruments to enforce this social purpose.

This research aims to create a typology on the different appearances of social enterprises, and to add adequate enforceability mechanisms to this typology in order to protect the social purpose of social enterprises.