Legal Structures for Social Enterprise 12 th October 2015 Robert Foster Co-Founder Red Ochre © Red Ochre © Red Ochre

Agenda  Social enterprise?  What are appropriate legal structures?  Triggers  Options  Pros and cons  Delegate advice  Grab me at the © Red Ochre

Who am I? T: I use business models to fix social and environmental problems © Red Ochre

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 © Red Ochre

People and “bodies corporate” vs. © Red Ochre

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 © Red Ochre

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? © Red Ochre

 Personal liability  Management  Succession  Transparency  Constitution  Operations Consider  Branding  Scalability  Personal dynamics  Management flexibility  Stakeholders – internal and external  Required outcomes © Red Ochre

Consider also © Red Ochre 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 UnincorporatedIncorporated Sole trader / free lancer / social entrepreneur Limited Company – by Shares / Guarantee PartnershipLimited Liability Partnership Unincorporated 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 TrustCharitable Incorporated Organisation

Choosing a structure © Red Ochre