Organisation Type Not For Profit Organisations  - Social Enterprises Social Enterprises have been defined as "a business with primarily social ovjectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather that being drieven by the need to maximise profit for shareholders and owners".  Most aim to be viable trading concerns, making a surplus from trading alone. 1.  Partnership and Limited Liability Partnership A partnership is not generally considered to be a Social Enterprise, though social aims can be spelled out in the Partnership Agreement.  There is likely to be a problem if the business wants to apply for funding as it will be difficult to demonstrate any wider social involvement.  There is also a form of Limited Liability Partnership (LLP) which is safer for the partners; they are not personally liable for any losses provided they have acted in a reasonable maner.  An LLP requires you to register with Companies House and to publish annual accounts. 2. Not for Profit Limited Company  This may be a company limited by shares or limited by guarantee.  Its Memorandum & Articles of Association must state that any surplus is put towards the company's social purpose and usually defines the company as democratic and accountable to the community through its membership.  In law, a Limited Company is considered to be a person and it can therefore own land or enter into contracts.  The directors are agents of the ocmpany and are not personally liable for its debts.  This is a flexible structure, suitable for a wide range of Social Enterprises, but regulation by Companies House is fairly strict and there are detailed requirements for annual reports & accounts. Companies House Crown Way  Cardiff, CF14 3UZ Telephone  0870 3333636 www.companieshouse.gov.uk 2. Community Interest Company A CIC is a limited company with special features to ensure that it works for the benefit of the community.  It differs from a charitable company in that it can be established for any legal purpose which benefits the community, whereas a charity must have exclusively charitable purposes.  A further advantage is that a CIC is subject to lighter reglulation than a charitable company.  On the downside, a CIC is not eligible for funding which is available to a charity. CIC's commit their assets and profits permanently to the community by means of an "asset lock", ensuring that assets cannot be distributed to shareholders.  They report to a new independent regluater, the Regulator of Community Interest Companies.  A big advantage is that CIC's not-for-profit status is visible as well as assured. It is worth noting that a CIC cannot register as a Charity, but that a Charity may set up its trading subsidiary as a CIC. CICs have to register with Companies House as a company limted either by guarantee or by shares and then apply to the new Regulator for CIC status.  The CIC Regulator's website has detailed guidance notes on all aspects of setting up a CIC, or converting an existing limited company to a CIC. Community Interest Company Regulator CIC Team, Room 3.68 Companies House Crown Way, Maindy Cardiff, DF14 3UZ Tel  029 20346228 www.cicregulator.gov.uk 3.  Industrial and Provident Society (Co-Operatives) IPS is an incorporated orgainsation and its members benefit from limited liability.  There are two types of IPS:- a bona fide co-operative society and a society for the benefit of the community.  An IPS must register with the Mutual Societies Registration section of the Financial Services Authority, the regulatory body.  In general regulation is lighter than for Limited Companies and the accounting requirements far less stiff.   An IPS is run by its members and there are several sets of model rules.   Profits must generally be ploughed back into the business.  Where part of the profits are used for another purpose, that purpose should be similar to the main aim of the societ, for example for philanthropic or charitable purposes.  Where the rules of the IPS allow assets to be sold, the proceeds must be put into its business activities.  A change in the law has now made it possible for a non-charitable IPS to have an "asset lock" similar to a CIC above, to ensure that its assets are always used to benefit the community. An IPS whose aims are wholly charitable is considered an 'exempt charity' - it cannot register with the Charity Commission and is not rgulated by them, but it is generally bound by charity law.  A charitable IPS already has an "asset lock" under charity law. The Financial Services Authority Rgistration of Industrial & Provident Societies 25 The North Colonnade Canary Wharf London, E!$ 5HS Helpline  0845 606 1234 www.fsa.gov.uk 4.  Developemnt Trusts and Social Firms These are two fairly common forms of Social Enterprise but neither is a legal structure in itself.  Development Trusts are set up to bring about local regeneration and are often established as Limited Companies with provision of selfare services, but setting up enterprises which encourage self-help and reduce dependency. Development Trust Association 1st Floor, Red Lion Court London, EC4A 3EF Tel 0845 458 8336 www.dta.org.uk

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