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Conversation 2: Social Enterprise Legal Entity

MT Mathew Townsend Public Seen by 200

The purpose of this thread is to discuss what potential methods and options we can consider SE as a lone legal entity rather than considering various options in existing business structure.

MT

Mathew Townsend Tue 2 Jul 2019 10:37AM

I believe this should be mentioned at the Unconference? It difficult to get responses on here

RF

Rena Frohman Tue 2 Jul 2019 10:44PM

Hi @mathewtownsend
I agree with you that you have raised a very big topic. One of the issues is that there are many different definitions and perspectives about organisations (and their legal structures) that identify themselves as social enterprises.
Perhaps as we gather data from the Queensland Social Enterprise Survey over the coming months we will have some baseline data to feed into these discussions. More ideas can certainly come out of the conversations that will be happening at the Unconference

MT

Mathew Townsend Wed 3 Jul 2019 11:18PM

Thanks @renafrohman .Yesterday QSEC had a strategy day. There some talks about the legal entity but not developed action item as we believe there some overlaps from the standup project. So what we need to do is to get the conversation going. Who are experienced with the law and polices? @emmakaterose @tonysharp1 @impactboom

JE

Jamil Ebrahim-Ahomed Wed 3 Jul 2019 11:31PM

Hi @mathewtownsend . @alexhannant2 just informed us, there is @keithrovers from Minter Ellison and @annacrabb from B Lab - they're actively pushing for a B Company legal form with the federal govt. Perhaps, they can be valuable contributors to the conversation.

KR

Keith Rovers Thu 4 Jul 2019 3:46AM

Thx. Happy to participate in this discussion. Can also loop in my colleague in Melbourne who has been working with B Lab - Geraldine Johns Putra.

Kind regards


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AC

Anna Crabb Thu 4 Jul 2019 3:36AM

Thanks @jamilebrahimahomed, spot on. B Lab is mobilising business leaders to advocate for the opt-in Benefit Company status in Aus. More info here: https://www.benefitcompany.org/
Minter Ellison and Rankin Business Lawyers are our pro bono legal partners.
We are co-ordinating with Akina Foundation in NZ on the impact business model being developed there.
Let me know if you would like further info @mathewtownsend, @keithrovers and others.

ID

Ian Daniels Thu 4 Jul 2019 11:00PM

@mathewtownsend @emmakaterose @tonysharp1 @impactboom @alexhannant2
@renafrohman @keithrovers @annacrabb
I understand there is two very separate parts to this discussion. One is about the long-term policy and legal changes around B Companies etc - and while more important in the long term, these options are not realistic for QSEC in the life of the current government. The other matter then is which is the best current option. There are a range of suitable options for the various social enterprises - and each needs its own advice. For QSEC itself, I have been asked to head up a small group to work on this item. The best option by far is a company limited by guarantee - so we can obtain charity status (which requires it to be an incorporated body or a company limited by guarantee) and which wishes to operate outside on the state (which an incorporated body must not do). I hope to put together a paper shortly.

MT

Mathew Townsend Fri 5 Jul 2019 2:32AM

Good to see the discussion going. I am aware that we focusing on QSEC strategy, but what we need to help our members to obtain legals and protection is requiring the policies. There are lot of advantages to have legal entity and/or structure because it affects SE's finances and marketing.

I believe we just need to run this conversation at the Unconference because of diverse backgrounds of SE's.

SS

Sarah Stockhausen Fri 5 Jul 2019 8:53AM

This is an interesting topic and for SE it's possibly like many businesses - there is no one size fits all. The correct legal structure could be dependent on who initiated the SE, who might be involved in the future, how it's going to be funded, it's objectives and purpose. I think it's a complex but worthy topic and there are many considerations including legal, financial organisational as well as social. I agree with Ian that it is worthwhile for any SE it seek its own advice, preferably from qualified professionals or contacts and from the outset when possible. This can be hard when funds are limited but there is a lot of information available for free as well if you know what you are looking for.

AC

Anna Crabb Mon 8 Jul 2019 8:53AM

To clarify my previous comment and pick up on @Matthew Townsend's - social enterprises that opt in to the proposed Benefit Company status is not a new structure but a status that companies can opt into.

TC

Tania Cobham Tue 9 Jul 2019 1:07AM

See reference to this topic in today's Probono news:
“Entrepreneurs with low self-efficacy are likely to lack confidence when talking to banks, venture capitalists or equity investors,” the report said.

Social Change Central co-founder Anne Lennon told Pro Bono News that Australian social entrepreneurs faced similar barriers.
“A lack of awareness of and access to funding options is definitely a barrier for Australian social entrepreneurs,” Lennon said.
She also said the legal landscape for social enterprises posed a challenge when scaling, with many having to choose between structuring as a not-for-profit or a for-profit organisation.

“They may seek to rely on grant funding in the startup phase but then in order to scale they may require equity investment,” she said.
“However there is currently no distinct legal structure for social enterprise in Australia that easily accommodates this. It is complex and requires specialist advice.”
Full article: in attachment below

MT

Mathew Townsend Sat 13 Jul 2019 7:24AM

Totally agreed @taniacobham . That article highlights my experiences as a social entrepreneur. Being in accelerator programs with mainstream startups, we always being overlooked. I find there some sort of attitude and cultural influence in business investment sector against 'impact towards people' rather than impact towards profits. It sad world indeed

SB

Sandy Blackburn-Wright Wed 31 Jul 2019 1:53AM

Just by way of background, we have been lobbying the federal government at every opportunity about a hybrid structure since 2011. We obviously want it to be able to take on debt and equity as well as grants. There has been very little interest over that time but it may be that in the last 12 months that its changing.

RF

Rena Frohman Wed 31 Jul 2019 1:59AM

HI @sandyblackburnwrig
Thank you for the extra background information - I'm hoping as @mathewtownsend mentioned that this issue can be explored more deeply during the Unconference as a way to build on changes and momentum that seems to be building across the sector.

MT

Mathew Townsend Thu 1 Aug 2019 5:04AM

Thanks @sandyblackburnwrig and @renafrohman . Yes we will establish this topic at the Unconference.

MT

Mathew Townsend Mon 9 Sep 2019 10:35PM

Hi all. With respect about the social enterprise legal for Qld state. Unfortunately, I come to conclusion we need to pause this for now. There are lot of legal obligations happening with existing and emerging social enterprises in Qld are registered with the NDIS. The NDIS is under federal legislation. If social enterprise is recognised at state level at being a NDIS provider it won't be approved.
It becomes like this:
NDIS service provider but not a social enterprise
Social enterprise organisation but not a NDIS service provider

This comes an issue of identity between state and federal legals. If social enterprise recognised at national level, this will become a better solution.

I apologise to everyone who investing time for the legals at Qld state level