How to start up a Social Cooperative Enterprise (SCE)

Under L. 4019/2011 (Official Gazette Α΄216) a new legal form has been introduced, the Social Cooperative Enterprise (SCE). Below you can find some key information on this new type of corporation, as well as information on how to start a SEC. For more information on the possibilities offered by this type of corporation and its specificities, you are advised to look for the relevant legislative framework on the website of the Managing Authority for Social Inclusion and Social Economy of the Ministry of Labour, Social Security and Welfare (www.keko.gr).

1. What is a Social Cooperative Enterprise?

A Social Cooperative Enterprise (SCE) is a civil-law cooperative with a social purpose and limited liability for its members, possessing entrepreneurial capacity by law. A SCE is equally managed by its members and its purpose is to ensure collective benefits, whereas its profits come only from activities of social interest.

2. How many SCE categories are there?

Depending on their special purpose, SCEs are divided into 3 categories:

·       Integration SCEs: Their aim is to integrate people who belong to vulnerable social groups (people with disabilities, drug addicts, rehabilitated drug addicts, HIV-positive people, prisoners, released prisoners, juvenile offenders) into the economic and social life. In integration SCEs, at least 40% of the employees belong to vulnerable social groups.

·       Social Care SCEs: Their aim is to produce products and provide social and welfare services targeted at social groups, such as the elderly, babies, children, people with disabilities and chronic illness.

·       Collective and Productive SCEs: Their aim is to serve local and collective interests and to promote employment, social cohesion and local or regional development. For example, they are active in sectors, such as culture, the environment, ecology, education, utility services, promotion of local products, maintenance of traditional activities and crafts, etc.

3. How many people are required to start a SCE?

To start an Integration SCE at least 7 members are required.

To start a Social Care SCE or a Collective and Productive SCE, at least 5 members are required.

4. Who can be a SCE member?

SCE members can be both natural and legal persons. The number of legal persons participating in the corporation cannot exceed 1/3 of the total of its members. Local authorities (OTA) and public law entities (NPDD) subject to them are not allowed to participate in the corporation, with the exception of Integration SCEs in which public law entities can participate as members upon the approval of their surveillance body.

5.      What are the specificities of a SCE?

·         Each member must have at least one obligatory share in the cooperative enterprise and up to five optional ones.

·         All SCE members entitled to vote have one vote irrespective of the number of shares they possess in the cooperative enterprise.

·         The participation of a natural person in its capacity as member-partner in a SCE alone does not entitle the person to have entrepreneurial capacity and does not bring social security or tax liabilities.

·         A SCE member cannot participate in another SCE established in the same Regional unit with the same objective in its Articles of Association.

·         SCE profits will not be distributed to its members, unless its members are also employees of the SCE.

·         Profits will be distributed yearly on a percentage basis as follows:

-  5% to create a reserve.

- Up to 35% will be distributed to employees as a productivity bonus.

- The rest (at least 60%) will be distributed for business activities and the creation of jobs.

6. What is the liability of its members?

Except for the sum paid by SCE members to obtain shares in the cooperative enterprise, SCE members will not be liable to their creditors.

7. What are the motives to start a SCE?

·  People working for SCEs, who belong to vulnerable social groups and receive a welfare benefit or any other kind of allowance, can receive these allowances together with their wage from the SCE.

·  SCEs may have access to funding provided by the Social Economy Fund (under construction).

·  They may have access to funding provided by the Hellenic Fund for Entrepreneurship and Development.

· They may be eligible under L. 3908/2011 on "boosting private investment in economic development, entrepreneurship and regional cohesion".

· They may be eligible under entrepreneurship support programmes, OAED (Greek Manpower Employment Organisation) work support programmes and all kinds of active employment policies.

· They may conclude programme contracts with the public sector, the wider public sector and first- or second-level local authorities.

8. What is the Social Economy General Register?

The Social Economy General Register is a public book kept in electronic form. It is mandatory to register SCEs in the Register. The Register is kept at the Department for Social Economy Register, Directorate for Social Protection of the Ministry of Labour, Social Security and Welfare. Access to the Register is free of charge for any interested persons.

Until the electronic version of the Register becomes operational, SCE registrations will be conducted manually by the Department for Social Economy Register.

9. Whom should I contact to start up a SEC?

The Department for Social Economy Register, Directorate for Social Protection of the Ministry of Labour, Social Security and Welfare where you can find the forms to be filled in for registration.

10.   When does a SCE obtain a legal form?

By registering to the Social Economy General Register, the SCE obtains a legal form and entrepreneurial capacity.

11.   What should I do before going to the Department for Social Economy Register?

You should draft the Articles of Association of the SCE. You can use an Articles of Association template to be found as Annex to the Ministerial Decision No. 2.9621/οικ.4.1200 (Official GazetteΒ΄/1360/25-04-2012).

12.   What are the steps to take to register a SCE to the Social Economy General Register?

Stage 1: Submit an application to register

The candidate SCE will submit to the Department for Social Economy Register:

a.       The Articles of Association of the SCE signed by the founding members,

b.      An application to register, duly filled in,

c.       A signed declaration, separately signed by each founding member, certifying their participation or not in another SCE,

d.      (Only for Integration SCEs) Asigned declaration certifying that the obligation to employ people who belong to vulnerable social groups at a rate of at least 40% is met.

e.       Other relevant supporting documents (where necessary).

The Register Department will check the information submitted and proceed with:

·  the registration of the SCE to the Register,

·  the issuing of a Registration Certificate valid only for activity commencement in the Tax Office,

·  the signing of the Articles of Association and their dispatch to the SCE.

Stage 2: Submit additional information

The SCE will submit to the Department for Social Economy Register:

·  An application to register additional information (exact address of its establishment, the Tax Office it belongs to, VAT and NACE, the annual activities programme and the composition of the Steering Committee)

·  The certificate of commencement of business submitted to the Tax Office

·  A report on the formation of the Steering Committee as a body.

 

The Register Department will check the information submitted and proceed with:

· The approval of the application to register additional information.

· The issuing of a Registration Certificate (valid until the submission of the first Annual Activities and Accounting Programme, by which time it will be replaced by the Register Membership Certificate).

13.   When is the start-up process for a SCE complete?

Upon the conclusion of the second stage of the SCE registration process to the Social Economy General Register (approval of the application to register additional information and issuing of the Registration certificate), the start-up process of the enterprise is complete.

14.  What happens if the supporting documents are inadequate or wrong?

The Register Department asks for additional information or corrections which the SCE will have to provide within a specific time limit.

15.   What will happen if I do not fill in or correct the information requested by the Department for Social Economy Register within the time limit it has set?

Rejection of the application to register is provided for, or at a later stage, the SCE itself could be removed from the Register.

16.   Are the time limits set by the Department for Social Economy Register binding?

The time limits are binding.

17.  Do I need to register to ΟΑΕΕ (Self-Employed Workers’ Insurance Organisation)?

No. The participation of a natural person in its capacity as member-partner in a SCE alone does not entitle the person to have commercial status and does not bring social security or tax liabilities.

Business Sector