ARTICLES OF ASSOCIATION
A company is formed as soon as the Articles of Association drawn up by its shareholders are signed. The Articles of Association can be adapted to the various circumstances the company may encounter throughout its life. By filing them with the Luxembourg Registre de Commerce et des Sociétés, the company is registered and acquires legal personality. However, the Articles of Association of a company that has obtained ministerial approval as a social impact company (SIS) must fulfill certain specific criteria.
The corporate purpose of a company defines the activity carried out by the company. A company's actions are in fact limited by this corporate purpose, which it may not exceed without risking criminal liability. It is therefore important that it be well drafted from the outset, even though can be amended later, with the prior authorisation of the Minister responsible for the social and solidarity economy.
The distribution shares of an SIS are those which entitle the owner to a portion of the dividends, provided that the company has made a profit and that its corporpate purpose has actually been achieved.
The impact shares of an SIS do not entitle the owner to any dividends and cannot under any circumstances be converted into value shares. All profits are reinvested in the SIS to ensure its continuity.
LAW OF 12 DECEMBER 2016
This law creates the legal framework for societal impact companies and defines the principles of the social and solidarity economy in Luxembourg.
At least 50% of the profits made by the SIS, after tax, must be reinvested in the SIS.
The legislation on societal impact companies (SIS) requires a minimum of two performance indicators, which allow for the measurement of the social and societal impact of the SIS and thus also allow for the effective and reliable verification that the corporate purpose has actually been achieved.
A share is a title of ownership in the share capital of a company. A share confers certain rights on its holder. The share entitles its holder to receive dividends and may confer voting rights on its holder at the General Meeting. The amended Law of 12 December 2016 on the creation of societal impact companies stipulates that shares are exclusively registered and issued with a nominal value.
SOCIAL AND SOCIETAL IMPACT
This term refers to the transformation generated by an organisation’s activities on society, its citizens, and its environment over the long term. It is important to know how to differentiate between the impact of a company's achievements and its results. The achievements are the actions, products, and services that the organisation develops. The results are the immediate effects of these actions. Finally, the impact is the medium- and long-term effect that these actions have on stakeholders.
SOCIAL AND SOLIDARITY ECONOMY (SSE)
This term covers several related structures based on common values and principles: social utility, cooperation, and a local foundation adapted to the needs of each region and its inhabitants. SSE activities provide responses to social and societal needs by combining sustainable economic activities with positive social effects. They contribute to inclusive, intelligent, and sustainable growth, quality jobs, social cohesion, and local and regional development. Since 2009, Luxembourg has had a ministerial department for the social and solidarity economy dedicated to promoting the SSE at national and international level. Since 2016, a law has highlighted the specific features of the social and solidarity economy in Luxembourg.
Social innovation provides new, effective solutions to social and societal needs that are under-satisfied in all sectors and that neither the State nor the market can meet on their own. The social economy often goes hand-in-hand with social innovation.
SOCIETAL IMPACT COMPANY (SIS)
The societal impact company (société d’impact sociétal, or SIS) is aimed at any individual or legal entity, acting alone or with others, wishing to set up a commercial company to carry out an economic activity with a social or societal purpose.
Accreditation as a societal impact company (SIS) is reserved for commercial companies that meet the principles of the social economy.
The SIS is aimed both at existing businesses or organisations and at project leaders who want to start a business activity with a social or societal purpose.
The societal impact company (SIS) offers a number of advantages for the organisation concerned, including a clear and precise legal framework, a suitable tax regime, and access to national and European public contracts.