Memorandums and Articles For Social Enterprises — What A Mission, And I Don’t Mean Statement

This blog charts the path to our creation of valid and relevant Memorandum and Articles of Association for a Social Enterprise.

Most of us with an entrepreneurial spirit will trawl the internet to unearth an absolute goldmine of resources helpfully posted by a range of people and organisations.

Memorandums and Articles of Association are necessary to incorporate your new company – to define the scope of your organisation and form your company’s constitution.

October 2009 saw the final implementation of the Companies Act 2006, and this led to a problem. (This blog does not intend to identify the different changes that were implemented, you can find that here).

The problem was that I couldn’t find post-October model M&A’s for a Social Enterprise anywhere.

What Is A Social Enterprise

To track back slightly, to be a Social Enterprise consisted, in reality, of two main actions:

1. Stating your social or community beneficiary in your Memorandum
2. Stating that any assets left over from dissolving the company will be gifted to a similar organisation

This was easily understood when working with pre-Oct 09 model M&A’s available all over the internet (not least Social Enterprise East Midlands’ very own available straight from their website); it was easy to cut and paste these parts in worded for your own purposes, so long as the legal clauses weren’t changed.

So, I embarked on an extraordinarily lengthy process of discovery to my ultimate endpoint.

Can I Have Model Articles Please?

Firstly, I contacted the commercial organisations that offer incorporation, normally along with free this and that such as a bank account (example).  As a Social Enterprise was not an ‘off-the shelf’ product I was invited to spend £250 to have a bespoke incorporation package.  No thanks.  NEXT!

Then I scoured the Business Link website to see if they offered model M&A’s.  NOPE!

I spoke to seventeen (yes, that’s right 17) different so-called Social Enterprise and Third Sector advice or associated service organisations.  The sum total of the expertise that I could muster through them amounted to either being pointed back to Business Link, or the humble admission that they didn’t know how to reflect a Social Enterprise in M&A’s post-Oct 09.  The worst aspect of this was that no-one was able to offer a signpost to the right place.

Finally, I was able to get hold of a ‘Consultant’ who said that he would look over what I had cobbled together to see if it met the Social Enterprise needs and was legal.  He then submitted an entirely different format for both M&A’s claiming that this was ‘easier’ yet they were based on the pre-Oct models.

Along the way I have had an assortment of ‘pay me’ options offered, but ethically I felt it was my duty to a) understand this process by being directly involved in it, and b) reduce the expenses burden on the Social Enterprise that I was setting up.

Companies House Saved The Day

I struggled on with two sets of documents, one being what I had cobbled together from Companies House models plus the Social Enterprise insertions; and the other being the Consultant’s Choice.  I mapped every clause of each set out on paper, compared and contrasted, and finally settled on a final version.

Still wary of the legal implications of my home-made Articles (the main part of this task) I called Companies House to find out what the process would be if they rejected the M&A’s.  Why make this call?  Because that was the resoundingly repetitive warning that I heard throughout this whole information gathering exercise – ‘if you get them wrong Companies House will throw them back at you’. WRONG!

Companies House stated ‘we do not check them’.  I was aghast!

The Ethical Kicker

Some may say that this means that I didn’t need to be so ‘anal’ about the M&A’s and that I could get away with just submitting standard Private Limited By Guarantee M&A’s.  But my point is this: surely all businesses, and especially Third Sector and Social Firms and Enterprises should govern themselves by their M&A’s.  This way they can display them as evidence of their ‘Social’ status, and be used as a guiding mandate, and universally understood by all Directors?

This may seem desperately simplistic, and you may even guffaw incredulously to even consider that Directors don’t already know the ins and outs of their M&A’s.  I humbly submit that many don’t, and furthermore that some operate wide of their mandated aims.

This has been an incredible exercise and I feel informed, confident, and capable now that it is complete.

The new Social Enterprise is on it’s way to becoming incorporated, and the hope is that many will benefit from it’s activities.

Sometimes the long route is long, but definitely worth the journey.

The Capable Manager

Follow @capablemanager