Question:
I want to establish a social enterprise. What criteria do I need to meet?
Answer:
According to Article 10 of the 2020 Enterprise Law, a social enterprise is an enterprise established with the aim of addressing social and environmental issues for the benefit of the community, while still conducting business operations like a regular enterprise. Specifically, a social enterprise must meet the following three basic criteria:
- Be legally registered in accordance with the provisions of the 2020 Enterprise Law;
- Have operational objectives for social or environmental benefits, rather than prioritizing profit maximization;
- Use at least 51% of the annual after-tax profit to reinvest in achieving the registered social or environmental objectives.
In addition, when registering a social enterprise, the application must include a Commitment to Achieve Social and Environmental Objectives, in accordance with Clause 1, Article 28 of Decree 01/2021/ND-CP. The person authorized to sign this commitment depends on the type of enterprise, as follows:
- Private Enterprise: the owner of the private enterprise signs;
- Partnership Company: all general partners sign;
- Limited Liability Company (LLC): individual members sign, and the legal representative or authorized representative signs on behalf of organizational members;
- Joint Stock Company: founding shareholders or other shareholders (if agreed) sign, including the legal representative or authorized representative for organizational shareholders.
Once the Enterprise Registration Certificate is issued, the Business Registration Office will publish this commitment on the National Business Registration Portal to ensure transparency.
Conclusion:
To establish a social enterprise, the company must comply with both the general conditions for setting up a regular enterprise and the specific criteria regarding social and environmental objectives and profit reinvestment ratio (≥ 51%). The commitment to achieve these objectives must be signed by the authorized person and publicly disclosed in accordance with legal regulations.
Consulting reference: Business Law Services
