In December 2020, the Parliament of Cyprus approved legislation for the foundation of social enterprises. This establishes a legal framework under which certain entities, such as companies, cooperatives and other legal entities, can be registered as social enterprises.
Nicosia, Cyprus: 6 April 2021
Social enterprises are typically organisations that apply commercial strategies to maximise improvements in financial, social and environmental well-being, and usually involve an integration of social impact on business operations.
The Directorate General for European Programmes, Coordination and Development, provides the following description:
“A social enterprise, operating within the social economy, follows a differentiated business model from that followed by mainstream businesses; its primary objective is not to generate profits for its owners or shareholders, but rather to create positive social impact. The social enterprise operates normally in the market, providing goods and services in an entrepreneurial and innovative fashion and uses its profits mainly for social purposes”.
According to the provisions of the Law, a business can be defined as a social enterprise if it falls under one of the following two categories:
Social enterprise of general scope: the primary purpose of such an enterprise should be to carry out a social mission through the promotion of positive social and/or environmental actions in the interest of society, and it should invest at least 70% of its profits to promote this social mission;
Social integration enterprise: the primary purpose of such an enterprise should be to carry out a social mission through the employment of persons coming from vulnerable groups of the population, and these persons should constitute at least 40% of the enterprise’s workforce.
Elena Mavrou, Head of the Parliamentary Committee, welcomed the new legislation as one that allows the establishment of businesses that to a large extent give back their profits to society and a whole, and ones that provide employment opportunities to marginal members of the population such as the disabled, the unemployed, ex-cons and single parents.
According to Maria Nomikou, the Youth, Skills and Inclusive Communities Sector Lead for Europe at the British Council, a law defining social enterprises as separate, unique entities, distinct from other types of businesses or non-profits, helps increase awareness.
It also means that social enterprises will have access to EU grants available only to the social enterprise sector and receive various tax benefits, which will motivate people to set up their own social enterprises.
Pioneers Post writes:
“A key demographic that this law could benefit are young people. Social enterprises throughout Europe are instrumental when it comes to tackling youth unemployment. The younger generation is often the one to start social enterprises, be employed by them, or use them as means to gain work experience. With a significant youth unemployment rate of nearly 16%, the new law could present 15 to 25-year-olds in Cyprus with a new way of entering the job market”.
Navigator Consulting provides Investment Advisory, Strategic Management and support for small and medium enterprises in Cyprus, Greece and internationally.
For further information, please contact:
Philip Ammerman
Managing Director
Sources:
KNEWS. 6 April 2021
CyprusMail. 24 March 2021
Pioneers Post. March 2021
Directorate general for European Programmes, Coordination and Development. December 2019
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