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The Voluntary Code of Practice for Social Enterprise in Scotland

The Criteria

1. A Social Enterprise (SE) is a trading business – selling goods and services – but whose primary objective is to achieve social and/or environmental benefit. SEs are different from those charities and voluntary organisations which do not aspire to financial independence through trading.

2. Regardless of its legal form, the constitution of a SE will include the requirement that profits are reinvested in the business or in the beneficiary community – and not distributed to private owners, shareholders or investors. (See FAQs)

3. The constitution will always require that on dissolution, the assets of the SE are reinvested in another organisation with similar aims and objectives. Taken together Criteria 2 and 3 are referred to as the ‘asset lock’ – the defining characteristic of a SE – which distinguishes it from the private sector.

4. SEs are constituted and managed in an accountable and transparent way – particularly with regard to the community they serve.

5. SEs are distinct from the public sector and cannot be the subsidiary of a public body.