A new legal form for social enterprises in the Netherlands

In 2013, Tineke Lambooy, Professor of Corporate Law at Nyenrode Business Universiteit, and Aikaterini Argyrou, Assistant Professor also at Nyenrode, specialized in social enterprises and law, started their research in the field of social entrepreneurship and law. The purpose of the research was to find out in which way legal frameworks (can) facilitate social enterprises. The research comprised: (i) theoretical studies on legal forms for social enterprises in other jurisdictions, (ii) case studies in several jurisdictions, (iii) empirical studies concerning the legal forms that Dutch social enterprises employ, (iv) explorative studies into the possibilities of introducing a new corporate law form tailored to social enterprises in the Dutch legal system, and (v) action research regarding the development of self-regulation specifically aimed at social enterprises in the Netherlands.

"Entrepreneurs who start social enterprises are considered the explorers of the ‘new economy’. In this new economy, companies prioritize reaching societal goals over making a profit with their business. The current legal forms in the Netherlands do not yet support these companies," Lambooy says. Argyrou adds: "We started our research by asking questions like: ‘Which legal forms are suitable for social entrepreneurs?’, ‘Which legal forms are available for social entrepreneurs in other countries?’, and ‘What does “social” mean in relation to public or societal impact?’ Since then, we have included many social enterprises in our studies, conducted several case studies, and researched various topics in this field, including together with PWC and KMPG."

Societal impact

"Our research has in recent years supported many entrepreneurs in finding appropriate legal forms for their businesses. In addition, the research has contributed to the creation of the Social Enterprises Code in the Netherlands. This Code has been in use since 2018, offering the use of its label to social enterprises that participate. This quality mark creates recognition, acknowledgement, and trust for them," said Lambooy. A follow-up to the Social Enterprises Code is the current legislative development of the ‘BVm’ (‘BV-societal’): a new Dutch legal form which is based on the Dutch BV form (limited liability company) but will be tailor-made for social enterprises. Lambooy and Argyrou's research helped formulate the core indicators for the BVm.

Recognition of social enterprises

The new legal form (the BVm) will ensure better recognition of, and therefore appreciation for, the societal character of social entrepreneurs. As such, stakeholders will be able to recognize social enterprises by their legal form. "This is important for consumers, suppliers, and financiers. A clear legal form puts social enterprises on the map.

The need to support the development of the new economy in the Netherlands and thus support social enterprises is also reflected in the City Deal Impact Entrepreneurship, in which 80 partners work together with the aim of creating an enabling ecosystem for social entrepreneurs," says Argyrou. "This could further develop into collaboration, for example in the areas of employment, care, and social cohesion." She explains that an enabling effect is created by bringing everyone closer together, which also leads to new opportunities in terms of inclusiveness, creating a circular economy and social cohesion in the neighborhood. Lambooy: "Ultimately, social entrepreneurs also help the government to contribute to the implementation of the Sustainable Development Goals: the 17 Sustainable Development Goals drawn up by the United Nations."