ACT No. IX of 2022 AN ACT to regulate social enterprise organisations and their administration.

I assent.

(L.S.)

GEORGE VELLA

President

22nd February, 2022

ACT No. IX of 2022

AN ACT to regulate social enterprise organisations and their

administration.

BE IT ENACTED by the President, by and with the advice and

consent of the House of Representatives, in this present Parliament

assembled, and by the authority of the same, as follows:-

(1)

The short title of this Act is the Social Enterprise Short title and

commencement.

Act, 2022.

(2) This Act shall come into force on such date as the Minister

responsible for enterprise may by notice in the Gazette establish, and

different dates may be so established for different provisions of this

Act.

(Article 3(2)(a))

Social Enterprise Company

1. A social enterprise company shall be a private liability Private

company including a single member company, registered under the company.

Companies Act. Article 213 of the Companies Act shall not apply to a Cap. 386.

social enterprise company for the purposes of this Act.

2. The provisions of Part V - Limited Liability Company - of Part V - Limited

the Companies Act shall apply to the social enterprise company Liability

Company - of

subject to the following modifications

the Companies

Act shall apply

subject to

modifications.

(a)

the statute of a social enterprise company shall state Statement

that it is a social enterprise organisation taking the legal form of regarding

form to be

a company in terms of this Act;

included in the

statute.

(b) the statute of a social enterprise company shall be Contents of the

drafted in a manner which is consistent with the provisions of statute.

this Act regarding the statute and article 75 and the First

Schedule - Model regulations for a limited liability company -

of the Companies Act shall be construed accordingly. A social Cap. 386.

enterprise company shall also, insofar as its statute is concerned,

comply with the requirements of article 69 of the Companies

Act and article 8;

(c)

notwithstanding anything stated in the Companies Cap. 386.

Act it shall be permitted that all or a percentage of the shares in

the initial share capital of a social enterprise company to be

voting but non-participating so as to comply with the

requirements of this Act.

3. The reference to the objects of the social enterprise Objects of the

partnership indicated in article 69(1)(8) of the Companies Act shall social

company.

also include the declaration indicated in article 8(2)(b).

4. Article 144 of the Companies Act shall prevail over article Prohibition of

loans, etc. to

5. directors.

5. (1) Any provisions in the Companies Act relating to Provisions

dividends and to rights of participation in the profits of a company relating

dividends,

shall be interpreted in a way so as to comply with this Act insofar as it distributions

to rights of

relates to the seventy-five per cent of income in a social enterprise participation in

company and Chapter XI - Distribution of Profits and Assets - found the

company.

in Title I of Part V of the Companies Act shall be interpreted Cap. 386.

accordingly.

(2) Article 204 of the Companies Act shall also apply to any

distribution that is considered to be unlawful because it is in breach of

any of the provisions of this Act and particularly article 5 when the

distribution is in excess of the twenty-five per cent permitted by this

Act.

6. Title II - Dissolution and Consequential Winding Up of

Companies - found in Part V of the Companies Act shall apply to

social enterprise companies subject to the provisions of article 9.

7. Part VII - Conversion of Commercial Partnerships, Part

VIII - Amalgamation of Commercial Partnerships, and Part IX -

Division of Companies - of the Companies Act shall apply to social

enterprise companies

Provided that social enterprise companies may only

amalgamate with other social enterprise companies

Provided further that insofar as division is concerned under

this Schedule it is restricted to division within the context of social

enterprise companies only.

8. Article 402 of the Companies Act shall apply to the

shareholders of social enterprise companies in a manner which is

inconsistent and that does not breach this Act.

9. (1) The provisions of this Act and particularly article 19

and the Fourth Schedule regarding annual returns shall apply in

addition to Chapter X - Accounts, Audit and Annual Return - found in

Title I of Part V of the Companies Act and all other relevant

provisions of the Companies Act relating to accounts and auditing

shall apply.

(2) A social enterprise company shall not be required to

prepare any additional annual accounts for the purposes of this Act

and any regulations made thereunder. A copy of the annual accounts

prepared in accordance with the provisions of the Companies Act

shall be submitted to the Regulator who shall file such copy in the

Register of Social Enterprise Organisations.

(1)

In this Act, unless the context otherwise requires

Interpretation.

"acts of trade" shall be those identified in article 5 of the

Commercial Code and any transactions ancillary to or connected with Cap. 13.

any of the said acts;

"administrator" means any person who controls, supervises or

administers a social enterprise organisation such as a director of a

company or a partner of a partnership or a member of the committee

of management of a co-operative and includes any other person who

carries out such functions even if under another name, but shall not

include a manager or an executive while carrying out functions under

a contract against remuneration except in so far as he is an

administrator and only relating to his functions as an administrator;

"applicant" means an organisation seeking to register as a social

enterprise organisation under this Act;

"benefit of the community" means what a reasonable person

might consider to be -

(a)

for the benefit of the community in Malta as a

whole; or

(b)

for the benefit of a section of the community in

Malta;

and for the purpose of this definition "section of the community"

means any group of individuals which

(i) shares a common characteristic which may be

classified as a social purpose and which distinguishes the

group of individuals from other members of the

community; and

(ii) a reasonable person might consider to

constitute a section of the community;

"benefits" means any assistance or relief granted to a social

enterprise organisation in terms of the Income Tax Act, the Malta

Enterprise Act, the Business Promotion Act and in terms of any other

law or scheme as the Minister may prescribe;

"calendar year" means the period from 1st January to 31st

December of each year;

"charitable purpose" means a social purpose;

"Committee'' means the Social Affairs Committee of the House of

Representatives or any other committee substituting the same;

"company" means a company formed in Malta and registered

under Part V of the Companies Act, and if not a Maltese company,

means a company established in Malta;

"controlled by, related or affiliated to a political party" or

similar terms means, in the case of the controlled, related or affiliated

organisation -

(a)

its statute, financial statements or other documents

expressly state that it is controlled by, related or affiliated to the

political party; or

(b) it has been established by the political party which

supports it financially; or

(c)

its assets devolve on the political party upon its

dissolution,

and, in the case of a political party, that a political party as defined in

the Financing of Political Parties Act, whether registered under the

said Act or otherwise

(i) has the power, whether directly or indirectly,

to nominate, appoint, change or remove more than half of

the administrators of the organisation; or

(ii) is a beneficiary, in any manner and at any

time, of the income or capital of the organisation; or

(iii) is the beneficiary of the purposes of the

organisation, including the promotion of the specific

vision, policies and goals of the political party or its

candidates;

"controlled by the Government" means that the Government of

Malta has the power, whether directly or indirectly, to nominate,

appoint, change or remove any of the administrators of the

organisation or the organisation is a public agency;

"co-operative" means a co-operative society formed in Malta

and registered under the Co-operative Societies Act and if not a Cap. 442.

Maltese co-operative, means a co-operative established in Malta;

"Co-operatives Board" means the Co-operatives Board

established under the Co-operative Societies Act and includes any Cap. 442.

person exercising such powers of the Board as may have been

conferred upon him by the Board;

"Court" means the First Hall of the Civil Court unless it is

otherwise expressly stated;

"disadvantaged worker" means any person who

(a) has not been in regular paid employment for the

previous six months; or

(b)

is between fifteen and twenty-four years of age; or

(c)

has not attained an upper secondary educational or

vocational qualification (International Standard Classification

of Education 3) or is within two years after completing full-time

education and who has not previously obtained his or her first

regular paid employment; or

(d)

is over the age of fifty years; or

(e)

lives as a single adult with one or more dependants;

or

(f)

works in a sector or profession where the gender

imbalance in Malta is at least twenty-five per cent higher than

the average gender imbalance across all economic sectors in

Malta, and belongs to that under-represented gender group; or

(g) is a member of an ethnic minority within Malta and

who requires development of his or her linguistic, vocational

training or work experience profile to enhance prospects of

gaining access to stable employment

Provided that the Minister may by regulations establish, and

consistently with applicable European Union Regulations apply,

administrative or compliance conditions arising under Maltese law to

the above categories or add the following categories of persons to the

definition of "disadvantaged worker"

(a)

any migrant worker, whether a citizen or resident of

the European Community or third country national, who has

moved to Malta to take up work and who is registered, enrolled

or in possession of any relevant licences, permits or

documentation as may be required from time to time by

applicable law to work in Malta, including an employment

licence or permit or a National Insurance or social security

number and registration for the purposes of taxation; or

(b) any person who wishes to enter or to re-enter

working life and who has been absent both from work and from

education for at least two years, and particularly any person who

gave up work on account of the difficulty of reconciling his or

her family life with his or her working life; or

(c)

any long-term unemployed person, that is, any

person who has been unemployed for twelve of the previous

sixteen months; or

(d) any person recognised to be or to have been an

addict and who is or who was on the Register of Addicts kept by

the Superintendent of Public Health in accordance with the

Registration of Drug Addicts Regulations; or

(e)

any person who has not obtained his or her first

regular paid full-time employment on account of serving a

period of imprisonment or other penal measure that appears on

such person’s Police Conduct Certificate;

"ecclesiastical entity" means an association of persons or a

universality of things which are established by the competent

ecclesiastical or other religious authority so that they might, in the

name of such authority and in accordance with the provisions of the

relevant law, fulfil the specific task entrusted to them in view of the

public good, including the imparting of religious teaching, the

promoting of public worship and the undertaking of projects which

are appropriate to their character and governed by their statutes, under

the higher direction of the said authority. Such entities include

dioceses, parishes and all institutes of consecrated life and societies

of apostolic life, and include similar organisations of any religious

denomination;

"engagement" means a contract of service other than a contract

of employment;

"established" means an organisation which, having a permanent

establishment or branch in Malta, is registered under Part XI of the

Companies Act or under any other similar provision under applicable Cap. 386.

law and in the case of a co-operative, is also recognised as an

overseas co-operative by the Co-operatives Board;

"financial year" means the period from 1st January to 31st

December of each year unless otherwise determined in the statute of

the social enterprise organisation or otherwise in accordance with

applicable law;

"Government" includes the Government of Malta, any Local

Council, any statutory corporation, public agency and other

organisation of whatever legal form controlled by the Government

and includes the President of Malta;

"guidelines" means the set of binding rules issued by the

Regulator from time to time for the further implementation of the

provisions of this Act and any regulations made thereunder, including

the definition, application, administration, grant and revocation of

benefits, schemes and other arrangements for the regulation and

management of social enterprise organisations;

"Minister" means the Minister responsible for enterprise;

"normal market levels" means any remuneration, honorarium,

wage, salary or fee which is normally granted

(a)

by social enterprise organisations of the same legal

form and operating in the same or in a similar area of activity

and under the same or similar conditions; and

(b) to persons in the same or in a similar office or role

and under the same or similar conditions and who have the same

or similar qualifications.

In applying the above principles, reference shall be made to

market levels prevailing in Malta, or, in case of organisations which

operate internationally, in the country where the relevant activities or

transactions take place;

"partnership" means a commercial partnership formed in Malta

and registered under Part III or IV of the Companies Act, and if not a

Maltese partnership, means a partnership established in Malta;

"philanthropic" means for the relief of poverty, pain and

suffering, and other humanitarian needs;

"pious foundation" comprises -

(a) an autonomous pious foundation, that is, an

aggregate of things destined for pious or religious purposes and

established as a juridical person by the competent ecclesiastical

or other religious authorities;

(b) non-autonomous pious foundations, that is, temporal

goods given in any way to a public juridical person established

by the competent ecclesiastical or other religious authorities and

carrying with them a long-term obligation, such period to be

determined by applicable law, whether religious or national, and

where a long-term obligation consists of binding the juridical

person, from the annual income, to celebrate Masses or other

religious ceremonies, to perform other determined ecclesiastical

functions, or in some other way to fulfil the pious or religious

purposes as defined by the applicable religious laws or rules;

and "pious or religious purposes" are understood to be those which

concern acts of piety, of the apostolate, or of charity, whether spiritual

or temporal and include similar organisations of any religious

denomination;

"prescribed" means either prescribed by regulations made by the

Minister under this Act or prescribed by binding guidelines issued by

the Regulator under this Act, unless otherwise expressly stated, and in

the event of a conflict between the regulations made by the Minister

and guidelines issued by the Regulator on any particular matter, the

regulations shall prevail;

"public agency" means any entity which is established to carry

out public administration in terms of the Public Administration Act or

any other law and includes a statutory body;

"Registrar" means the Registrar of Companies and the Co-

operatives Board, or any other Registrar, howsoever named, with

whom the organisations which may qualify as social enterprise

organisations in terms of this Act may or are required to register;

"Registrar of Companies" means the Registrar of Companies

appointed in terms of the Companies Act;

"Regulator" means the person appointed by virtue of article 11;

"remuneration" means any honorarium, wage, salary, fee or

other payment for services, whether under a contract or otherwise, but

shall not include the refund of any expenses incurred on behalf of any

organisation;

"social enterprise company" means a company which is

registered in terms of this Act;

"social enterprise co-operative" means a co-operative which is

registered in terms of this Act;

"social enterprise organisation" means a social enterprise

company, a social enterprise partnership or a social enterprise co-

operative which is registered in terms of this Act;

"social enterprise partnership" means a partnership which is

registered in terms of this Act;

"social enterprise sector" includes social enterprise

organisations and their employees, the administrators of such

organisations and any volunteers supporting such organisations;

"social purpose" is a purpose which is of benefit to the

community and which means any charitable or philanthropic purpose,

and without prejudice to the generality of the aforesaid, includes -

(a)

the advancement of education, including physical

education and sports;

(b)

the advancement of health;

(c)

social and community advancement;

(d)

the advancement of culture, arts and national

heritage;

(e)

the advancement of environmental protection and

improvement, including the protection of animals;

(f)

the promotion of human rights, conflict resolution,

democracy and reconciliation; or

(g) any other purpose as may be prescribed by the

Minister by means of regulations made by virtue of this Act

but does not include a political purpose. For the purposes of this

definition ''political purpose'' means the promotion of the interests of

a political party or a political candidate, whether at local, national or

international level and "political party" shall have the meaning

assigned to it by any special law regulating political parties, whether

it is registered as a political party or not under such law, and for the

purpose of this Act shall include any other organisation, of whatever

legal form, controlled by, related or affiliated to the political party or

its purpose as stated in its statute or constitutive deed in such manner

as renders it non-autonomous, and the terms "political candidate" and

"political organisation" shall be construed accordingly;

"special law" means an Act of Parliament or any regulations

made thereunder which regulates specifically a particular legal form

or forms of organisations;

"statute" means the memorandum and articles of association of

a company, the deed of partnership or the statute of a co-operative

which provides for the setting up of such organisation as the case may

be;

"volunteer" means a person who provides unremunerated

services through or for a social enterprise organisation but who may

receive a refund of any reasonable expenses incurred in connection

with these services;

"worker with a disability" means any person who is on the

Register of Persons with Disability in terms and for the purposes of

the Persons with Disability (Employment) Act.

(2) Terms which are not specifically defined in this Act shall

have the meaning assigned to them under the relevant law governing

the legal form of the organisation qualifying as a social enterprise

organisation under this Act.

(3) In the case of social enterprise companies, social enterprise

partnerships and social enterprise co-operatives, the Companies Act

or the Co-operative Societies Act, as the case may be, shall be

interpreted so as to facilitate the application of the provisions of this

Act to the particular legal form, and this, irrespective of the specific

provisions indicated in the Schedules intended for the same purpose.

(4) This Act is intended also to reflect the principles in the

European Union Commission Regulation No. 651/2014 of 17th June

2014 as the same may be amended or replaced from time to time and

this Act shall be interpreted consistently with such Regulation.

Part II

Social Enterprise Organisations

(Article 3(2)(b))

Social Enterprise Partnership

1. The statute of the social enterprise partnership shall state Statement

that it is a social enterprise organisation taking the legal form of a regarding

form to be

social enterprise partnership in terms of this Act.

included in the

statute.

2. Any agreement to pay a share of profits in the manner laid Agreement to

down in article 8 of the Companies Act shall be made in accordance pay

profits.

with article 5 and any other relevant provisions of this Act.

3. (1) In the case of death or expulsion of a partner such Death of a

partner shall only be entitled to twenty-five per cent of the profits as partner.

permitted by this Act.

(2) There is no restriction on the return of any capital

contribution under this Act and is permitted subject to the observance

of the provisions of the Companies Act.

4. The entitlement to pro rata share of profits contemplated Rights of

in article 34(2) of the Companies Act shall be compliant with article 5 persons

to be partners.

and there can be non-participating interests in the social enterprise Cap. 386.

partnership.

5. Any relevant provisions regarding the dissolution and Dissolution and

winding up of social enterprise partnerships contemplated in the winding up.

Companies Act shall apply with such modifications as may be Cap. 386.

expressly or impliedly required under the provisions of this Act and

particularly by article 9.

6. Part VII - Conversion of Commercial Partnerships - and Conversion and

Part VIII - Amalgamation of Commercial Partnerships - of the amalgamation.

Companies Act shall apply to social enterprise partnerships

Provided that social enterprise partnerships may only

amalgamate with other social enterprise partnerships and in

accordance with any relevant provisions of the Companies Act.

7. Any distribution of any assets as contemplated in article Distribution of

45, article 47 and any other relevant provisions of the Companies Act assets.

shall only be done if it is permitted by articles 5 and 9 in the case of

social enterprise partnerships.

8. Article 66 of the Companies Act shall apply with such Division of

modifications as may be expressly or impliedly required under the capital

shares.

provisions of this Act and in particular article 5 and when the Cap. 386.

contributions have been converted into shares the principles in the

First Schedule shall apply mutatis mutandis.

9. Article 66A and the Tenth Schedule - Partnerships en

commandite or limited partnerships - of the Companies Act shall not

apply to social enterprise partnerships.

10. (1) In the case of social enterprise partnerships, the

provisions of this Act and particularly article 19 and the Fourth

Schedule regarding annual returns shall apply, in addition to Chapter

X - Accounts, Audit and Annual Return - found in Title I of Part V of

the Companies Act and other relevant provisions regarding accounts

and auditing laid down in the Companies Act.

(2) A social enterprise partnership shall not be required to

prepare any additional annual accounts for the purposes of this Act

and any regulations made thereunder. In such cases, a copy of the

annual accounts prepared in accordance with the provisions of the

Companies Act shall be submitted to the Regulator who shall file

such copy in the Register of Social Enterprise Organisations.

(1)

A social enterprise organisation is one

Establishment

and regulation

of a social

(a) which is established in the legal form of a company,

enterprise

organisation.

a partnership or a co-operative and which complies with the

provisions of the applicable Schedule;

(b)

which is established for

(i) the carrying out of any act of trade or other

activity which is principally aimed, through the activity

itself, towards the fulfilment of a social purpose for the

benefit of the community; or

(ii) the carrying out of any act of trade or other

activity with the purpose of integrating into the labour

market workers with a disability or disadvantaged workers;

(c)

which is not controlled by the Government; and

(d) which is registered with the Regulator in terms of

this Act as a social enterprise organisation

Provided that for the purposes of this Act, the above

requirements shall subsist throughout the existence of the social

enterprise organisation.

(2) A social enterprise organisation shall

(a) in the case of a social enterprise company be

regulated by the relevant provisions of the Companies Act as Cap. 386.

modified by the provisions of the First Schedule;

(b) in the case of a social enterprise partnership be

regulated by the relevant provisions of the Companies Act as Cap. 386.

modified by the provisions of the Second Schedule; and

(c)

in the case of a social enterprise co-operative be

regulated by the relevant provisions of the Co-operative Cap. 442.

Societies Act as modified by the provisions of the Third

Schedule.

(3) Until such time as the Minister makes regulations in this

regard, organisations of other legal forms, not being companies,

partnerships or co-operatives, may not be registered as social

enterprise organisations in terms of this Act

Provided that such other organisations, including pious

foundations, ecclesiastical entities and voluntary organisations,

whether enrolled or not under the Voluntary Organisations Act, may

be the holder of any or all the shares or interests in a social enterprise

organisation.

(Article 3(2)(c))

Social Enterprise Co-operative

1. The statute of the social enterprise co-operative shall Statement

include a statement that it is a social enterprise organisation taking the regarding

form to be

legal form of a social enterprise co-operative.

included in the

statute.

2. Insofar as the name of a social enterprise co-operative is Name of social

concerned it shall be required to comply with article 24 of the Co- enterprise

operative.

operative Societies Act and with article 8(3), (4) and (5) and the Cap. 442.

social enterprise co-operative shall have the word "co-operative

limited" or the abbreviation "co-op ltd." at the end of its name as

required by article 24(2)(b) of the Co-operative Societies Act after the

words "Social Enterprise" or the letters "SEO".

3. Article 34(2) and the Second Schedule of the Co-operative Contents of the

Societies Act shall apply as modified by article 8 and any other statute.

relevant provisions of this Act and the provisions of this Act shall

prevail over the provisions of the Co-operative Societies Act insofar

as the statute of a social enterprise co-operative is concerned.

4. (1) The description of a co-operative laid down in Description of a

article 21(1) of the Co-operative Societies Act shall insofar as social co-operative

the third co-

enterprise co-operatives are concerned be construed in accordance operative

principle.

with articles 3 and 4 and in the event of conflict between the Cap. 442.

provisions of the Co-operative Societies Act and this Act, this Act

shall prevail.

(2) The Third principle - Member economic participation -

laid down in article 21(2) of the Co-operative Societies Act shall be Cap. 442.

compliant with articles 5 and 9 and any other applicable provision of

this Act and a social enterprise co-operative can define interests as

non-participating.

5. The proviso to articles 10 and 12 of the Co-operative Public

Societies Act shall not apply to social enterprise co-operatives and the inspection.

provisions of this Act shall prevail.

6. Article 40 of the Co-operative Societies Act shall apply as Sale or

modified by article 5 and the provisions of this Act shall prevail over provision

goods.

article 40 of the Co-operative Societies Act.

7. In the case of social enterprise co-operatives, insofar as Remuneration.

payment of allowances, honoraria, wages or salaries are concerned as

laid down in article 77 of the Co-operative Societies Act in the event Cap. 442.

of conflict with article 5, the provisions of article 5 shall prevail.

8. (1) Any considerations and determinations regarding

the distribution of any available net surplus referred to in article 66 of

the Co-operative Societies Act shall be made in accordance with

article 5 and any other applicable provisions of this Act.

(2) Articles 5 and 9 shall prevail over Part VII - Property and

Funds of Societies - of the Co-operative Societies Act and

(a)

insofar as social enterprise co-operatives are

concerned the rules regarding the division surplus funds

contemplated in article 92 of the Co-operative Societies Act

shall apply as modified by article 5 and any other relevant

provisions of this Act;

(b) insofar as social enterprise co-operatives are

concerned the rules regarding the patronage refund

contemplated in article 93 of the Co-operative Societies Act

shall apply as modified by article 5 and any other relevant

provisions of this Act;

(c)

insofar as social enterprise co-operatives are

concerned the rules regarding bonus certificates and bonus

shares contemplated in article 94 of the Co-operative Societies

Act shall apply as modified by article 5 and any other relevant

provisions of this Act.

9. Part VIII - Amalgamation - of the Co-operative Societies

Act shall apply to social enterprise co-operatives, and social

enterprise co-operatives shall only be permitted to amalgamate with

other social enterprise co-operatives.

10. Part IX - Dissolution and Liquidation of Societies - of the

Co-operative Societies Act shall apply as modified by article 9 and

the provisions of this Act shall prevail over Part IX of the Co-

operatives Societies Act insofar as dissolution and liquidation of

social enterprise co-operatives are concerned and in the event of any

conflict between the provisions of the Co-operative Societies Act and

the provisions of this Act, the provisions of this Act shall prevail.

11. (1) The Third Schedule - Form and Content of

Individual Accounts - including any other provisions of the Co-

operative Societies Act relating to accounts and auditing shall apply

to social enterprise co-operatives but they shall be construed in

accordance with the provisions of this Act.

(2) A social enterprise co-operative shall not be required to

prepare any additional annual certified accounts for the purposes of

this Act and any regulations made thereunder. A copy of the annual

accounts certified shall be submitted to the Regulator who shall file

such copy in the Register of Social Enterprise Organisations.

(1) For the purposes of article 3, a social enterprise

organisation shall be considered to be

(a) carrying out an act of trade or other activity which is

principally aimed, through the activity itself, towards the

fulfilment of a social purpose for the benefit of the community

when at least sixty per cent of its total income in any financial

year is acquired from such act of trade or other activity; or

(b) carrying out an act of trade or other activity with the

purpose of integrating into the labour market workers with a

disability or disadvantaged workers when not less than thirty

per cent of the total number of workers engaged or employed by

it on a full-time basis, in any capacity, are workers with a

disability or disadvantaged workers.

(2) For the purposes of sub-article (1)(b), the minimum

requirement of thirty per cent of full-time workers with a disability or

disadvantaged workers may also be satisfied by a greater number of

eligible persons working on a part-time basis but cumulatively

working the equivalent hours to the required number of full-timers.

(3) A social enterprise organisation may make use of the

services of volunteers participating in the activity of such social

enterprise organisation.

(Article 19)

Annual return

Purpose.

The purpose of this annual return is to provide the Regulator with up

to date information about the social enterprise organisation, its

administrators and its activities, generally. It is important that the

exercise be qualitative in that the persons preparing the annual return

must give a true account of the facts.

Name of Social Enterprise Organisation: ....................................

Social Enterprise Label: ..............................................................

Address: .....................................................................................

Postcode .....................................................................................

Telephone number(s): .................................................................

Fax number: ................................................................................

E-mail address/es: .......................................................................

Website: ......................................................................................

Name of Contact Person: ............................................................

Designation: ................................................................................

Mobile/Telephone Number: ........................................................

Annual Return for the twelve month period ...............................

If the social enterprise organisation must nominate a local

representative in terms of the Act please provide the details of the

local representative below. It must be ensured that the address that is

included is the address of the local representative in Malta.

Name and Surname: ....................................................................

ID Card/ Passport / Registration Number: ...................................

Address: ......................................................................................

Postcode: ....................................................................................

Telephone number(s): .................................................................

Mobile number: ..........................................................................

E-mail address/es: .......................................................................

Declaration of Completeness and Correctness.

I hereby confirm that the details provided, including the attached

Appendices, are complete and truthful as to their contents.

Signature of administrator: .........................................

Name of administrator: ..............................................

Date: ................................................................

Appendices

Appendix A - Organisational Chart ___________________________

Appendix B - an authenticated updated copy of the statute of the

social enterprise organisation as issued by the Registrar, if any

amendments have been made to such statute and in such case a

declaration signed by at least one administrator stating what

amendments have been made ________________________________

Appendix C - a copy of the annual accounts together with a report of

reviewers, accountants or auditors as may be required under

applicable law____________________________________________

Appendix D - a copy of the annual report ______________________

Appendix E - a copy of the business plan ______________________

Appendix F - an authenticated copy of any renewed identity cards or

passports or registration certificates of the administrators and local

representative of the social enterprise organisation (if applicable)

Passed by the House of Representatives at Sitting No. 546 of the 9th

February, 2022.

ANĠLU FARRUGIA

Speaker

RAYMOND SCICLUNA

Clerk of the House of Representatives

€4.32

(1) Subject to the provisions of sub-article (2), the

profits generated from the activities of a social enterprise organisation

may be

(a) used in any manner as may be determined by the

administrators to achieve the purposes of the organisation as

stated in its statute;

(b) retained and transferred to a reserve account for

future use;

(c)

used to capitalise its profits; or

(d) used as may be prescribed and in a manner which is

consistent with the achievement of the purposes of the

organisation.

(2) Notwithstanding anything stated in the statute of a social

enterprise organisation or in any other applicable law, only twenty-

five per cent (25%) of the profits generated over a three (3) year

rolling period by the social enterprise organisation may be distributed

and it shall not be permissible for any person, whether a private

interest or a non-profit making organisation, to enjoy directly or

indirectly more than twenty-five per cent (25%) of the profits through

the holding of shares or other interests in such organisation, or in any

other manner.

(3) The social enterprise organisation shall be obliged to

maintain records of capital contributions to the organisation that are

clearly distinct from any profits which are subsequently capitalised

including when they are capitalised against the issue of shares or

other interest to the shareholders or partners of the social enterprise

organisation. Nothing in this article shall prohibit the reduction or

return of capital in favour of a person who holds any shares or interest

in any social enterprise organisation provided it does not reflect

capitalised profits and if it does, does not exceed the limits in sub-

article (2) and the organisation has available funds after providing for

any losses.

(4) Notwithstanding the provisions of sub-article (2), it shall

be lawful for any person, including a shareholder within an

organisation or any person having an interest therein, to receive

income from a social enterprise organisation for his personal benefit

in the following cases

(a) income

under

contracts

of

employment

or

engagement;

(b)

income for the sale of goods or services;

(c)

interests on loans granted to a social enterprise

organisation to finance the development or operations of such

organisation even when such income is payable on a bond or

other financial instrument

Provided that such income or interest shall not be treated

as participation in the profits of the organisation and shall not be

considered to form part of the maximum of twenty-five per cent of the

profits referred to in sub-article (2).

(5) A social enterprise organisation shall not

(a) remunerate an administrator at a rate which is higher

than normal market levels unless the social enterprise

organisation is satisfied that the administrator has specific skills

which the organisation needs, in which case, the remuneration

may exceed normal market levels by such percentage as may be

stated in guidelines issued by the Regulator or as otherwise

approved by him;

(b) remunerate any person, whether an employee or

otherwise, with a salary, wage or a fee which is higher than

normal market levels unless the social enterprise organisation is

satisfied that in that particular case specific conditions apply;

(c)

pay interest or other remuneration on loans or

financial instruments raised or acquired from organisations

which are not licensed credit or financial institutions other than

in accordance with applicable market conditions or, in any case,

not in excess of the limits permitted by article 986 of the Civil

Code or as otherwise allowed by law; or

(d) pay a price for any property acquired which is

higher than the generally established market price for such

property disregarding special discounted sales or other special

arrangements

Provided that the basis on which a social enterprise

organisation satisfies itself of such compliance shall be recorded in

sufficient detail in the minutes of a meeting of the administrators

when such decision is taken, which minutes shall be submitted to the

Regulator on written demand

Provided further that in the event that any of the above

limits are exceeded

(a)

if to the benefit of any holder of any shares or

interests, the sum paid to him in excess of the market levels as

stated above shall be considered to be an advance on the twenty-

five per cent permitted to be paid to him; and

(b) if to the benefit of a third party, the excess shall be

brought to the attention of the administrators who shall be

entitled to make representations on the matter to the Regulator

and, if found to be unjustifiable, the excess shall either be

refunded to the organisation within the time stipulated by the

Regulator or the Regulator may proceed with the cancellation of

the registration and the demand for the reversion of any benefits

in accordance with this Act.

(6) In the case of those organisations which are registered as

social enterprise organisations under the provisions of article

3(1)(b)(i), the administrators shall seek to maintain a level of

expenses for persons who are employed or engaged which shall not

materially prejudice the continued functioning of the social enterprise

organisation. The Regulator may issue guidelines on the level of these

expenses and also on the manner and the time frame in which this

obligation shall be assessed.

(7) It shall be the responsibility of the administrators of a

social enterprise organisation to ensure compliance with the

provisions of this article. When an accountant, reviewer or auditor is

engaged to review the accounts of the social enterprise organisation,

such accountant, reviewer or auditor shall notify the administrators in

writing, with a copy to the Regulator, if the social enterprise

organisation has exceeded the limits established by this Act. In such

case, the Regulator shall notify the administrators with a time limit to

comply with the provisions of this Act, which shall not be less than

ninety days and the maximum of which shall be established by the

Regulator on a case by case basis.

(8) The performance of the purposes to which the profits of

the social enterprise organisation are applied shall be an express

fiduciary duty binding the administrators of the social enterprise

organisation and the social enterprise organisation itself.

(9) The provisions of this article shall apply irrespective of the

manner in which the persons involved in the social enterprise

organisation hold shares or other participation rights therein and in

the case of a conflict between this article and the provisions of any

other law the provisions of this article shall prevail.

(1) A social enterprise organisation may, subject to the Benefits.

observance of this Act and to applicable provisions of law, enjoy the

benefits contemplated by this Act and any regulations made

thereunder.

(2) Upon receiving benefits, it shall not be possible for a social

enterprise organisation to transfer or assign in whole or in part any

benefit granted by virtue of this Act to any other person.

(3) When granting benefits to social enterprise organisations,

the Government or any other entity shall consult and may rely on the

information contained in the Register of Social Enterprise

Organisations maintained by the Regulator.

(4) In the event that a social enterprise organisation does not

operate as such in the twelve consecutive months following the

receipt of any benefit, and is subsequently removed from the Register

in accordance with this Act, such social enterprise organisation shall

refund any benefits received with reference to the period during

which it did not operate and failure to do so shall constitute an

offence under this Act. This article shall apply in accordance with

regulations and guidelines which may be issued from time to time.

The Government, government departments, public

agencies and entities controlled by the Government shall act upon a

Certificate of Recognition issued in terms of article 18, as evidence of

the status of an organisation as a social enterprise organisation, and

shall not require any further evidence of its existence or status when

dealing with such an organisation

Provided that such certificate shall not imply any

exemption of such organisation from any procedure, duty, obligation,

liability, fees or dues unless expressly stated in the applicable law,

regulation or policy.

Part III

The Statute of the Social Enterprise Organisation

(1) The contents of the statute of a social enterprise

organisation shall be regulated by the law which is applicable to the

particular legal form with such modifications as are stated in this Act

and the relevant Schedule, as the case may be, and in the case of

conflict, the applicable provisions of this Act and the relevant

Schedule shall prevail.

(2) The statute of an applicant shall comply with the following

requirements for it to be eligible for registration as a social enterprise

organisation

(a)

the name of the social enterprise organisation shall

comply with sub-article (3);

(b) the objects for which the social enterprise

organisation is established shall state that the organisation is

established for

(i) the carrying out of an act of trade or other

activity which is principally aimed, through the activity

itself, towards the fulfilment of a social purpose for the

benefit of the community and, in such case, the social

purpose shall be expressly stated; or

(ii) the carrying out of an act of trade or other

activity with the purpose of integrating into the labour

market workers with a disability or disadvantaged workers;

(c)

the statute shall also

(i) state that the organisation is a social

enterprise organisation in terms of this Act;

(ii) state that investments in the social enterprise

organisation to receive profits shall not entitle any person

to participate in more than an aggregate of twenty-five per

cent (25%) of the profits of the social enterprise

organisation as per article 5;

(iii) restrict the rights of participating shares, or

contributions, or any interest as the case may be in the

social enterprise organisation so as to comply with the

provisions of this Act and a waiver of participating rights

on dissolution and winding up;

(iv) provide for the manner in which the

remaining assets, if any, of the social enterprise

organisation shall devolve on dissolution and winding up,

which provision shall comply with article 9.

(3) The social enterprise organisation shall be identifiable by a

unique name which shall conform to the applicable law and which

shall include the words "Social Enterprise" or "SEO" in its name.

(4) No other organisation shall be permitted to use the words

"Social Enterprise" or the letters "SEO" in its name unless it is one

which is registered in terms of this Act and any breach of this sub-

article shall constitute an offence under this Act.

(5) The Regulator shall refuse registration if, to the best of his

knowledge, the name of the applicant is already used by another

social enterprise organisation or if the proposed name is offensive or

is likely to deceive or be misleading

Provided that in the event that a social enterprise

organisation has been registered with a name which is already used by

another social enterprise organisation, the Regulator shall request the

social enterprise organisation which has been last registered to change

its name.

(6) Additions or alterations to the statute of a social enterprise

organisation shall be notified to the Regulator within fourteen days

from the date of registration with the Registrar of the resolution or

decision, which information shall be submitted to the Regulator

together with any consolidated version of the statute filed with the

Registrar.

Part IV

Dissolution, Winding Up or Cessation

On dissolution and winding up of a social enterprise

organisation made in accordance with the law applicable to its legal

form, any assets after the payment of all liabilities shall be paid out

(a) to another social enterprise organisation expressly

identified in the statute having similar purposes as the social

enterprise organisation being dissolved; or

(b) to a social enterprise organisation identified by the

members in a decision supported by at least seventy-five per

cent of all the members and at least a majority of the

administrators present at a meeting of administrators; or

(c)

in the case of any obstacle which cannot be

overcome in the manner stated above, to a social enterprise

organisation identified by the Civil Court in its voluntary

jurisdiction following an application made by any

administrators of the social enterprise organization being

dissolved; or

(d)

in any other manner as may be prescribed

Provided that in case any profits have been capitalised and

not distributed as permitted under this Act to the holders of shares or

interests in a social enterprise organisation, the organisation may

distribute such capitalised profits to the holders of the shares or

interests limitedly up to an amount which does not exceed twenty five

per cent of the capitalised profits being an amount which is calculated

after the organisation has settled all its liabilities and made adequate

provisions for any losses.

(1) It shall be an obligation on all administrators of a

social enterprise organisation which for any reason ceases to operate

as such or to qualify as a social enterprise organisation in terms of this

Act to bring the facts to the attention of the Regulator within three (3)

working days, and, in such case, the Regulator shall cancel the

registration of the social enterprise organisation.

(2) The social enterprise organisation may also resolve not to

continue to operate as such by a resolution of the holders of the shares

or participating interests therein and may, subject to the other

provisions of this Act, resolve to continue the operations of the

organisation without the benefits under this Act, in which case article

22(2) and (5) shall apply mutatis mutandis.

Part V

The Regulator of Social Enterprise Organisations

(1) There shall be a Regulator of Social Enterprise Appointment of

Organisations who shall be appointed by the Minister following the Regulator.

consultation with the Committee for this purpose.

(2) The Regulator shall be appointed for a period of three

years and may be re-appointed upon expiration of the term of office

for a further period or periods.

(3) A person shall not be qualified to be appointed or continue

to hold office as Regulator if such person

(a) is a Judge, a Magistrate, a Member of the House or a

Local Council, or running for election to the House, a Local

Council, or to the European Parliament; or

(b)

is legally incapacitated or interdicted; or

(c)

has been declared bankrupt or has made a

composition or arrangement with his creditors; or

(d) has been convicted of a crime affecting public trust

or theft or fraud, or of knowingly receiving property, obtained

by theft or fraud, a crime affecting the good order of the family

or of an offence against this Act.

(4) During his term as Regulator, such person shall not hold

any position which results in a conflict of interest or is incompatible

with the correct performance of his official duties as Regulator or

with the impartiality expected from this office or with the public

confidence therein.

(5) When the office of the Regulator becomes vacant, a person

appointed as Regulator shall hold office temporarily until a successor

is appointed and, subject to the qualifications in sub-article (3), the

Minister may, at any time, during the absence of the Regulator or for

any other temporary purpose where the Minister considers it

necessary to do so, appoint a person to act in the office of the

Regulator, until the resumption of office by the Regulator.

(6) The Minister may also appoint one or more Deputy

Regulators to assist the Regulator as directed by him and in the

performance of his functions.

(7) The Regulator shall receive such remuneration as the

Minister may establish and shall be provided with premises and an

adequate number of staff to carry out the functions assigned to him

under this Act. The officials and staff appointed to assist the

Regulator shall receive such remuneration as the Minister may

establish.

(1) The Regulator may, at any time, be removed or

suspended from office by the Minister after consultation with the

Committee on the grounds of proved inability to perform the

functions of the office of the Regulator or due to proved

misbehaviour

Provided that if the Committee is not constituted or if

Parliament is not in session, the Regulator may be suspended from

office by the Minister, acting in accordance with his own discretion,

for proved inability to perform the functions of the office or due to

proved misbehaviour to the satisfaction of the Minister, but any such

suspension shall not continue to be in force beyond two (2) months

after the Committee is constituted and Parliament is in session.

(2) The Regulator may, at any time, resign from office by

notice in writing addressed to the Minister.

(1) The Regulator shall perform the duties and exercise

the functions imposed and conferred on him by this Act and by any

regulations made thereunder including

(a) providing registration facilities for applicants which

are eligible for registration in terms of this Act;

(b) accepting or refusing applications from applicants to

register as social enterprise organisations in terms of this Act;

(c)

maintaining and updating the Register of Social

Enterprise Organisations;

(d) monitoring the activities of social enterprise

organisations in order to ensure that they comply with their

statute, with the provisions of this Act, any regulations and any

guidelines made thereunder and to ensure that the social

enterprise organisation implements the necessary policies,

regulations and reporting structures to ensure accountability and

transparency in their operations;

(e)

monitoring the behaviour of the administrators of

social enterprise organisations to ensure the observance of high

standards of accountability and transparency and compliance

with law;

(f)

investigating any complaints relating to social

enterprise organisations or organisations purporting to be social

enterprise organisations and their activities, investigating ex

officio any social enterprise organisation for any shortcomings

and taking such action as is in his power to redress any justified

grievance that may come to his notice, including referring his

findings to the Police;

(g) ensuring that the social enterprise organisation

achieves its purposes and protects its capital base while

developing operational surpluses to ensure sustainability;

(h) co-ordinating and communicating

with

each

Registrar and with any competent authority

(i) to facilitate the registration processes for

social enterprise organisations and to ensure the

continuous monitoring and eligibility of social enterprise

organisations in terms of this Act;

(ii) to establish procedures to ensure that the

Regulator and each Registrar are aware of the status of a

social enterprise organisation at all times and of any

investigation or action which is being taken in respect of

such social enterprise organisation;

(i)

promoting the social enterprise sector, developing

co-operation between social enterprise organisations and the

Government and co-operation between social enterprise

organisations amongst themselves;

(j)

making recommendations to the Minister on

legislation and policies in support of social enterprise

organisations and the social enterprise sector in general;

(k) assisting Government, government departments,

public agencies, authorities and entities controlled by the

Government in preparing and reviewing policies in support of

social enterprise organisations and the social enterprise sector in

general;

(l)

performing any other function or duty that is

assigned to him under this Act and any regulations made

thereunder as well as such other functions as may be assigned to

him under any other law;

(m) the extension of these regulations and obligations to

other organisations that he considers as achieving the same

objectives set out in the law. In these instances, the Regulator

may apply temporary derogation in relation to profit

distribution, engagement of volunteers and the employment of

disadvantaged workers according to the exigencies of the case.

(2) In the exercise of his functions, the Regulator shall act

impartially and shall not be subject to the direction of any other

person or authority.

(3) The Regulator may by writing under his hand, delegate to

any person specific functions, powers or authorities assigned to or

conferred on him by this Act or any other law, and may at any time

revoke or vary such delegation

Provided that no such delegation shall be deemed to divest

the Regulator of any of his functions, powers or authorities and he

may, if he thinks fit, exercise such functions, powers or authorities

collaterally with the person so delegated.

(4) The provisions of article 72 of the Financial

Administration and Audit Act shall not apply to the Regulator or any

other person carrying out his functions in terms of this Act.

(1) The Regulator shall seek to encourage an

environment where the credibility and good reputation of the social

enterprise sector is continually enhanced through high standards of

operation of social enterprise organisations and their administrators,

of transparency and public awareness and of proper accountability.

(2) The Regulator shall promote and facilitate the

development of the social enterprise sector by complying with the

obligations imposed and conferred on him by this Act and any

regulations made thereunder including

(a) providing assistance with regard to any matter

relating to social enterprise organisations; and

(b) promoting and publicising any measures meant to

support the social enterprise sector.

(3) The Regulator, in order to better implement and safeguard

the principles of this Act, may issue binding guidelines regarding

(a)

the social enterprise sector in general and social

enterprise organisations and their activities and the

requirements, benefits and responsibilities deriving from

registration in terms of this Act;

(b) when a social purpose may be considered to benefit

the community or a section of the community;

(c)

persons involved in social enterprise organisations,

including -

(i) their remuneration, in so far as they act as

administrators;

(ii) their employment or engagement and the

remuneration payable to them; and

(iii) the supply of goods or services by them under

a contract of engagement to the social enterprise

organisation, including by volunteers,

and this, for the better performance of their role and for the

better achievement of the objectives of the social enterprise

organisation in which they serve;

(d) the provision of loans or other financial assistance

with or to a social enterprise organisation;

(e)

the sale of goods and services to a social enterprise

organisation; and

(f)

the relevant market rates or margins applicable to

social enterprise organisations.

(4) The Regulator may request any information from any

Government entity, public authority or department in order to fulfill

his duties and such entities shall co-operate with the Regulator as

required in the performance of his functions under this Act, and this,

in accordance with any special law which may be applicable

Provided that information obtained under this article shall

only be used to the extent and only for the purposes required for the

implementation of the provisions of this Act and the avoidance of any

abuse and shall be kept confidential by the Regulator under the same

duty of confidentiality binding the other entity providing the

information.

(1) The Regulator shall, by not later than eight weeks Annual report.

after the end of each calendar year, make and present to the Minister

an annual report which shall include

(a) a report of the Regulator’s activities during the

preceding year including those relating to the monitoring of

social enterprise organisations;

(b) a general description of the circumstances of the

social enterprise sector in Malta and any developments which

may have affected such sector;

(c)

any recommendations regarding legislation,

regulation, policies or other matters affecting the social

enterprise sector; and

(d) the accounts and other financial records referred to

in sub-article (2), duly audited, together with a copy of any

report made by the auditor on such accounts.

(2) The Regulator shall cause to be kept proper accounts and

other financial records in respect of the operations of his office, and

shall cause to be prepared a statement of accounts in respect of each

financial year. The accounts of the Office of the Regulator shall be

audited by an auditor to be approved by the Minister.

Part VI

Register of Social Enterprise Organisations

(1) There shall be a Register of Social Enterprise

Organisations (hereinafter referred to as "the Register") which shall

be maintained by the Regulator and shall contain the following

information, supported by the documentation referred to in

paragraphs (f) to (l), as the same may be amended or updated as may

be prescribed

(a)

the name of the social enterprise organisation;

(b)

the address of the social enterprise organisation;

(c)

the social enterprise label of the social enterprise

organisation;

(d) the names, identity card numbers or passport

numbers or registration numbers, if any, accompanied by an

authenticated copy of a valid identification document or

registration certificate, as applicable, and the residential

addresses of the administrators of the organisation;

(e)

if the administrators of the social enterprise

organisation are all not ordinarily resident in Malta, the name,

identity card number or passport number or registration number

if any, including an authenticated copy of a valid identification

document of a person ordinarily resident in Malta who shall act

as local representative of such social enterprise organisation in

Malta;

(f)

an authenticated copy of the statute of the social

enterprise organisation and any amendments made thereto;

(g) an authenticated copy of the social enterprise

organisation’s certificate of registration issued by the Registrar;

(h) the annual accounts of the social enterprise

organisation, together with a report of reviewers, accountants or

auditors as may be required under applicable law;

(i)

the

annual

reports

of

the

social

enterprise

organisation;

(j)

an organisational chart of the social enterprise

organisation;

(k) the social impact report of the social enterprise

organisation;

(l)

the written consent of the administrators to hold

office as administrators of the social enterprise organisation

after registration;

(m) a resolution signed by the administrators of the

social enterprise organisation indicating that they resolve to

register the social enterprise organisation with the Regulator;

and

(n) any other information which, in the opinion of the

Regulator, should be included in the Register.

(2) The list of names of social enterprise organisations in the

Register shall be available upon written request. No other information

or contents of the Register other than the name of the social enterprise

organisation and its social enterprise label shall be available except to

the competent authorities granting benefits as referred to in this Act.

(3) The Regulator shall compile and maintain the Register in

accordance with the provisions of the Data Protection Act.

(1) An applicant may apply for registration by Application to

submitting the prescribed application form to the Regulator, which register.

form shall be accompanied by

(a)

an authenticated copy of the statute of the applicant;

(b) an authenticated copy of the applicant’s certificate

of registration or, if not yet registered, an undertaking to provide

an authenticated copy of the applicant’s certificate of

registration issued by the Registrar when the organisation is

registered with the Registrar;

(c)

an authenticated copy of the identity card or

passport or certificate of registration of the administrators of the

applicant;

(d) an authenticated copy of the identity card or

passport or certificate of registration of the local representative

of the applicant, if any;

(e)

the annual accounts of the applicant for the last

financial year prior to registration, if any, together with a report

of reviewers, accountants or auditors as may be required under

applicable law;

(f)

the annual report of the applicant for the last

financial year prior to registration, if any, which must include

(i) a description of the activities carried out by

the applicant; and

(ii) if the applicant is one which may be classified

under article 3(1)(b)(i), an indication of the social purpose

being fulfilled through the carrying out of the act of trade

or other activity; or

(iii) if the applicant is one which may be classified

under article 3(1)(b)(ii), information regarding the persons

employed or engaged by the applicant particularly the

workers with a disability or the disadvantaged workers;

(g) an organisational chart of the applicant which shall

be signed by at least one administrator and shall include

(i)

the organisational structure of the applicant;

(ii) an indication of who the ultimate beneficial

owners of the shares or interests in the applicant are;

(iii) a depiction of the management and

administrative structure of the applicant, showing the

responsibility of each board and any working groups, the

relationship of each board and any working groups to each

other, and the hierarchy of management and

administration;

(iv) an indication of who is responsible for the

day to day running of the applicant;

(v) to demonstrate the basis of the application of

the provisions of this Act, the names and identification

numbers of any employees and, in the case of an applicant

which may be classified under article 3(1)(b)(ii), the

persons who qualify;

(vi) information

regarding

the

number

of

volunteers;

(h) a social impact report which indicates the primary

social objective or objectives of the organisation and the manner

in which the applicant intends to achieve these social objectives

together with the manner in which the applicant intends to

operate so as not to

(i) prejudice the fulfilment of the social purpose

for which it was established, if the applicant is one which

may be classified under article 3(1)(b)(i);

(ii) prejudice the integration into the labour

market of disadvantaged workers or workers with a

disability if the applicant is one which may be classified

under article 3(1)(b)(ii);

(iii) grant gratuitous distributions from the profit

or bonuses to its administrators, employees or other

officers which will lead to the same results indicated in

sub-paragraphs (i) and (ii);

(i)

the written consent of the administrators to hold

office as administrators of the applicant after registration;

(j)

a resolution signed by the administrators of the

applicant indicating that they resolve to register the applicant

with the Regulator;

(k)

the application fees due to the Regulator; and

(l)

any other document as may be required by this Act

or as may be prescribed.

(2) In considering an application, and at any time thereafter,

the Regulator may request the applicant to provide further

information about or make representations on any matter on which he

may have reservations or concerns in relation to the application.

(3) The Regulator may accept or refuse any application for

registration on the basis of

(a)

the observance or otherwise of all the formalities

required by this Act or as may be prescribed;

(b) the presence or otherwise of any factors which bar

registration under an express provision of this Act or as may be

prescribed;

(c)

the legality or otherwise of the proposed purposes

and objects of the applicant having regard to the stated purposes

and objects of the applicant and the stated intentions of the

promoters relating to its activities;

(d) the fulfilment or otherwise of obligations relating to

the payment of social security contributions in accordance with

applicable law; or

(e)

the fulfilment or otherwise of obligations relating to

the payment of taxes due in accordance with applicable law.

(4) The Regulator shall

(a)

pay due regard to all information provided and

representations made, but in the event that the applicant fails to

provide any requested information or to make representations,

the Regulator shall proceed with the determination of the

application for registration on the basis of the information

available to him;

(b) determine whether the applicant is eligible for

registration as a social enterprise organisation;

(c)

notify the applicant, in writing, of his determination,

and in the case of a decision not to accept an application, the

reasons for such determination.

(5) The Regulator shall seek to determine all applications from

the date of application.

(6) The Regulator shall issue a confirmation of eligibility to

register the applicant as a social enterprise organisation so as to

facilitate the registration of the applicant, or of an amendment to its

statute so as to comply with this Act, with the Registrar who shall

proceed with registration in terms of applicable law on being satisfied

with compliance with such law keeping in view the modifications

made in accordance with this Act.

(1) Upon being satisfied that the applicant is eligible for Registration as a

registration in terms of this Act, and upon receiving an authenticated social

organisation.

copy of the applicant’s certificate of registration or an authenticated

copy of the applicant’s updated statute so as to comply with this Act

issued by the Registrar, the Regulator shall proceed to register the

applicant as a social enterprise organisation and shall

(a)

allocate a unique registration number to the social

enterprise organisation which shall be preceded by the letters

"SEO", which letters and numbers shall cumulatively be

referred to in this Act as the "social enterprise label";

(b) enter the particulars of the social enterprise

organisation in the Register; and

(c)

issue a certificate of recognition including the social

enterprise label of the social enterprise organisation.

(2) The social enterprise label shall, at all times, be quoted by

the social enterprise organisation on any published materials, letters,

notices, advertisements and other documents issued by such social

enterprise organisation.

(3) Certificates of recognition shall be considered to be public

instruments and shall be surrendered to the Regulator on his simple

demand in writing. The Regulator shall be bound to provide written

reasons for any withdrawal of a certificate of registration when

making such written demand.

(4) The certificate of recognition issued in terms of this article

shall not determine the fiscal status of a social enterprise organisation

or the taxability or otherwise of its income and transactions.

(5) The administrators of a social enterprise organisation may,

upon a resolution of the holders of shares or other participating rights

therein, request the removal of the organisation from the Register

upon giving three months notice to the Regulator and, in such case,

the Regulator shall proceed to cancel the registration subject to the

issue of any orders under article 22(5) which he may consider

appropriate.

(1) A social enterprise organisation shall submit the

annual return found in the Fourth Schedule to the Regulator by the

end of each calendar year. In default, there shall be a penalty of

twenty-five euro (€25) for each month of delay. In the event of non-

compliance for a year, the registration of the social enterprise

organisation shall be duly cancelled and all benefits shall be refunded

and reimbursed immediately.

(2) The annual return for social enterprise organisations shall

cover a calendar year from the first day of January to the thirty first

day of December of each year

Provided that

(a)

if a social enterprise organisation was registered

between the first day of January and the thirtieth day of

September of any year, it shall file the annual return normally

but such annual return shall, for the first year only, cover a

period of less than twelve months since its registration;

(b) if a social enterprise organisation was registered

between the first day of October and the thirty-first day of

December of any year, it shall not file an annual return for its

first year of registration but it shall file, for the second year

only, an annual return up to the thirty-first day of December

following the year of registration for a period over twelve

months but not exceeding fifteen months.

(3) The annual return and all the required documents relating

to a social enterprise organisation shall be filed by not later than the

thirtieth day of April of the following year.

The Regulator may request any information and any

clarification from the social enterprise organisation, and may also

carry out any verification, investigation or audit so as to ascertain to

his satisfaction that such social enterprise organisation is in

compliance with the provisions of this Act or as may be prescribed.

The registered social enterprise organisation shall seek to comply

with this request expediently and in default the Regulator may cancel

the registration of the social enterprise organisation.

(1) The Regulator may order the cancellation of the

registration of a social enterprise organisation by the issue of a

cancellation order, which shall come into effect thirty days from the

date of notification of such order, to all or any one of the

administrators, unless an application is filed within the period

provided for in article 26 in which case such order shall only have

effect if so determined and from the date established by the Court.

(2) A cancellation order may be issued if the social enterprise

organisation

(a)

is not pursuing the purposes stated in the statute;

(b) is carrying out unlawful activities or is acting in

contravention of the provisions of any law;

(c)

is failing to comply with the provisions of its statute

or of this Act or as may be prescribed or the administration

thereof is being carried out to poor standards of corporate

governance and continues to be so carried out for a period in

excess of three months notwithstanding a written warning by

the Regulator;

(d) is distributing profits directly or indirectly in excess

of the twenty-five per cent permitted under this Act;

(e)

appears to have continued operating after it has been

formally dissolved;

(f)

has not functioned for a period which exceeds

twelve consecutive months;

(g) is not seeking to uphold and maintain the objectives

of this Act;

(h) is using its certificate of recognition in an incorrect

manner or has committed a forgery thereof; or

(i)

has obtained registration on the basis of materially

incorrect or incomplete information that would have otherwise

resulted in a refusal had the correct or complete information

been known to the Regulator.

(3) Prior to ordering the cancellation of the registration of a

social enterprise organisation by the issue of a cancellation order, the

Regulator shall grant the social enterprise organisation a period of

time in which to regularise its position and conform with the

provisions of this Act. If the social enterprise organisation does not do

so within this stipulated time period, which may be extended by the

Regulator at his discretion, the Regulator shall order the cancellation

of the registration of the social enterprise organisation in accordance

with sub-article (1).

(4) The Regulator may appoint any person to assist the social

enterprise organisation to regularise its position.

(5) Until a cancellation order comes into effect in accordance

with sub-article (1), the affairs of the social enterprise organisation

shall continue to be administered by the administrators who shall only

carry out acts of ordinary administration or, in case where judicial

proceedings are pending, such acts as may be authorised by the

Regulator or the Court.

(6) The cancellation order shall include all determinations

under such terms and conditions as the Regulator or the Court, as the

case may be, may consider appropriate in the circumstances and such

order shall not however imply a restriction of the right of association

of any persons involved in the organisation or of the right of said

persons to continue to operate the organisation without the continuing

benefits of registration under this Act.

(7) The Regulator shall publish, in one local newspaper or by

means of a notice in the official website of the office of the Regulator,

as the Regulator may consider appropriate in the circumstances of the

case, any cancellation orders which have become final with a brief

statement as to the effects of the order and such statement shall be re-

published regularly for as long as the Regulator may consider

necessary to ensure that the necessary public awareness has been

achieved.

(8) The registration of a social enterprise organisation shall

terminate ipso iure if the organisation is struck off the register

applicable to its legal form by the Registrar.

(1) In the event of the cancellation of registration of a

social enterprise organisation, the administrators shall make all the

necessary amendments to the statute of the organisation including

amending its name to remove any references to the term "Social

Enterprise" or the letters "SEO".

(2) Notwithstanding anything stated in the organisation’s

statute or in any applicable law, the administrators of a social

enterprise organisation which has been cancelled may resolve to

retain the organisation in operation and shall be deemed to have all

the necessary powers and authority to make any amendments to the

statute so as to remove any particular statutory requirements imposed

by this Act and to bring it in line with the law applicable to its legal

form should it be resolved by the administrators to retain its

registration in the relevant register.

(3) In the event of the cancellation of registration of a social

enterprise organisation, the administrators shall forthwith surrender,

to the Regulator, the certificate of recognition of such social

enterprise organisation and any person failing to surrender such

certificate within the time stated in the demand, in writing, made by

the Regulator, shall be guilty of an offence against this Act and shall

be liable, on conviction, to a fine (multa) of two hundred and fifty

euro (€250) and a fine (multa) of twelve euro (€12) for every day of

default.

(4) In the event of the cancellation of registration of a social

enterprise organisation, all benefits granted to such social enterprise

organisation by virtue of registration shall cease from the date when

the decision to cancel takes effect

Provided that such loss of benefits shall not apply to the

acts required to liquidate and dissolve the social enterprise

organisation, including any transfer of property to other social

enterprise organisations as required by the statute of the social

enterprise organisation or otherwise in accordance with article 9 or

the provisions of applicable law.

(5) Cancellation for the reasons mentioned in article 21 shall

entitle the Regulator to demand in writing the refund of, or fair

compensation for, any benefits received by the social enterprise

organisation or any other person by virtue of its registration in terms

of this Act, and that demand, when done by judicial letter, issued in

accordance with article 466 of the Code of Organisation and Civil Cap. 12.

Procedure shall constitute an executive title against the organisation

or any named administrator in favour of the Regulator, in his own

name or as trustee for the person entitled to the refund or fair

compensation as aforesaid. Any person aggrieved by such order may

file an application in Court within thirty days of receipt thereof

Provided that there shall lie an appeal to the Court of

Appeal from any confirmation of liability by the Court in terms of

this sub-article.

(6) An order of the Regulator against an organisation or any

named administrator shall be enforceable as an executive title once

any judgment has become res judicata or no proceedings have been

filed within the relevant time limits.

(1) Without prejudice to the provisions of any other law, Abusive use of

in those cases where the Regulator is of the opinion that a person or a certificate

recognition or

social enterprise organisation is making or has made abusive use of a forgery thereof.

certificate of recognition issued in terms of article 18 or has made or

made use of a forgery thereof, the Regulator may

(a) prohibit such person from using such Certificate of

Registration by giving notice to such person in writing; or

(b) issue public statements on the facts to warn the

public about any abuse by the person or social enterprise

organisation.

(2) Prior to the taking of any of the actions referred to in sub-

article (1)(a) and (b), the Regulator shall notify in writing, any person

or social enterprise organisation who appears to him to have abused a

certificate of recognition, of his findings and of the actions he intends

to take and such person or social enterprise organisation shall be

entitled to make submissions to the Regulator within five days from

the date of receipt of the written notice.

Part VII

Applications to the Court

The Court shall be competent to hear and determine any

applications made under this Act and made in terms of article 25. The

Court shall have jurisdiction in relation to any breach of the

provisions of this Act or any regulations made thereunder when such

breach does not constitute a criminal offence.

(1) Any person or organisation aggrieved by any

cancellation order issued by the Regulator may apply to the Court for

review of such decision within thirty days of receipt thereof.

(2) Applications shall be made in writing and shall be lodged

with the Court in accordance with the provisions of the Code of

Organization and Civil Procedure or shall be made in the manner as

may be prescribed by regulations made by the Minister by virtue of

this Act.

(3) All applications shall be made to the Court which

applications shall be served on the Regulator by the applicant.

(4) An application to the Court may also be made by an

administrator or member of a social enterprise organisation for an

order on the affairs of such organisation on the grounds that such

organisation is not being administered in accordance with this Act,

any regulations or guidelines made thereunder or as provided in the

statute of such organisation.

(5) In determining an application, the Court may dismiss the

application or annul, revoke or substitute the decision of the

Regulator.

Compliance with any instructions of the Regulator shall

not be interpreted as a renunciation of the right to seek review of the

Regulator’s determination.

Part VIII

Offences

Where any person acts in breach of any of the provisions Penalties.

of this Act or any regulations or any guidelines made thereunder, and

a specific penalty is not provided for the offence under this Act or any

regulations or guidelines made thereunder, such person shall, on

conviction, be liable to a fine (multa) of not less than one hundred and

twenty euro (€120) but not more than two thousand five hundred euro

(€2,500).

The provisions of this Act establishing offences and Provision with

penalties in respect thereof shall not affect the operation of any other respect

offences.

law establishing offences and penalties in respect of the same acts or

omissions and shall not affect the application of any higher penalty

under any other law.

Any person who, in any manner, forges or alters a Forgery or

certificate of registration of a social enterprise organisation so as to alteration

certificates or

give the impression that he acts on behalf of a social enterprise mis-

representation

organisation, or that an organisation is a social enterprise organisation or abusive use

when it is not, shall be guilty of an offence and shall be liable to the of status.

same punishment as provided for in article 183 of the Criminal Code. Cap. 9.

Any person who knowingly acts or purports to act as an Purporting to

administrator of a social enterprise organisation without having been act

administrator.

duly appointed or elected as an administrator of such organisation,

shall be guilty of an offence punishable as a contravention unless the

actions of the said person constitute a more serious offence under any

other law, in which case he shall be punishable accordingly.

Any person who -

Abusive use of

certificate of

recognition and

(a)

makes abusive use of a certificate of recognition or

incorrect

statements or

of a social enterprise label;

information.

(b) acts or purports to act in the name of a social

enterprise organisation which does not exist; or

(c)

without reasonable excuse prepares any incorrect

statement or gives any incorrect information in relation to any

matter falling under this Act,

shall be guilty of an offence under this Act.

(1) Any person who, with the intent of obtaining any Abuse of

benefit under this Act or any regulations or guidelines made benefits.

thereunder, or who assists any person in doing so -

(a)

omits from an annual return or any other document

or statement made for the purposes of this Act or as may be

prescribed, any matter which should be included therein; or

(b) makes any false statement or entry in any annual

return or other document or statement made for the purposes of

this Act or as may be prescribed; or

(c)

gives any false answer, whether verbally or in

writing, to any question or request for information made in

accordance with the provisions of this Act or as may be

prescribed; or

(d) prepares or maintains or authorises the preparation

or maintenance of any false books of accounts or other records

or falsifies or authorises the falsification of any books of

accounts or records; or

(e)

makes use of any fraud, art or contrivance or

authorises the use of any such fraud, art or contrivance,

shall be guilty of an offence under this Act.

(2) Upon any person admitting to or being found guilty of any

of the above offences, the Regulator shall on conviction revoke any

Certificate of Registration issued to the social enterprise organisation.

(1) The Regulator may investigate the affairs of any

social enterprise organisation at any time and may demand from any

person, in writing, any relevant information and documentation

relating to the operation of a social enterprise organisation or any

person involved in the activities of a social enterprise organisation, if

he receives what he considers to be a valid compliant in writing or if

he has cause to believe that such information is necessary in order to

establish whether a social enterprise organisation is acting in

compliance with the provisions of this Act or any regulations or

guidelines made thereunder.

(2) Any person who fails to provide information and

documentation as aforesaid, and destroys or defaces documents, or

attempts to destroy or deface documents, required by the Regulator

pursuant to this article shall be guilty of an offence.

(3) The Regulator may issue directives demanding compliance

with any of the provisions of this Act or any regulations or guidelines

made thereunder and failure on the part of any person to comply with

such directives shall constitute a breach of duty.

(4) The Regulator may set a period for compliance with any

directives he may give or for compliance with any of the provisions

of this Act or any regulations or guidelines made thereunder and may

impose penalties for non-compliance within such period

Provided that such penalties shall not exceed two thousand

five hundred euro (€2,500) for the breach of a directive and one

hundred twenty euro (€120) for each day of non-compliance and such

penalties shall be paid to the Regulator.

(5) A demand under this article may also be sent to a person

who is bound by a duty of professional secrecy under the Professional Cap. 377.

Secrecy Act and for the purposes of article 6A of the said Act, the

Regulator shall be considered to be a public authority. Any

information obtained by the Regulator upon such a demand shall be

used exclusively for the purposes of this Act.

(6) Any person or organisation may be subject to further

investigations and in the event that they transpire to be of a criminal

nature, the Regulator shall refer the matter to the Executive Police.

Part IX

General

(1) The Minister may by regulations prescribe Powers of the

regulations to properly implement the provisions of this Act, and Minister.

may, without prejudice to the generality of the aforesaid, by

regulations

(a)

amend the Schedules;

(b)

further regulate social enterprise organisations;

(c)

establish forms for the notification to the Regulator

of changes to the statute of the social enterprise organisation or

of its administrators or otherwise; and

(d) further establish the form and content of annual

reports and accounts which are to be submitted to the Regulator

in order to achieve a satisfactory level of transparency and

accountability of social enterprise organisations.

(2) The Minister may, after consulting the relevant Minister

depending on the type of benefit or incentive granted, make

regulations including different rules for the different types of social

enterprise organisations identified in terms of this Act, and may

establish the criteria for the granting of any exemptions, in whole or

in part, with regards to the activities of social enterprise

organisations. Such regulations may also establish the terms,

conditions and forms of any fiscal certificates, receipts or other

documents which may be necessary for the enjoyment of the above

fiscal status and regulations

Provided that only social enterprise organisations in possession

of a valid certificate of recognition may benefit from the incentives or

grants prescribed by the Minister.