Cap. 630 чл. 5The income of a social enterprise organisation. Cap. 16.

(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.