Creating a Social Impact Company (SIS) in 5 steps

Social enterprises have gained popularity in recent years in a world where people increasingly recognize the importance of local, fair, and environmentally friendly consumption. The Social Impact Company (Société d’Impact Sociétal) accreditation is designed for individuals or entities wishing to establish a business aligned with the values of solidarity and participatory management. Whether you are a budding entrepreneur or already well-established, this accreditation allows you to blend positive impact with economic viability while enjoying several benefits. In this article, we share the key steps for creating a SIS.

1. Define the social purpose and intended impact of your business

Before considering the impact you wish to make, it's crucial to identify the social mission of your project. Begin by clearly defining the social and/or environmental issue you aim to address. Your mission should be at the core of your business, guiding every decision you make. Then, based on the social mission, consider the impact your activity can generate and establish a system to measure it. This enables you to regularly communicate your achievements and progress to stakeholders, including investors, partners, and your community. Keep in mind that social impact encompasses all changes (positive or negative, expected or unexpected) resulting from a company's activities, taking into account the needs of its beneficiaries. Therefore, it's crucial to be as closely connected to your beneficiaries as possible. For instance, if you plan to create a brand of clothing tailored to people with disabilities and produced by individuals distant from employment, measure the number of employed individuals, the number of beneficiaries purchasing your products, and their satisfaction (improved daily life, increased confidence, etc.). Explore the topic in more detail through our dedicated article on impact assessment.

2. Determine your impact and return shares

In the context of a SIS, the company's capital must consist of:

• At least 50% impact shares that do not entitle shareholders to any dividend distribution.
• Up to 50% return shares that entitle shareholders to dividend distribution only if the social purpose of your company has been achieved.

The profit allocated to impact shares is exclusively intended for fulfilling the social purpose and is fully reinvested in maintaining and developing the SIS's activities.

3. Draft your legal statuses

Reminder: the SIS accreditation is not a legal form. A SIS can be established solely as a public limited company (SA), limited liability company (SàRL), simplified limited liability company (SàRL-S), or cooperative society (SC). Models of articles are available for these four types of companies on the guichet.lu website. You can submit an accreditation request when creating the company or during its existence.

4. Submit your application

The accreditation application must include:

• A copy of the statuses or the draft statuses of your company, in line with the information provided in the accreditation request.
• A sworn statement.
• A list of all key individuals in the company (directors, managers, economic beneficiaries, etc.).

You may also be asked to supplement your application with a business plan if the advisory committee evaluating your application deems it relevant. Submit the accreditation request to the Ministry of Labor, Employment, and Social and Solidarity Economy.

5. Complete administrative formalities after submitting your application

Once the application is submitted, you have a three-month period to complete the following steps:

• Obtain the final establishment authorization.
• Register with the Luxembourg Business Registers (LBR) according to the nature of your activity.
• Affiliate with the Common Social Security Center (CCSS).
• Register with the AED (registration for value-added tax).
• Provide a certificate of non-bankruptcy and absence of ongoing liquidation proceedings issued by the trade and companies register.

We hope this guide has helped you better understand the steps to create a SIS. Whether you are in the idea stage or have already begun the creation process, contact the Social Business Incubator at the Ministry of Labor, Employment, and Social and Solidarity Economy for guidance. Over to you!