FAQ on the Societal Impact Company (SIS)

You are interested in the Societal Impact Company (SIS) accreditation but you feel lost and would like some answers? You are at the right place. We have prepared an article for you with the questions that are most frequently asked by the entrepreneurs we support.

Why apply for the SIS accreditation?

The SIS accreditation will allow you to carry out an activity with a social and/or environmental impact and to be recognised as such. To name just a few advantages, you will benefit from tax breaks (if you opt for a 100% impact share model). Yield units or shares are those that give the right to a portion of the dividends. Thus, if a societal impact company is made up of 100% impact shares, no dividend is distributed to shareholders/owners of social shares. You will also become part of a dynamic ecosystem of socially committed companies and finally, it will give you access to public contracts.

When to apply for accreditation?

Contrary to popular belief, it is not compulsory to set up a company before applying for an accreditation approval. The application can be made by both companies that have already been established and companies that are in the process of being created. As long as the company meets the legal requirements, i.e. it defines a clear and precise social purpose and identifies indicators regarding its impact, you are entitled to submit an application at any stage of your company's life.

What types of companies are eligible?

Unfortunately, you will not be eligible for the SIS accreditation if you are planning to set up your business as a self-employed person, a freelancer. However, if you opt for a capital company, you can choose between a public limited company, a limited liability company, a simplified limited liability company or a cooperative society. All are eligible for SIS approval!

Is a SIS allowed to make a profit?

Profit is not forbidden for a SIS. On the contrary! Any impact company must generate financial surpluses in order to survive and be sustainable. Therefore, the distribution of dividends is allowed as in traditional companies. However, a SIS made up of 100% impact shares must reinvest all of its profits in the maintenance and continuity of its activity in order to achieve its social purpose.

How are impact shares and distribution shares defined?

In the context of a SIS, a distinction is made between impact shares and distribution shares. Impact shares are intended to achieve your company's purpose, while distribution shares will allow you to distribute dividends, provided that your purpose has been achieved. The only requirement here is that your share capital must consist of at least 50% impact shares.

 What are your obligations as a SIS?

One of the conditions of accreditation is measuring how well the societal impact objectives have been achieved through performance indicators. To this end, a extra-financial impact report detailing the implementation of the performance indicators must be drawn up every year by the company itself. This report must be sent to the Ministry of Labour, Employment and the Social and Solidarity Economy. If in the future the turnover of your SIS increases considerably (i.e. exceeds 1,000,001 euros), then your annual accounts will also have to be audited by an approved auditor.

What are the consequences if your company does not meet its societal impact targets?

Variations in performance indicators are integral to any business activity. It varies according to unpredictable circumstances and events during the year. Contrary to popular belief, failing to meet your societal impact targets does not result in the withdrawal of your accreditation or the termination of your company! Instead, the Ministry of Labour, Employment and Social Economy will issue a warning and summon the business to discuss why the targets were not met, and possibly adjust the impact indicators.

Why should a non-profit organisation become a SIS?

The SIS accreditation will offer you greater flexibility and the proper legal framework that will allow you to carry out commercial activities while keeping the societal mission at the heart of your company. In addition, if you opt for a 100% impact share model, you will continue to have access to public funding and donations in the same way as non-profit organisations.

Where to apply for accreditation?

You should send your application to the Ministry of Labour, Employment and the Social and Solidarity Economy. An advisory committee meets every month to evaluate the applications. On the guichet.lu website, you will find all the information you need to prepare your application. It takes an average of two to three months from the submission of the application to obtaining the accreditation.

 Who can help you?

You can get support from the Ministry of Labour, Employment and the Social and Solidarity Economy.

In short, the procedure for obtaining the SIS accreditation is fairly simple, provided that you have a clear idea of the societal mission you would like to promote through your entrepreneurial project.

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