Social enterprises will be allowed to distribute part of their profits, but they will be required to disclose the amount of profit distributed as dividends in their annual activity reports. The administrative burden associated with the supervision of social enterprises will also be reduced.
These changes are provided for in amendments to the Cabinet of Ministers regulations entitled “Regulations on Groups of People at Risk of Social Exclusion and the Procedures for Granting, Registering and Supervising Social Enterprise Status”, which were adopted by the Cabinet of Ministers at its meeting on Tuesday, 6 October.
Allowing the distribution of part of a social enterprise’s profits could support the development of the sector by creating greater opportunities to attract private investment and strengthen financial sustainability. At the same time, this change could provide an additional incentive for entrepreneurs and investors, supporting business growth and increasing social impact.
To maintain a balance between economic and social objectives, the amendments introduce several safeguards. Profit distribution will be permitted only if the social enterprise has not received public grant funding specifically intended for social enterprises during the preceding three years. In addition, dividends may be paid only from the profits earned in the relevant reporting year; undistributed profits from previous years may not be used for this purpose.
The amendments will also reduce the administrative burden associated with supervising social enterprises. The Ministry of Welfare will verify compliance with the requirements of the Social Enterprise Law and assess the specified performance indicators. If all requirements are met, the Social Enterprise Commission will no longer need to be involved in preparing an opinion. However, if non-compliance is identified or there are doubts about whether the requirements have been met, the enterprise’s annual activity report will be referred to the Social Enterprise Commission for assessment and an opinion.
The requirements for reporting information on volunteer service organised by social enterprises will also be clarified. These changes will ensure compliance with the Volunteer Service Law and make it possible to obtain consistent and comparable information on the volume of volunteer service carried out by social enterprises.
As the amendments to the Social Enterprise Law concerning partial profit distribution will enter into force on 1 January 2027, the corresponding amendments to the Cabinet of Ministers regulations governing profit distribution will take effect on the same date.