A social enterprise consultancy has created new, free-to-use templates for articles of association and loan agreements that it says brings clarity to the definition of a social enterprise and should stimulate the social investment market.
Prime Advocates, which was founded in 2012 and offers a mixture of free and paid-for services, created the documents with the pro bono help of the law firms Linklaters, Weil, and Allen & Overy.
The four documents – articles of association for a for-profit social enterprise and a related guidance note, plus a term-sheet for a loan to a social enterprise and a loan agreement template – have been made available on the website of the social enterprise network i-SEN.
Anthony Murphy, founder and managing director of Prime Advocates, said of the articles: "This should become the starting place for all social enterprises operating in for-profit structures other than community interest companies. One of the problems that we have in the UK is identifying what a social enterprise is – this helps organisations prove that they are social enterprises, and it helps investors identify them."
Murphy said that the template loan documents should speed up the process for making social investments.
Tomas Carruthers, chief executive of the online social finance platform the Social Stock Exchange, said the templates would "help lower the barriers to entry for social enterprises seeking to unlock private capital". He said: "Ultimately, it allows investors to gain access to a wider range of opportunities – including those that deliver a positive impact on society as well as a financial return."
Nick Temple, deputy chief executive of Social Enterprise UK, said: "SEUK is, in general, supportive of initiatives that bring clarity and consistency to a marketplace that can at times seem blurred and difficult to navigate for charities and social enterprises.
"Our consistent call has been for greater transparency from investors and investees alike. It is also encouraging to see such prominent firms providing their expertise to try to cut transaction costs and move the agenda forward."