A voluntary code of conduct for the Scottish social enterprise sector that rules out the payment of profits to shareholders was launched yesterday by the social entrepreneurs body Senscot.
The code, announced at the Social Enterprise Exchange, the joint conference of Social Enterprise UK, Social Enterprise Scotland and Community Enterprise in Scotland, says every social enterprise should be set up with a clause that would transfer all its assets to another social enterprise or charity were it to be wound up.
It also says a social enterprise should be a good employer, with a pay ratio between the highest and lowest paid staff of only 5:1.
The code is designed to be self-regulating, with members deciding whether other members should be signatories. Each organisation that joins must have two sponsors from the social enterprise community.
It has been launched as an alternative to the Social Enterprise Mark, which is used as an identifier for social enterprises across the UK, but which Senscot feels is not sufficiently rigorous.
Addressing the conference, Aidan Pia, executive director of Senscot, said organisations in Scotland felt that when the Social Enterprise Mark was introduced in the UK as a means of identifying social enterprises, "the bar had been set too low".
The mark allows anything up to half of profits to be paid out to shareholders and owners in the form of dividends. During the trial stage, only 35 per cent of profits could be distributed, but this was increased for the main launch.
This change, Pia said, meant that Senscot had withdrawn its support for the mark. In 2010, it considered setting up its own mark, but abandoned the idea.
"In England, in particular, there has been a lobby to keep definitions blurred, with the result that essentially private enterprises are masquerading as social enterprises and devaluing our brand," the introduction to the code reads.
"In response to this, the Scottish social enterprise community has set down the values and behaviours by which we recognise each other."
Lucy Findlay, managing director of the Social Enterprise Mark Company, said her organisation welcomed the code and that it was broadly in line with the mark's criteria.
"Any social enterprises that adhere to the new code would automatically qualify for the mark," she said.