Social enterprise

A social enterprise (사회적기업/社會的企業) is an organization that applies commercial strategies to maximize improvements in human and environmental well-being rather than mazimizing profits for enternal stakeholders. Social enterprises can be structured as a for-profit or non-profit, and may take the form of a co-operative, mutual organization, a social business, or a charity organization.

Under the Social Enterprise Promotion Act (사회적기업육성법/社會的企業育成法, the "Act"), a social enterprise refers to an enterprise certified by the Act as one that pursues a social objective, such as raising local residents' quality of life, etc., by providing vulnerable groups with social services or jobs while conducting business activities, such as the production and sale of goods and services, etc.

Establishment
A social enterprise is required to satisfy the certification requirements as specified by the Act and obtain certification from the Minister of Employment and Labor. The Minister of Employment and Labor may grant certification subject to the deliberation of the Employment Policy Council. Article 7 of the Act.

Certification
The certification requirements are as follows: Article 8 (1) of the Act
 * 1) It should take the form of an organization prescribed by the Presidential Decree, such as a corporation or an association under the Civil Law, a company under the Commercial Act or a non-profit private organization, etc.;
 * 2) It should employ paid workers and conduct business activities, such as the production and sale of goods and services, etc;
 * 3) Its main purpose should be to realize a social objective, such as raising local residents' quality of life, etc., by providing vulnerable groups with social services or jobs or contributing to local communities. In this case, detailed criteria for judgment shall be prescribed by the Presidential Decree;
 * 4) It should have a decision-making structure in which interested persons, such as service beneficiaries and workers, etc., can participate;
 * 5) Revenue from its business activities should meet or exceed the standards prescribed by the Presidential Decree;
 * 6) It should have articles of incorporation, rules, etc. in accordance with Article 9 as mentioned below;
 * 7) Where it has distributable profits for each fiscal year, it should spend at least 2/3 of the profits for social objectives (applicable only to a company under the Commercial Law); and
 * 8) It should satisfy the other matters prescribed by the Presidential Decree regarding operational guidelines.

By-laws
Articles of incorporation of a social enterprise shall contain the following matters: Article 9 of the Act
 * 1) Purpose;
 * 2) Contents of business;
 * 3) Name of business;
 * 4) Location of the main office;
 * 5) Type of organization and governance, method of operation and method of decision-making on important matters;
 * 6) Matters concerning profit sharing and re-investment;
 * 7) Matters concerning capital contributions and loans;
 * 8) Matters concerning the composition, appointment and dismissal of employees;
 * 9) Matters concerning dissolution and liquidation (where it is a company under the Commercial Law and has remaining distributable property, including provisions requiring it to donate at least 2/3 of the remaining property to another social enterprise or a public-interest fund etc.); and
 * 10) Other matters prescribed by the Presidential Decree.

Operations
The government may provide support, such as provision of professional advice and information, etc., in the areas of business management, technology, taxation, labor affairs, accounting, etc. as may be needed for the establishment and operation of a social enterprise. Article 10 (1).

The government may also conduct education and training to cultivate the professional workforces needed for the establishment and operation of social enterprises and improve the skills of social enterprise workers.

In addition, the government may:
 * provide subsidies or loans for land purchase expenses, facility expenses, etc., or lease national and public land as may be necessary. Article 11
 * promote the preferential purchase of the goods and services produced by social enterprises. Article 12
 * grant reduction of or exemption from national or local taxes under the conditions prescribed by the Corporate Tax Act, the Restriction of Special Taxation Act, and the Restriction of Tax Reduction and Exemption Act. Article 13 (1)
 * support part of the employment insurance premiums and industrial accident compensation insurance premiums under the Act on the Collection, etc. of Employment Insurance and Industrial Accident Compensation Insurance Premium, the insurance premiums under the National Health Insurance Act, and the pension contributions under the National Pension Act. Article 13 (2)
 * provide social enterprises providing social services with financial support, such as for labor costs, operating expenses, consultation expenses, etc. within the limit of the budget through open invitation and screening. Article 14