SCIC

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The SCIC - Société coopérative d'intérêt collective (co-operative society of collective interest) is a new type of multi-stakeholder co-operative structure introduced in France in 1982. Its relative rigidity, combined with the failure of the government to grant tax relief, has limited its take-up.

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SCICs in theory

SCICs are the legal embodiment of the idea of a social enterprise; that is an enterprise with social objectives.

The status of SCIC was introduced by a series of relatively simple amendments to existing co-operative legislation. The status acts to shift the emphasis from what an organisation’s corporate form is to what its objective is. Thus, it enables an association to convert into a co-operative without having to change its legal form.

In comparison with existing co-operative law, its chief innovation is the multi-stakeholder obligation: at least three different interest groups must be represented in the membership. Users and employees must make up two of these categories, thus ensuring both a user orientation and employee participation in decision-making. The other three stakeholder categories are volunteers, public authorities and other individual or corporate supporters. Voting is on a ‘one member, one vote’ basis, though voting in colleges is also provided for under certain circumstances.

The implementing regulations provide that the prefect approves a SCIC’s status for periods of five years, and it is withdrawn if it fails to meet the conditions. In order to qualify, SCICs must declare their ‘general interest’ objectives and are subject to a co-operative audit. In accordance with co-operative principles, SCICs are not totally non-profit-distributing. At least 57.5% of profit must be set aside as an indivisible reserve, but the remainder can be distributed to shareholders, subject to the legal ceiling of the average interest paid on private bonds. On dissolution any assets remaining are transferred to a body with similar objectives.

Capital is not a significant condition as the legal minimum is €3,750. Public bodies can subscribe for up to 20% of the capital. Financing is eased by the fact that the law also extends the right to issue non-voting shares to co-operatives incorporated as private limited companies (SARLs).

SCICs in practice

Up until the middle of 2006, 63 SCICs had been registered, of which 3 had folded. The largest is AMI (Actions Méditerranéennes pour l’Insertion; Mediterranean Actions for social inclusion) in Marseilles with around 60 employees, and the smallest employs a single person. The average size is around 8 employees so, in total, this new type of enterprise provides around 500 jobs. Future growth is expected to be steady but not spectacular.

Growth sectors

There is a spread of activities, including landscaping, waste processing, culture, education, sport, care, housing and social tourism. It may be that clusters will develop in sectors such as environmental services, for instance a labour market integration operation involving collecting waste, sorting it and neutralising hazardous components such as batteries. This could involve Revi+ in Angoulême, which has already been active in waste treatment for 11 years in the form of an association, Riscoll in Pessac near Bordeaux, which has expertise in biological waste treatment, and a workers’ co-operative (SCOP) in the Basque Country. Partners in this development include the Regional and Departmental Councils. It might be replicable in several regions. Other SCICs are active in the ecological sector, for instance ecological brickworks with a kiln powered by waste. EU finance has not been sought for this type of development.

A second potential growth sector is information and communications technologies, such as open source software. A noteworthy SCIC in this field is Websourd in Toulouse, which has invented a piece of software that allows deaf people to deal with bureaucracies using sign language. Sign language interpretation of interviews is delivered via a monitor and webcam. It has sold its innovative service to the city of Toulouse, to a number of arrondissements (urban districts) in Paris, and to other public agencies dealing with the public such as the Caisse des allocations familiales (Benefit Agencies). Another SCIC, Ev@soc in Paris, has developed software to manage the relationship between disabled people and the authorities.

Fund-raising

The existence of the new statute has been an important factor in the start-up of most of these businesses. It makes it easier to mobilise new partners. Roles and objectives are clearer, and public authorities seem to be more prepared to buy into the equity than they would to become a member of an association. An example is Okhra in Roussillon, of which Lubéron National Park became a member once it had converted from an association. Financial transparency is another positive factor.

The MACIF Foundation, the Direction du Travail and the Caisse des Dépôts et Consignations have invested in SCICs. CGSCOP plans to set up a venture capital fund especially for SCICs.

Multi-stakeholder balance

As regards the multi-stakeholder nature of SCICs, there have as yet been no conflicts between different membership constituencies. However this may arise after the ‘honeymoon’ period is over. It is to be noted that not all SCICs have written their rules in consultation with all stakeholders. There have been instances of the volunteer constituency withdrawing once they realised that becoming a SCIC would mean sharing power with the employees. Conversely, there have been two cases where the employees withdrew when they realised they would have to take responsibility for the success or failure of the business.

Taxation

The regulatory implementation of the SCIC was deficient in that the expected tax relief was not legislated for (this was a matter of political misjudgement rather than a fundamental objection). The original plan had been for SCICs to be exempted from the taxe professionelle (a payroll tax to provide for vocational training).

Further information

http:www.scic.coop