Friday, May 9, 2014

Bethke & Górski: Rethinking Social Ventures in Hong Kong

Jedrzej-gorskiDamian_bethkeDamian Alexander Bethke and Jędrzej Górski (both Chinese University of Hong Kong) have posted Rethinking Social Ventures in Hong Kong (Richmond Journal of Global Law and Business, Spring 2014).  Here is the abstract:

Hong Kong has experienced a significant transformation in its understanding of business, which concerns the phenomenon of social ventures that attempt to combine a make money and do good approach and to apply business skills to address social needs. Social ventures live a mystical existence, as they are fully ignored from a legal perspective despite the recent reform of laws on charitable activities. This causes problems as to their general understanding, which the authors try to address with their own typology, systematically characterizing social ventures. Then the authors examine the legal environment of social ventures in Hong Kong and identify the challenges they face. Hong Kong’s company law and related public/administrative law issues are considered. The answer searched for is: what is the appropriate legal vehicle for social ventures, and what are the practical legal questions when a social venture wants to structure its make money and do good business? As to the first problem, the legal non-existence of social ventures results in coupled privileges — meaning a system which favors traditional business forms such as for-profit and not-for-profit companies and discourages doing good approaches by social ventures. The authors identify instances where privileges crediting charitable activities are coupled with not-for-profit status, and propose solutions under which social ventures could be registered and have tax privileges efficiently assigned by a one-stop supervision body. As the second problem, the situation of social ventures abandoning their mission of doing good poses further challenges to the legal system, and the authors propose a regime under which business organizations can easily adopt or abandon a social mission based on a partial application of the cy-près doctrine. The authors come to the conclusion that the social venture sector bears immense potential for Hong Kong as well as for all of Asia. But in order to use this potential, Hong Kong has to show a more refined understanding and has to be open to a profound discussion.

Lloyd Mayer

http://lawprofessors.typepad.com/nonprofit/2014/05/bethke-g%C3%B3rski-rethinking-social-ventures-in-hong-kong.html

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