IN SEARCH OF LEGAL FORM FOR SOCIAL ENTERPRISE (A COMPARATIVE STUDY BETWEEN THE UNITED KINGDOM AND INDONESIAN LEGAL SYSTEM)

A social enterprise, also known as a social business, is a company that has specific social objectives that seek to maximize profits while maximizing benefits to society and the environment, with profits primarily used to fund social programs. The problem that Indonesia faces regarding social enterprises is that there is no legal vehicle to address the development needs of social enterprises. To find their legal form, social enterprises in Indonesia choose between limited liability or foundation in running their type of company, but, of course, this existence condition cannot accommodate the needs of the social enterprise form.

This research examines the legal form for social enterprises in Indonesia through a comparative study of the law between the United Kingdom (UK) and Indonesia. The purpose of the research is to scrutinize the advantage and to analyze the need of social enterprise movement by new legal form existence for social enterprise in Indonesia by reference learning thought UK.

This study uses normative legal method. Data required for this thesis consists of primary and secondary legal authorities. Primary legal authorities were collected through analyzing related national legislations, international law legislations principle and other regulations. Secondary legal resources were obtained through reviewing related literature, text books, journal, and previous related writing. All collected data were analyzed by applying qualitative analysis.

The result of the research shows that there are two principles that need to be adopted by social enterprises in Indonesia: asset and profit lock. With reference to learning from how Community Interest Company (CICs) exists as the social enterprise UK legal form, Indonesia requires social enterprise legal forms that accommodate the social enterprise principles of asset lock and profit lock in order to achieve their social purpose while maximizing profit.

It is proposed that a new regulation be created about social enterprise legal form at the level of the constitutional hierarchy, at the same level as Indonesia Law Number 40 of 2007 concerning Limited Companies. Even nowadays, Indonesia has presidential regulation number 2 of 2022 about entrepreneurship development that mentions social enterprise, where the regulation is quite ideal and clear, but it is not enough to acknowledge social enterprise in Indonesia in order to create a legal form that is suitable for the flexibility of social enterprises, such as profit lock and asset lock regulation that may be applied to our new regulation.