Social Business Initiative
Draft policy eyes govt stake in all projects
The Board of Investment has finalised a draft of social business policy with a provision for participation of the government as a shareholder in any social business initiative, officials said.
The draft framed to facilitate social businesses in the country has already been sent to the Economic Relations Division for final approval, they said.The draft also recommended that no shareholders could take dividends from the initiative rather profits through business would be re-invested for expansion of the project.
Investors, however, will be able to withdraw his/her initial investment, it said.
Net profit gained from the business will be taxable, according to the draft.
Anybody, organisation and company from home and abroad will be able to launch SBI either as a single initiative or joint venture.
Following the proposal of Islamic Development Bank and Grameen Trust to start three joint venture social business initiatives in health and sanitation sector in the banner of IDB-Grameen SBI, the government in mid-2012 took the initiative to frame the policy so that SBIs can be operated following the policy guideline.
Grameen Trust is an initiative of Nobel laureate Muhammad Yunus.
The move was taken at a time when the government and Yunus were at loggerheads over Yunus continuing as managing director of Grameen Bank.
The government committee formed to frame the policy was headed by BoI executive member Nabhash Chandra Mandal, however, suggested for scrapping the name of Grameen to avoid misunderstanding among other probable entrepreneurs.
‘In the draft, the BoI recommended to form a commission to promote social businesses and settle disputes among the entrepreneurs and stakeholders of social business initiative,’ Nabhash Chandra Mandal, executive member of BoI and head of the committee, told New Age on Wednesday.
Provision of government share in the SBI has been kept to ensure its participation in such noble projects, he said.
He said that the overall objective of the policy is to facilitate the social businesses not to regulate.
He said that the name of Grameen was scrapped to avoid misunderstanding among other entrepreneurs so that they do not think the social business is an issue confined only for Grameen.
A committee member, however, said that the word Grameen was left out because of objections from different government bodies.
He said that the government would provide a portion of equity for initial capital and appoint directors at the board of directors of the SBIs like projects under public-private partnership programme.
According to the draft policy, a social business is not for profit but a form of a company designed to address social problems. The profits are used to expand the company’s reach and develop the products and services.
The company may be production oriented or services and trade oriented.
The policy says that the investors can gradually get back the money invested but cannot take any dividend. The purpose of the investment is purely to achieve one or more social objectives including healthcare, education, poverty, environment and housing through operation of the company.
Officials said that any social business entity would have to be registered under the Companies Act- 1994.
Regarding the business nature of SBI, the policy says that social business will usually produce the products which are not produced by traditional businesses or its target areas are not served by other types of business.
Social businesses can offer lower or affordable prices for their products.
-With New Age input
