Social Enterprise Law Surveys |
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Jamaica |
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| (Latin America/Caribbean) Firm Myers, Fletcher & Gordon | |
| What jurisdiction(s) do you practice in? | Jamaica |
| What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade ... | The most common for-profit organizational forms utilized in Jamaica are Sole Trader, Limited Liability Companies and Partnerships.
a. Limited Liability Companies are the most common for-profit organizational forms used for seeking financing from investors and that will have multiple owners. b. The most common for-profit organizational form used by Social Enterprises (not specifically designed for social enterprises) is Limited Liability Companies. |
| Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required... | Traditional organizational forms do not require the board or managers to consider, balance or prioritize interests other than shareholder value in decision making, but legislation and the common law do so require. For example, the Employment (Termination & Redundancy Payments) Act, Sale of Goods Act and the Wild Life Protection Act impose obligations regarding the interest of employees, customers and the environment respectively. |
| Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so:a. What type(s) of organizational forms are they?b. How do they materially differ from the most closely analogous traditional organizational ... | Yes. Non-Profit Organizations and Charities are specifically designed for Social Enterprises. a. and b. Charities; In Jamaica, Charities are governed by the Charities Act. They materially differ from corporations/LLCs because they must be designed for a charitable purpose. Charitable purpose is defined in the Act and it includes but is not limited to relief of poverty; advancement of education and religion; advancement of good citizenship and community; advancement of environmental protection or improvement. No part of a Charity’s net income or assets enures to the personal benefit of any governing board members or private individual. c. The main benefit is that once a Charity is properly registered in Jamaica in accordance with the law – waivers and tax exemptions will apply. d. However, Charities have more reporting obligations than a private Limited Liability Company as they are required to submit annual returns, notice of change of directors and audited financial statements to the Companies of Office of Jamaica and the Charities Authority. e. The material difference in timing and cost for forming a Social Enterprise versus a traditional Enterprise arises where the Social Enterprise seeks charitable status from the Charities Authority. The Social Enterprise may form a trust or a company limited by guarantee, then apply to the Charities Authority for that trust or company charitable status. Obtaining charitable status may take up to a month or two depending on factors such as the volume of information to be reviewed and delays caused by the pandemic. f. Non-Profit Social Enterprise forms are very prevalent and some are very well-known. |
| Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporat... | Yes. a. Non-Profits are usually Social Enterprises and they a treated differently from other organizations if they have charitable status, as in their case tax exemptions would apply. In Jamaica, it is recommended that all Non-Profits register for charitable status in order to benefit from the tax exemptions. b. The material benefits of using the Non-Profit form for Social Enterprises are the tax exemptions applicable if the Non-Profit is also a registered Charity. c. A Non-Profit that does not apply for charitable status is typically not referred to as a “hybrid”, but this organization can be formed faster than a Charity. Tax exemptions that apply to Charities would not apply to Non-Profits that are not Charities, however, less reporting obligations would apply. d. The use of Non-Profits for Social Enterprises is very prevalent. |
| Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms. | Yes. |
| Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to. | If a Social Enterprise decides to be registered as a Charity, they will be subject to reporting requirements which include filing submit annual returns, notice of change of directors and audited financial statements to the Companies of Office of Jamaica and the Charities Authority. Also, each director or person in charge of a Charity must be approved as a fit and proper person by the Charities Authority. |
| In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples. | Since many of the Enterprise forms are new, there is not much case law on point. |
| Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe. | No. |
| Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe. | Directors of Social Enterprises that are Charities must be approved as fit and proper and operate in accordance with a “charitable purpose” as defined by the Charities act. |
| Does your jurisdiction have any ESG requirements for investors? If it does, please describe. | No. |
| Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements.b. If they are not, are they permi... | No major investor classes are required to look at ESG issues. They are permitted to consider ESG factors in making investment decisions, but any such consideration is based on the preference of decisions makers. |
| What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)? | Social Enterprises receive grants, charitable investments, and traditional investments. The type of funding typically varies based on the Enterprise form that the Social Enterprise chooses. For example, Social Enterprises formed as Non-profits receive more grants and charitable investments, while Social Enterprises formed as for-profit corporations received more traditional investments. |
| How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)? | Not very prevalent. |
| What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government... | Government funding for Charities is not very common if it happens at all. |
| Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)? | Not aware of any. |
| To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction. | N/A |
| How prevalent, if at all, are impact bonds in your jurisdiction? | Not common if used at all. |
| In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)? | No. |
| Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under a... | Crowdfunding is allowed. Not aware of any such rules. |
| Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full.b. Are they dependent on the Social Enterprise utilized using a spe... | There are tax exemptions available for Nonprofits that are Charities, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form. |
| Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations? | No. |
| Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.) | No. |
| Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions? | No. |
| Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe. | No. |
| What government operational support, resources, training or services, are available for small businesses or Social Enterprises? | N/A |
| Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are. | Social Enterprises that are Charities have the compliance obligations mentioned at I 7 above. |
| Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness. | Social Enterprises that are Charities are supervised by the Charities Authority. |
| Is there a different bankruptcy system available for Social Enterprises? | N/A |
| What are the average time and filing fees to form an Enterprise in your jurisdiction? | Incorporating a limited liability company can take up to seven business days and cost about US$230. There is no official fee charged for obtaining charity status but legal fees may be incurred and the application process may be completed in one or two month(s). |
| What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well... | A Social Enterprise may obtain charitable status in order to benefit from tax exemptions, but this has to be renewed every two years. |
| Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction. | It is usually easy to form a startup in Jamaica. Whether it flourishes depends on its location, the demand for goods or services being supplied, and other factors that can generally affect profitability. |
| Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction. | A Social Enterprise can be formed easily. Whether it flourishes depends on factors like public acceptance of the cause. |
| Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Soc... | Not aware of any. |
| In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects. | There have been cases of corruption reported in Jamaica, but they are not so major that businesses or Social Enterprises are not able to flourish in the jurisdiction. |
| What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction? | 1. Providing tax benefits to Social Enterprises utilizing for-profit Enterprise forms. 2. Expanding the scope of permitted activity for Nonprofits regardless of activity (even if the Nonprofits for certain activities did not have all tax benefits of other Nonprofits). |
| What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)? | Implementing a uniform set of standards for ESG policies and reporting of public companies would make it easier for investors and consumers to compare and evaluate which enterprises are in fact doing good in the world, which would drive companies to perform better. |
| Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not? | No. |
Social Enterprise Law Surveys
Jamaica
The most common for-profit organizational forms utilized in Jamaica are Sole Trader, Limited Liability Companies and Partnerships.
- Sole Trader- Normally operated by an individual. There is no distinction between the owner of the business and the business he/she is operating. The law considers the business and the individual the same person. Many examples of sole traders in Jamaica include micro businesses such as Barbers, hairdressers etc. The disadvantage of operating as a sole trader is that the owner has unlimited liability for all the debts against the business as there is no distinction between the owner and the business.
- Partnership – Made up of two or three persons or two companies or a combination of both. In Jamaica partners are jointly and individually liable for the actions of other partners. One example of partnerships in Jamaica are law firms. Partnerships end upon termination of the partnership or death of a partner.
- Limited Liability Companies – this is the most used form of business in Jamaica. A limited liability company is considered by law to be a separate legal entity from its owners. Owners are distinct from the company. A Limited Liability Company can sue or can be sued in its own name and the owners are generally shielded from exposure to liability. In Jamaica a limited liability company can be limited by shares or by guarantee.
a. Limited Liability Companies are the most common for-profit organizational forms used for seeking financing from investors and that will have multiple owners.
b. The most common for-profit organizational form used by Social Enterprises (not specifically designed for social enterprises) is Limited Liability Companies.
Traditional organizational forms do not require the board or managers to consider, balance or prioritize interests other than shareholder value in decision making, but legislation and the common law do so require. For example, the Employment (Termination & Redundancy Payments) Act, Sale of Goods Act and the Wild Life Protection Act impose obligations regarding the interest of employees, customers and the environment respectively.
Yes. Non-Profit Organizations and Charities are specifically designed for Social Enterprises.
a. and b. Charities; In Jamaica, Charities are governed by the Charities Act. They materially differ from corporations/LLCs because they must be designed for a charitable purpose. Charitable purpose is defined in the Act and it includes but is not limited to relief of poverty; advancement of education and religion; advancement of good citizenship and community; advancement of environmental protection or improvement. No part of a Charity’s net income or assets enures to the personal benefit of any governing board members or private individual.
c. The main benefit is that once a Charity is properly registered in Jamaica in accordance with the law – waivers and tax exemptions will apply.
d. However, Charities have more reporting obligations than a private Limited Liability Company as they are required to submit annual returns, notice of change of directors and audited financial statements to the Companies of Office of Jamaica and the Charities Authority.
e. The material difference in timing and cost for forming a Social Enterprise versus a traditional Enterprise arises where the Social Enterprise seeks charitable status from the Charities Authority. The Social Enterprise may form a trust or a company limited by guarantee, then apply to the Charities Authority for that trust or company charitable status. Obtaining charitable status may take up to a month or two depending on factors such as the volume of information to be reviewed and delays caused by the pandemic.
f. Non-Profit Social Enterprise forms are very prevalent and some are very well-known.
Yes.
a. Non-Profits are usually Social Enterprises and they a treated differently from other organizations if they have charitable status, as in their case tax exemptions would apply. In Jamaica, it is recommended that all Non-Profits register for charitable status in order to benefit from the tax exemptions.
b. The material benefits of using the Non-Profit form for Social Enterprises are the tax exemptions applicable if the Non-Profit is also a registered Charity.
c. A Non-Profit that does not apply for charitable status is typically not referred to as a “hybrid”, but this organization can be formed faster than a Charity. Tax exemptions that apply to Charities would not apply to Non-Profits that are not Charities, however, less reporting obligations would apply.
d. The use of Non-Profits for Social Enterprises is very prevalent.
Yes.
If a Social Enterprise decides to be registered as a Charity, they will be subject to reporting requirements which include filing submit annual returns, notice of change of directors and audited financial statements to the Companies of Office of Jamaica and the Charities Authority. Also, each director or person in charge of a Charity must be approved as a fit and proper person by the Charities Authority.
Since many of the Enterprise forms are new, there is not much case law on point.
No.
Directors of Social Enterprises that are Charities must be approved as fit and proper and operate in accordance with a “charitable purpose” as defined by the Charities act.
No.
No major investor classes are required to look at ESG issues. They are permitted to consider ESG factors in making investment decisions, but any such consideration is based on the preference of decisions makers.
Social Enterprises receive grants, charitable investments, and traditional investments. The type of funding typically varies based on the Enterprise form that the Social Enterprise chooses. For example, Social Enterprises formed as Non-profits receive more grants and charitable investments, while Social Enterprises formed as for-profit corporations received more traditional investments.
Not very prevalent.
Government funding for Charities is not very common if it happens at all.
Not aware of any.
N/A
Not common if used at all.
No.
Crowdfunding is allowed. Not aware of any such rules.
There are tax exemptions available for Nonprofits that are Charities, but there are no tax exemptions that are uniquely available for Social Enterprises structured using a for-profit organizational form.
No.
No.
No.
No.
N/A
Social Enterprises that are Charities have the compliance obligations mentioned at I 7 above.
Social Enterprises that are Charities are supervised by the Charities Authority.
N/A
Incorporating a limited liability company can take up to seven business days and cost about US$230. There is no official fee charged for obtaining charity status but legal fees may be incurred and the application process may be completed in one or two month(s).
A Social Enterprise may obtain charitable status in order to benefit from tax exemptions, but this has to be renewed every two years.
It is usually easy to form a startup in Jamaica. Whether it flourishes depends on its location, the demand for goods or services being supplied, and other factors that can generally affect profitability.
A Social Enterprise can be formed easily. Whether it flourishes depends on factors like public acceptance of the cause.
Not aware of any.
There have been cases of corruption reported in Jamaica, but they are not so major that businesses or Social Enterprises are not able to flourish in the jurisdiction.
1. Providing tax benefits to Social Enterprises utilizing for-profit Enterprise forms.
2. Expanding the scope of permitted activity for Nonprofits regardless of activity (even if the Nonprofits for certain activities did not have all tax benefits of other Nonprofits).
Implementing a uniform set of standards for ESG policies and reporting of public companies would make it easier for investors and consumers to compare and evaluate which enterprises are in fact doing good in the world, which would drive companies to perform better.
No.