SBE bylaws

Social Business Earth Sagl is a Social Business Centre registered as a company with social objectives following Professor Muhammad Yunus’ principles of Social Business, the first of its kind on Swiss territory.

Social Business Earth Sagl Bylaws
Lugano, Switzerland

To ensure transparency our bylaws are published below:

I. Name, Location and Purpose

Article 1 – Name

Under the name Social Business Earth Sagl a limited liability company is established in accordance to Articles. 772 et seq. Code of Obligations (CO).

Article 2 – Location

The company is headquartered in Lugano, Ticino (Switzerland).

Article 3 – Purpose

The company has the following objectives: promotion of social activities to help the disadvantaged due to poor physical, mental, economic and family conditions and the dissemination of the social business model. The social purpose is pursued through the following activities: the creation of social businesses; the organization of workshops and cultural events; the design, development and management of social businesses including consultancy and impact monitoring. The company may participate in other companies that serve the same purpose. The company does not aim to make profit.

Article 4 – Policy provisions

Social Business SAGL Earth is firmly committed to the social business model and its seven founding principles developed by Muhammad Yunus, Nobel Peace Laureate 2006.

A social business is a non-loss, non-dividend company that is created to address and solve a social issue. In a social business, the investors/owners can gradually recoup the money invested, if they wish to do so, but cannot take any dividend beyond that point. The purpose of the investment is purely to achieve one or more social objectives through the operation of the company. No personal gain is desired by the investors. The company must cover all costs and be financially and environmentally sustainable, while achieving the social objective. Social Business Earth is a social business in itself and it follows the aforementioned principles.

II. Share Capital

Article 5

1. The share capital amounts to CHF 20,000.00

2. It is divided into 200 shares of CHF 100.00 each

III. Shares

Article 6 – Share Book

1. The Directors shall keep a book of shares.

2. The book of shares’ content is provided by law.

Article 7 – Share Transfer

1. The transfer of shares and the commitment to carry out such transfer must be done in writing.

2. The transfer agreement must refer to the statutory provisions relating to pre-emption rights of partners.

3. The transfer of shares requires the approval of the partners.

4. The Partners Assembly may refuse to approve, without stating a reason.

5. The transfer of shares will only be effective from the moment it was approved by the partners

6. The approval is deemed granted if the Partners Assembly does not reject it within six months after receiving the application.

Article 8 – Particular Ways of Share Acquisition

1. The acquisition of shares by inheritance, by virtue of the matrimonial property or by enforced proceeding is governed by the law.

Article 9 – Usufruct

1. The constitution of a contract providing usufruct on shares is not allowed.

2. When the usufruct of a share derives from the inheritance law, the rights and obligations listed below are incumbent upon the following individuals:

a. voting rights and related rights: the usufructuary in accordance with Art. 806b CO

b. the preferential right to subscribe new shares: to the the partner

c. the right of pre-emption on the shares: to the the partner

d. the right to the outcome of the liquidation: to the partner

e. delivery of the board report: to the partner and the usufructuary

f. the right to obtain information and view the documents: to the partner and the usufructuary

g. the duty of loyalty: to the partner and the usufructary

h. renunciation to nominate auditors: to the partner and the usufructuary

Article 10 – Right of lien

1. The constitution of a lien on shares requires the approval of the Partners Assembly.

2. The Partners Assembly may reject the approval provided there are serious reasons for it.

IV. Partners’ rights and obligations

Article 11 – Duty of Loyalty

1. The partners are bound to business secrecy and confidentiality.

2. Partners shall refrain from taking actions that would put the company’s interests at stake. In particular they cannot manage businesses that would give them special benefits while undermining the purposes of the company.

Article 12 – Pre-emption right: Procedure

1. Each partner has a pre-emption right on other partners’ shares under the following conditions:

2. In case a partner decides to sell his/her shares, a case of pre-emption right under the Law occurs. The partner shall notify other partners and directors by registered mail within 30 days from when the decision was made.

3. Holders of a pre-emption right may exercise their right within 60 days of receipt of notice of the case of pre-emption. The exercise of that right must be notified by registered mail to the managing partners.

4. The exercise of the pre-emption right should always include all the shares subject to the case of pre-emption. If several holders of the pre-emption right decide to exercise their right, the shares are allocated in proportion to their equity.

5. Once the deadline for exercising the pre-emption right has occurred, the directors shall inform the partners about the exercise of the right within 10 days by registered mail. If the pre-emption right has been exercised, shares shall be transferred to the partners that have exercised it within 60 days after the deadline for exercising the pre-emption right, upon payment of the full sale price.

Article 13 – Pre-emption right: Pricing

1. The pre-emption right on the company shares shall occur with the actual value of the shares at the time of the pre-emption case.

2. In the event that the concerned parties are unable to find an agreement on the actual value of shares within 30 days from the notification of the exercise of the pre-emption right by the directors, they must state their purchasing proposal to the directors in writing. In the event that an agreement on pricing is not found, the actual value is determined in a permanent and binding way by a qualified expert auditor who plays the role of mediator.

3. In the event that the concerned parties are unable to find an agreement with the qualified expert auditor who acts as a mediator, he is conclusively and irrevocably appointed by the President of the Cantonal Court where the company’s headquarters are based (Court of Appeals).

4. Before the final determination of the actual value, the auditor shall submit to all concerned parties his proposal with annexes as a unilateral stance, as well as the evaluation principles on which it is based. The stance of the concerned parties must be in writing.

5. Costs of the assessment procedure shall be borne by the concerned parties in proportion with the difference between their written proposal under the law in cpv. 2 (private code 2) and the result of the expert auditor’s appraisal.

6. If the President of the Cantonal Court does not accept the mandate concerning the appointment of the qualified expert auditor who acts as a mediator, the actual value is determined by the ordinary courts (District Court for the District of Lugano), and respectively by an arbitral tribunal.

Article 14 – Delivery of the Annual Report

1. The annual report and audit report shall be delivered to the partners no later than 20 days before the Partners General Assembly.

2. Partners receive the annual report as approved by the Partners General Assembly.

V. Company Structure

Article 15 – Structure

The company bodies are:

a) The Partners General Assembly

b) The Board of Directors

c) The Auditors, if required by law or as per decisions of the partners

1. The Partners General Assembly

Article 16 – Powers

1. The Partners General Assembly is the supreme organ of the company

2. The Partners General Assembly is entitled to the following non-transferable assignments:

a) The amendment of the statutes

b) The appointment and dismissal of Directors

c) The appointment and dismissal of auditors

d) The approval of the annual report and, where appropriate, of the group financial report

e) The approval of the annual budget and decision on the profit allocation resulting from the turnover

f) The discharge of Directors

g) The approval of shares sale and the recognition of a buyer as a partner with voting rights

h) The approval of the creation of a right of lien on shares

i) The authorization of shares purchase bought back by the company and through the Directors, or the approval of such a purchase

j) The decision to ask the judge to exclude a partner for serious misconduct

k) The dissolution of the company

l) the deliberations on the items that are reserved to the Assembly by law or by statute or which are submitted by Directors

Article 17 – Convocation

1. The ordinary Partners General Assembly is held each year within six months from the end of the fiscal year. Extraordinary General Assemblies shall be convened in accordance with the bylaws, if necessary.

2. The Partners Assembly is convened by the Board of Directors and, when necessary, by the auditors or the court. The liquidators also have a right to call an Assembly.

3. One or more partners, who together represent at least 10% of the share capital, may request to convene the Partners Assembly in writing, stating the objects of discussion and the proposals.

4. The Partners Assembly is convened in writing or by e-mail at least 20 days prior to the Assembly. It is reserved for art. 17.

Article 18 – Items of Deliberation

1. Items on the agenda are indicated in the meeting notice, as well as the proposals of Directors and Partners.

2. No decision may be taken on items that have not been duly added on the agenda, with the exception of the proposal to convene an extraordinary Partners Assembly and, where appropriate, to designate an audit office.

3. There is no need to communicate in advance proposals that will be under the items on the agenda or discussions that are not followed by a vote.

Article 19 – Decisions subject to facilitated conditions

1. As long as no one is opposed to it, all the partners can hold a Partners Assembly without observing the abovementioned formalities for calling the meeting (of all partners).

2. As long as all partners are present, or regularly represented, the Assembly can validly deal with all matters pertaining to the Partners General Assembly and vote on them.

3. Deliberations of the Partners General Assembly may also submitted in writing, provided that a partner does not request a verbal discussion.

Article 20 – Assembly Chair and Minutes

1. The Assembly is chaired by the president. He/She nominates the secretary who will write the minutes and the scrutineers, who need not to be partners.

2. The contents of the minutes must be provided by law (art. 805/5 cifra 7 CO e art. 702/2 CO).

3. The minutes are signed by the president and the secretary who takes the minutes.

4. The Directors send a copy of the minutes to all partners.

Article 21 – Representation

1. At the Assembly any partner can represent his/her shares personally or may delegate any person of his/her choice to represent them.

2. The delegate must show a written consent by the partner.

Article 22 – Voting right

1. The voting right of each partner is determined by the nominal value of his/her shares.

2. Every partner has at least one vote.

Article 23 – Decisions

1. Quorum: The Partners General Assembly shall be valid only if two-thirds of the partners attend the Assembly in person or by representation. Participation can also take place via teleconference or video conference call, or through a written communication by the partners.

2. For the remaining issues, provisions by law are valid (art. 806 et seq., 808 et seq. CO)

2. Board of Directors

Article 24 – Appointment and dismissal of Directors

1. The company management is entrusted to a Board of Directors, composed of one or more members

2. The Directors are appointed by the Partners Assembly for a period of one year. They may be reappointed. (The appointment of Directors is the Assembly’s inalienable right, Art. 804 CO)

3. Only natural persons may be appointed as Directors. They need not be partners.

4. The Partners Assembly may dismiss the appointed Directors at any time.

Article 25 – Organization

1. The functions of a member of the Board of Directors are uncompensated (except for the remuneration resulting from their employment contract with the company, if they have one).

2. The Board of Directors shall meet and deliberate at least once a year or as often as the interests of the company so require.

3. Quorum: The decisions of the Board of Directors are valid only if half of its members participate in the meeting in person or via a conference call or videoconference, or through a written decision by the members (circular).

4. The Board shall deliberate as often as the interests of the company so require at a minimum of once per year.

5. Forms of deliberation: the Board of Directors deliberates either during meetings, which may also be in the form of teleconference or video conference or through written consent resulting from the signature of a document by the Board member.

6. Meeting Notices: a meeting of the Board of Directors may be called at any time by the president or, potentially, at the request of one of its members. Board of Director meetings may be called by any means based on an agenda determined by the person calling the meeting at least eight days before the meeting. Written consents shall be offered at any time by the president, at his/her own initiative or in the event of default by the president, by any one of its members, through the sending by any means of the decisions proposed.

7. Meeting agenda: the agenda can be amended by the Board of Directors by a majority of members present in the meeting.

8. Place of meetings: meetings of the Directors shall take place at the registered headquarter, or in any other location in Switzerland, Italy or abroad as specified in the meeting notice.

9. Voting rights attributed to each member of the Board of Directors: each member of the Board of Directors has one vote.

10. Majority: decisions of the Board of Directors are made by a majority of the votes of the members present or represented in the event of a meeting, or by a majority of the votes of all members of the board of directors in the event of a written consent procedure

11. President: the Board of Directors is chaired by a president or, in her/his absence, by a member of the Board of Directors appointed by its members. The President shall organize the work of the Board of Directors and ensure that its members receive the information necessary for the accomplishment of their mission. The president has a casting vote in case of a tie.

12. Corporate Registers: the decisions made by the Board of Directors during the meetings shall be recorded in minutes signed by the president (or the president of the meeting) and the secretary. The minutes of the decisions of the board of directors made during the meetings and the decisions resulting from written consent by the members of the board of directors shall be retranscribed in a special register kept at the registered office of the company. Copies or excerpts of it that have been duly certified by the president may be issued.

13. Participation by third parties: the president may invite to any meeting of the Board of Directors any person, whether employed by the company or not, who may be useful to the advancement of the work of the Board of Directors.

Article 26 – Powers of the Board of Directors

1. The Board of Directors is vested with the powers to perform all acts that are not assigned to the partners by law or by the company bylaws.

2. They have the following inalienable and non-transferable rights :

a) senior management of the company and the authority to issue the necessary instructions;

b) determination of the strategic direction of the company, within limits permitted by law and by the company bylaws;

c) organization of accounting and financial control and the development of the financial plan for the management of the company;

d) oversight of those responsible at manager level in different departments, specifically regarding compliance with the law, the bylaws, regulations and instructions;

e) preparation of the annual report (annual financial statements, annual management report and, where appropriate, group financial statements);

f) preparation of Partners Assembly and implementation of its resolutions;

g) notice to the judge in case of excessive indebtedness.

3. The Directors may appoint directors, attorneys and business representatives.

4. The president of the Board of Directors or the sole Director has the following responsibilities:

a) call and direct the company Assembly;

b) provide communications to partners;

c) ascertain that the necessary notices are sent to the Office of the Registry of Commerce.

Article 27 – Decisions

1. If the company has more than one Director, they shall make decisions according to the majority of votes issued. Decisions are valid only if at least half of the members of the Board of Directors agree.

2. The president has a predominant vote.

Article 28 – Duty of diligence and loyalty

1. The Directors and third parties dealing with the management are required to exercise their powers with diligence.

2. They shall protect the interests of the company and they are bound to business secrecy.

3. They shall refrain from all that would put the company interests at stake. They cannot manage affairs that would offer special personal benefits and would undermine the purpose of the company.

Article 29 – Exemptions from the prohibition of competition

The partners, board members and third parties dealing with the management, may engage in competitive activities only if all other partners have provided written consent.

Article 30 – Equal treatment

The members of the Board of Directors and third parties dealing with the management should treat partners who are in the same situation equally.

Article 31 – Representation

1. The Partners Assembly establishes the rules for representation of the Board of Directors.

2. At least one Director must be authorized to represent the company.

3. The company must be able to be represented by a person resident in Switzerland. This requirement may be fulfilled by a partner or a member of the Board of Directors.

4. The Directors can determine the details of the company representation by directors, attorneys or commercial agents in a policy.

3. Audit Board

Article 32 – Auditors

1. The company Assembly appoints the auditors in accordance with the provisions of the CO and the Law on the licensing and oversight of auditors (AOA).

2. The Assembly may decide to waive the appointment of auditors, when:

a. the company is not subject to regular review;

b. all partners voted in favour, and

c. the company staff does not exceed 10 full-time employees in the annual average.

3. The partners’ waiver to a limited review is also valid for the following years. However, each partner has the right to ask for a limited review within 10 days prior to the Partners Assembly. In this event, the Assembly shall designate the auditors. The Partners Assembly can vote on the annual report, on the financial statements, on the use of the profits resulting from the turnover and the determination of dividends only after the audit report is available.

VI. Bookkeeping of accounts

Article 33 – Fiscal Year

The fiscal year begins on January 1 and ends on December 31, the first time December 31, 2011.

Article 34 – Financial statements

1. The annual account report consists of the income statement, balance sheet and the annex.

2. It has to be filled out in accordance with the provisions of the Swiss Code of Obligations, in particular articles. 662nd ff. and Articles. 958 et seq. CO, in accordance with the general principles of a regular report.

Article 35 – Use and appropriation of profit

1. Any balance sheet profit, after allocating a percentage to the reserves established by law, may not be distributed to partners through the determination of dividends.

2. The balance sheet profit is available to the Partners Assembly, which has its destination in one or more of the following situations:

a) Re-investment in the expansion and / or development of the business activity of Social Business Earth SAGL

b) Use for the creation of new social businesses

VII. Withdrawal

Article 36

1. Every partner has the right to withdraw from the company when he or she has:

a. submitted a notice period of three months by the end of a fiscal year;

b. at the time of the partner withdrawal, the company has sufficient funds available to buy the shares of the outgoing partners at their actual value and

c. at the time of the partner withdrawal, the company does not own more than 35% of its own shares.

2. The necessary funds have to cover the recovery of the shares and the establishment of balance sheet reserves in accordance with the corresponding CO (art. 659th Para. 2 CO irc art.783, para. 4 CO).

3. This arrangement can be changed or abolished only with unanimous decision by all partners.

4. Each partner can ask the court permission to withdraw from the company for compelling reasons.

VIII. Dissolution

Article 37

1. The Partners Assembly may decide to dissolve the company. The resolution must be maintained by a public act.

2. The Board of Directors appoints the liquidators, unless the Partners Assembly reassigns the task to other people. The liquidation occurs according to law articles 742 et seq. i. r. c. art. 821st and art. CO 826.

3. Once all company debts have been extinguished, the assets of the dissolved company are distributed in the following manner: the remaining assets will be transferred to a micro-credit program or a social business that operates according to the principles of Professor Muhammad Yunus, Nobel Peace Laureate. The organization to which the funds will be destined must be recognized as tax free in the country of location.

IX. Communications and Publications

Article 38

1. Notices and communications of the Board of Directors to the partners are made in writing or by e-mail.

2. The official publication of the company is in the Swiss Official Gazette of Commerce (SOGC).

Social Business Earth was registered in Lugano (Switzerland) on June 14, 2011