Purposely is a free tool to put purpose at the heart of a business. Businesses with a purpose beyond profit are committed to fulfilling a social, economic or environmental goal. There are more than 1.2 million of them in the UK. Purposely is a digital tool to embed your purpose in a company’s governing articles. And it’s free to use.
Purposely has been developed following upon the recommendations of the 2016 Mission-Led Business Review that recommended that government should raise awareness of the existing legal flexibility to embed purpose within a conventional limited company and establish clear ways for entrepreneurs to take advantage of it.
Purposely is designed for founders who have already decided that the Company Limited by Shares legal structure is right for them. There are other legal structures that automatically include purpose, including the Community Interest Company and various charitable structures.
Purposely was designed and created by UnLtd, the Foundation for Social Entrepreneurs, in partnership with law firm Bates Wells, and with strategic support from the Department for Culture, Media & Sport (DCMS). Purposely is now managed by Social Enterprise UK, the membership body for social enterprises, in partnership with Bates Wells and with continued support from DCMS.
We are grateful to the following for their input as members of the project Sounding Board:
The Purposely model articles place the agreed purpose in what is known as the objects clause in the articles. The agreed purpose of the company shapes the duties and responsibilities of the directors, along with any responsible business principles which the company agrees to uphold. These principles are a way of setting out what standard of behaviour is expected of the company and those working for it.
The directors are obliged to report on the impact the company has had in pursuit of its purpose. In some of the Purposely model articles, the purpose of the company leads, in turn, to changes in the relative prioritisation of the interests of shareholders and other stakeholders. And others include restrictions on how the directors of the company may decide to distribute profits or what to do with assets if the company is would up. In summary, the articles support the directors and others to get behind an agreed purpose.
Purposely has adapted the standard articles that are used by the vast majority of UK companies – the standard company limited by shares – and created amended versions to suit the needs of a range of purposeful businesses. You can view this default set of articles here, on Companies House website.
There are other forms of company that founders may wish to consider when they are incorporating their business, such as the community interest company or the company limited by guarantee. Purposely does not try to help founders to decide which company form is right for them.
For a detailed guide on the Purposely articles and how they differ from the default model articles for UK companies limited by shares, please read this guide.
In Purposely, the model 4 articles meet these criteria. Model 3 is similar to a social enterprise in that it has a primary social purpose, but it lacks a legal commitment to reinvest the majority of the profits. Social enterprises can also opt for other legal structures such as the Community Interest Company (CIC). You can find out more on the webpages for the CIC Regulator.
Purposely, the model articles and the tools available on the Purposely website do not constitute legal advice and should not be relied upon as such.
The model articles and other tools available on the Purposely website may not be suitable for every situation. They are intended to be used as templates and should be adapted by you as necessary to meet your individual requirements. If you need legal advice for your specific situation, please consult a lawyer. This is particularly important if you plan to change the wording of the model articles or any other materials provided on the Purposely website, or if you have any questions about their legal implications. You can speak to your usual legal advisor, or get in touch with Bates Wells on firstname.lastname@example.org.
Please note that Bates Wells will not be reviewing your use of any of the model articles or other materials available from the Purposely website as part of the Purposely process. Your use of the tools on the website, including the model articles, does not create a lawyer-client relationship between you and Bates Wells.
Please read our ‘Important Notes’ section for more detail.
As with any company, the company may have a claim against directors who breach their duties. However, while embedding purpose redefines and reshapes the existing duties of directors to promote the success of the company, it does not create any new rights for the company or for third parties and so does not create new forms of liability for directors. In particular, the Purposely model articles do not affect the fundamental principle (codified in s170 of the Companies Act 2006) that the duties of directors are owed to the company (and generally not to anyone else) and so the only person with a right of recourse is the company itself or, in limited circumstances, a member on behalf of the company.
For the avoidance of any doubt, the Purposely model articles include language to make it clear that stakeholders are not granted rights of recourse against directors in respect of the carrying out of their responsibilities.
In any event, the shareholders may decide to amend the articles of association to remove the Purposely model articles’ special features by passing a shareholders resolution (provided that there are no additional provisions to entrench these special features).