This chapter articulates the central argument (why a new legal form for social enterprises in India, Malaysia, Hong Kong, and Singapore is needed and what it should entail); explains why the four Asian jurisdictions are selected as case studies; and examines the purposes of social enterprises and their two main business models. The chapter then provides an overview of social enterprises in the four Asian jurisdictions including: their operating domains, the drivers of the development of social enterprises, the challenges faced by them, the three main conflicts of interests afflicting them, and the legal forms used by social enterprises. Importantly, the chapter shows that the legal forms available to or used by social enterprises in the four Asian jurisdictions are unable to properly address the conflicts of interests, and thus, a new legal form is required.

The central argument in this chapter is that the duties to which directors owe the company, specifically the duty to act in good faith in the best interests of the company and the duty to exercise powers for proper purposes, should be aligned with the purpose of social enterprises. In other words, the meaning of company’s interests in the best interest duty and that of proper purpose in the proper purpose rule ought to be equated with the proposed corporate purpose advanced in Chapter 1. To make this argument, I show that the laws governing these two directors’ duties in the four common law Asian jurisdictions and those of UK CICs and US PBCs and SPCs are not aligned with the purpose of social enterprises and I demonstrate why it is important to have this alignment. I also explain how the proper purpose rule can be aligned with my proposed purpose of social enterprise.

This chapter argues that the existing corporate laws of the four Asian jurisdictions and the laws regulating social enterprises in the US and UK that deal with purpose are generally ineffective in preventing the subordination of social benefit to profit; the laws are inadequate to ensure that social benefit is prioritized. Thus, I argue that in my proposed legal form, under the first criterion, there should be a requirement to the following effect that “on the whole, the pursuit and delivery of social benefit is prioritised over profit-making except where doing so will have a material and adverse effect on the financial viability of the social enterprise.” To make this argument, I first distinguish between corporate interest, corporate object, and corporate interest. I then examine the company laws of the four common law Asian jurisdictions, followed by the US benefit corporation and social purpose corporation as well as the UK community interest company. Subsequently, I propose a corporate purpose to which social enterprises should adhere and I show how this purpose can be privately and publicly enforced.