Purposely

What is Purposely?

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, in partnership with law firm Bates Wells Braithwaite (BWB), and with strategic support from the Department of Digital, Culture, Media & Sport (DCMS).

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What does purpose mean when it comes to business?

All companies have a purpose. Under company law, the standard purpose of a standard limited company is to benefit the shareholders of the company. This is usually achieved by selling goods or services with a view to generating a profit. At the same time, the law requires directors to have regard to wider stakeholder considerations, such as the interests of employees, customers, suppliers, the community at large and the environment.

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Can companies have a purpose other than profit?

Yes. All companies have a purpose. Under company law, the default purpose of a limited company is to benefit the shareholders of the company, while having regard to wider stakeholder considerations. Increasingly, many companies feel that this description of the purpose of a company places too narrow an emphasis on profit and fails to fully capture their true purpose. These companies are being set up and run with the aim of doing more than simply generating a profit for shareholders. Fortunately, company law allows a company to specify purposes other than benefit to shareholders.

Some companies have a specific purpose that relates to their commercial goals. For example, a company might aim to be the most innovative company in its sector, or the best place to work. This purpose might be so fundamental to the company that it makes sense for it to be identified formally, alongside shareholder benefit.

Beyond this, some companies want to have a positive impact on the society and the environment, while also generating profits for shareholders. They might focus on a specific social or environmental impact, for example promoting healthy eating. Or they might aim to benefit society more generally. In either case, this social impact would be core to the purpose of the company.

Some companies go even further and decide to put people or planet before profit to shareholders. For some, this means prioritising a specific social or environmental purpose. For example, a company’s primary purpose might be to create employment opportunities for people with disabilities, or to promote clean energy solutions. This doesn’t mean that they can’t distribute profits to shareholders at all, but they do so only in order to achieve their stated purpose, which must come first in any decision-making.

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