Applying for ESUS approval: the file, the DDETS and the two-month deadline

Once the articles of association are in order and the accounting demonstration is ready, applying for ESUS approval is a short administrative procedure — but two of its mechanics regularly catch applicants out: the departmental entry point, and an assessment period that works in the applicant’s favour. Here is how filing actually goes.

A departmental entry point, a prefectoral decision

The application is filed with the prefect of the department where the registered office is located. It is submitted by the legal representative, by any means giving a certain date of receipt.

Assessment falls to the decentralised services: the departmental employment, labour and solidarity directorate (DDETS), the DDETSPP in departments where the service is merged with population protection, or the DRIEETS in the Paris region. Those are the services to contact beforehand, because the practical arrangements — filing platform, postal submission, form offered, number of copies — are not uniform across the country.

Two habits save weeks. First, read the social-economy page on your department’s DDETS website before printing anything. Second, file through a traceable channel, for reasons that appear below.

What the file contains

The file must let the case officer verify, document in hand, each of the conditions set by article L. 3332-17-1 of the Labour Code. The expected material falls into four blocks.

Identity and membership of the social economy. Up-to-date articles of association, a registration extract bearing the ESS mention for a commercial company, the prefecture filing receipt and RNA number for an association, and the composition of the governing bodies.

A description of the activities. What the organisation does, for whom, with what effects. This is where social utility is characterised, by reference to the branches of article 2 of Act no. 2014-856 of 31 July 2014. Descriptive, verifiable text beats a sales brochure: the case officer is looking for facts, not promises.

The accounts. Annual accounts for the last financial years, plus the demonstration that the cost induced by social utility has a significant impact — either through the operating-cost test or through capped financial profitability.

Pay policy. The material needed to check the two ceilings: the average of the five highest pay packages against seven times the annual pay of a full-time employee on the SMIC, and the highest single package against ten times that same reference.

One method point that saves time: the file refers to the numbers of the articles of association carrying the social-utility objective and the pay cap. Set out that cross-reference explicitly rather than leaving the case officer to hunt for it.

The two-month deadline: a rule that protects the applicant

This is the most useful mechanism to know. Silence from the prefect for two months from receipt of a complete file counts as a decision to accept.

Three practical consequences follow.

The acknowledgement of receipt becomes a strategic document. It is what starts the clock. File by a means giving a certain date, archive the proof, and diarise the expiry date.

A request for further documents is not bad news. It means the file was incomplete and the countdown had not started — or restarts. Answering quickly is the best use of your energy.

An implicit approval is a real approval, but an invisible one. No formal decision is issued, no document arrives. A funder asking for « the approval decision » then hits a void. The remedy is to ask the DDETS for a certificate recording that the implicit decision came into being, enclosing the acknowledgement of receipt. Arrange this before, not during, a funding negotiation.

Five years, or two: the term depends on age

Approval is granted for five years. It is cut to two years for companies created less than three years before the application.

That rule has an underestimated consequence for young organisations: a company approved at eighteen months old will have to reopen the file before its fourth birthday — often exactly when the team is absorbed by a fundraising round or a change of scale. There is no automatic renewal. Diarise the expiry as soon as approval is notified, with an alert six months ahead.

Preparing the file is already building your management reporting

An application forces an organisation to formalise what many carry implicitly: who the beneficiaries are, what costs social utility generates, how that is demonstrated. It is worth turning that imposed exercise into a lasting investment.

Research points the same way. In an action-research study published in 2013 in the Australian Journal of Public Administration, Jo Barraket and Nina Yousefpour find that small and medium social enterprises most often start measuring impact to satisfy an external requirement, and that the practice only becomes genuinely useful when it is connected to internal management (see the study). The approval file is exactly that kind of external requirement: built once for the administration, it can then serve the board, the funders and the annual report.

That formalisation has a second, defensive virtue. Alnoor Ebrahim, Julie Battilana and Johanna Mair, writing in 2014 in Research in Organizational Behavior, analyse mission drift as the central governance risk of organisations pursuing a social and an economic objective at once (see the study). Writing social utility into the articles and demonstrating it in the accounts every five years is, in effect, a safeguard against that drift.

The costliest mistakes

Filing before amending the articles of association. The leading cause of rejection, and an avoidable one: the amendment is scheduled before everything else.

Underestimating the accounting work. Isolating the operating costs attributable to socially useful activities often means rebuilding an analytical breakdown across several financial years. It is not a last-minute task.

Not keeping proof of filing. Without an acknowledgement of receipt, an implicit approval becomes very hard to rely on.

Waiting for expiry to think about renewal. A gap in coverage in the middle of a funding operation can stop everything.

Take action

Call your department’s DDETS this week to find out its exact filing arrangements, then fix three dates: the extraordinary general meeting to amend the articles, the meeting with your accountant on the cost demonstration, and the filing itself. The conditions to be met are covered in our article on the four conditions of article L. 3332-17-1, and the ESUS approval page sets out the whole procedure.