On 1 August 2014, the term industrial and provident society (also known as IP society) was replaced by two new terms, co-operative and community benefit societies. The changes were brought into force by the Co-operative and Community Benefit Societies Act 2014 which repealed the Industrial and Provident Societies Act 1965.
All pre-existing IP societies were re-designated as co-operative or a community benefit societies depending on what conditions of registration the relevant societies fulfil. The FCA is the registering authority for the new societies (as the FSA was for IP societies) and like their predecessor, the new societies are legal entity in their own right which exist independently from their members.
If you are looking to use one of the new societies for a new profit or not for profit business venture, you will need to consider the prescribed criteria for each. The criteria for a co-operative society is based on the International Statement on the Co-operative Identity which, broadly, describes a co-operative as a democratic entity which has voluntary and open membership which primarily serves its members but also works for the sustainable development of communities in general. Whereas a community benefit society should, as the name suggests, be used primarily to benefit the community at large rather than its members. It may be (but does not have to be) a charity and the society rules must prevent the society from being able to distribute profits and capital to its members (otherwise known as an ‘asset lock’).
Please contact Henry Maples if you would like to discuss any of the issues raised in this article. The information provided in this article is for general information purposes only and does not constitute legal or other professional advice and cannot be relied upon as such. Any law quoted in this article is correct as at 12th January 2015. Appropriate legal advice should be sought for specific circumstances before any action is taken. Copyright © Murrell Associates Limited, January 2015.