Co-operative and Community Benefit Societies Bill (HC Bill 181)

Part 1 Registration

Introduction

1 Meaning of “registered society”

(1) 5In this Act “registered society” means a society registered under this Act, that
is—

(a) a society registered under this Act on or after 1 August 2014 (the day
this Act comes into force), or

(b) (by virtue of section 150(1)) a society that immediately before that date
10was registered or treated as registered under the 1965 Act.

(2) In this Act “the 1965 Act” means the Industrial and Provident Societies Act
1965.

Registration

2 Societies that may be registered

(1) A society for carrying on any industry, business or trade (including dealings of
any kind with land) which meets the conditions in subsection (2) may be
5registered under this Act as—

(a) a co-operative society, or

(b) a community benefit society.

(2) The conditions are—

(a) that it is shown to the satisfaction of the FCA—

(i) 10in the case of registration as a co-operative society, that the
society is a bona fide co-operative society, or

(ii) in the case of registration as a community benefit society, that
the business of the society is being, or is intended to be,
conducted for the benefit of the community,

(b) 15that—

(i) the society has at least 3 members, or

(ii) the society has 2 members both of which are registered societies,

(c) that the society’s rules contain provision in respect of the matters
mentioned in section 14, and

(d) 20that the place that under those rules is to be the society’s registered
office is in Great Britain or the Channel Islands.

(3) For the purposes of subsection (2)(a)(i) “co-operative society” does not include
a society that carries on, or intends to carry on, business with the object of
making profits mainly for the payment of interest, dividends or bonuses on
25money invested or deposited with, or lent to, the society or any other person.

(4) For registration under this Act as a credit union, see the Credit Unions Act
1979.

3 Registration

(1) An application for the registration of a society under this Act is made by
30sending the following to the FCA—

(a) an application for registration, signed by—

(i) the society’s secretary and 3 of its members, or

(ii) where both or all of its members are registered societies, the
secretaries of 2 of those registered societies, and

(b) 352 copies of the society’s rules or, if the application is made by electronic
means, 1 copy of those rules.

(2) If the FCA is satisfied that the society has complied with the requirements
under this Act as to registration, it must—

(a) register the society, and

(b) 40give the society an acknowledgment of registration bearing the FCA's
seal.

(3) A registered society is by virtue of its registration a body corporate by its
registered name, with limited liability.

(4) The society may sue and be sued by its registered name.

(5) Registration vests in the society all property for the time being vested in any
person in trust for the society.

(6) Any legal proceedings pending by or against the trustees of the society may
(once the society is registered) be brought or continued by or against the
5society.

(7) The acknowledgement of registration also constitutes an acknowledgment of,
and is conclusive evidence of, the registration under this Act of the rules of the
society in force at the date of the society’s registration.

4 Registration etc: special cases

(1) 10A society which has any withdrawable share capital may not be registered with
the object of carrying on the business of banking.

(2) Section 67(2) (taking of deposits below limits specified there not to be treated
as carrying on the business of banking) applies for the purposes of subsection
(1).

(3) 15For the prohibition on registering a society whose objects are wholly or
substantially those of a credit union otherwise than as a credit union, see
section 2(3) of the Credit Unions Act 1979.

(4) Subsection (5) applies where, for the purposes of securing (and maintaining)
approval of its profit sharing scheme in accordance with Part 1 of Schedule 9
20to the Income and Corporation Taxes Act 1988, the rules of a society that is a
workers’ co-operative contain any of the following—

(a) provision for membership of the society by trustees of the scheme;

(b) provision denying voting rights to those trustees;

(c) other provisions which appear to the FCA to be reasonably necessary
25for that purpose.

(5) The provisions are to be disregarded in determining—

(a) whether the society should be registered as a co-operative society
under this Act;

(b) if the society is a registered society, whether for the purposes of this
30Part the society is a bona fide co-operative society.

Cancellation of registration

5 Cancellation of registration: conditions for cancellation

(1) The FCA may, in writing, cancel the registration of a registered society if any
of conditions A to E is met.

(2) 35Condition A is that—

(a) the society has requested the cancellation of its registration,

(b) the request is evidenced in such way as the FCA from time to time
directs, and

(c) the FCA considers it appropriate to cancel the registration.

(3) 40Condition B is that any of the following is proved to the FCA’s satisfaction—

(a) that an acknowledgment of registration has been obtained by fraud or
mistake;

(b) that the society has less than 3 members (and does not have 2 members
both of which are registered societies);

(c) that the society has ceased to exist.

(4) Condition C is that it is proved to the FCA’s satisfaction—

(a) 5that the society exists for an illegal purpose, or

(b) that the society has wilfully and after notice from the FCA violated any
of the provisions of this Act.

(5) Condition D is that it appears to the FCA—

(a) in the case of a society registered as a co-operative society, that the
10condition in section 2(2)(a)(i) is not met;

(b) in the case of a society registered as a community benefit society, that
the condition in section 2(2)(a)(ii) is not met;

(c) in the case of a pre-commencement society, that neither of the
conditions in section 2(2)(a) is met.

(6) 15Condition E is that—

(a) the society’s registered rules contain provision of a kind authorised by
section 22 (rules of agricultural, horticultural or forestry society), and

(b) it appears to the FCA that—

(i) the society no longer consists mainly of members of a kind
20mentioned in that section, or

(ii) the activities carried on by the society do not mainly consist in
making advances to its members for the purposes mentioned
there.

6 Cancellation of registration: procedure and effect

(1) 25The FCA must give a registered society at least 2 months’ notice in writing of
the proposed cancellation of its registration, specifying briefly the ground of
the proposed cancellation.

(2) Subsection (1) does not apply to any cancellation—

(a) made by virtue of condition A in section 5 (cancellation at society’s
30request),

(b) made by virtue of section 112(2) (cancellation following conversion into
a company etc), or

(c) made after a relevant certificate within the meaning of section 126
(certificate that society’s property has been transferred to persons
35entitled to it) has been lodged with the FCA.

(3) If the society appeals under section 9 before the end of the period of notice, its
registration may not be cancelled before the date the appeal is determined or
abandoned.

For the FCA’s power to suspend the society’s registration in these
40circumstances, see section 8(3).

For the FCA’s power to suspend the society’s registration in these
circumstances, see section 8(3).

(4) For the right of the society to make representations and to be heard by the FCA
in a case where condition D in section 5 is relied on, see section 7.

(5) 45The FCA must consult the PRA before cancelling the registration of a
registered society that is a PRA-authorised person.

(6) The FCA must ensure that, as soon as practicable after a society’s registration
is cancelled, notice of the cancellation is published in—

(a) the Gazette, and

(b) a local newspaper circulating in or about the locality in which the
5society’s registered office is situated.

(7) As from the date of publication of the notice in the Gazette, the society ceases
to be entitled to any of the privileges of this Act as a registered society.

This does not affect any liability incurred by the society (which may be
enforced against it as if the cancellation had not occurred).

10This does not affect any liability incurred by the society (which may be
enforced against it as if the cancellation had not occurred).

7 Cancellation of registration: additional procedure in cases involving
condition D

(1) This section applies where the FCA gives a registered society a notice under
15section 6 (notice of proposed cancellation of registration) specifying a ground
set out in condition D in section 5.

(2) The FCA must consider any representations about the proposed cancellation
that the society makes to it in the period of notice.

(3) If the society requests, the FCA must give the society an opportunity of being
20heard by the FCA before its registration is cancelled.

(4) If, at any time after the end of one month from the date the notice is given, it
appears to the FCA that there have not been taken the steps which by that time
could reasonably have been taken for the purpose of—

(a) converting the society into a company, amalgamating it with a
25company, or transferring its engagements to a company, in accordance
with section 112, or

(b) dissolving the society under section 119 or 123,

the FCA may give such directions as it considers appropriate for securing that
the society’s affairs are wound up before its registration is cancelled.

(5) 30The FCA must consult the PRA before giving directions under subsection (4)
to a registered society that is a PRA-authorised person.

(6) A person who contravenes or fails to comply with a direction under subsection
(4) commits an offence.

(7) A person guilty of an offence under this section is liable on summary
35conviction—

(a) in England and Wales, to a fine not exceeding level 3 on the standard
scale;

(b) in Scotland, to a fine not exceeding level 3 on the standard scale or
imprisonment for a term not exceeding 3 months (or both).

40Suspension of registration

8 Suspension of registration

(1) If any of conditions C to E in section 5 is met in relation to a society, the FCA
may by notice in writing—

(a) suspend the society’s registration for a term not exceeding 3 months,
45and

(b) from time to time renew any suspension for a term not exceeding 3
months.

(2) The FCA must give a registered society at least 2 months’ notice in writing of
the proposed suspension of its registration under subsection (1)(a), specifying
5briefly the ground of the proposed suspension.

(3) Where—

(a) a notice of proposed cancellation of a society’s registration is given
under section 6, and

(b) before the end of the period of notice, the society appeals under section
109 against the proposed cancellation,

the FCA may by notice in writing suspend the society’s registration from the
end of that period until the date the appeal is determined or abandoned.

(4) The FCA must consult the PRA before suspending, or renewing the suspension
of, the registration of a registered society that is a PRA-authorised person.

(5) 15The FCA must ensure that, as soon as practicable after the suspension or
renewal of suspension of a society’s registration, notice of the suspension or
renewal is published in—

(a) the Gazette, and

(b) a local newspaper circulating in or about the locality in which the
20society’s registered office is situated.

(6) From the date of publication of the notice in the Gazette until the end of the
period for which the society’s registration is suspended, the society is not
entitled to any of the privileges of this Act as a registered society.

This does not affect any liability incurred by the society (which may be
25enforced against it as if the suspension had not occurred).

This does not affect any liability incurred by the society (which may be
enforced against it as if the suspension had not occurred).

Appeals

9 Appeal against refusal to register or cancellation or suspension of registration

(1) 30A society may appeal to the appropriate court from a decision of the FCA—

(a) to refuse to register the society (but see subsection (3)),

(b) to cancel the society’s registration (but see subsections (3) to (5)), or

(c) to renew a suspension of the society’s registration so far as the renewal
provides for the suspension to continue more than 3 months from the
35date its registration was first suspended.

(2) “The appropriate court” means—

(a) if the society’s registered office is in Scotland, the Court of Session;

(b) otherwise, the High Court.

(3) No appeal may be made against—

(a) 40a refusal to register a society on the ground that a condition in section
2(2)(a) is not met, or

(b) a decision to cancel a society’s registration on the ground that condition
D in section 5 is met.

(4) No appeal may be made against a cancellation within section 6(2).

(5) An appeal against a decision to cancel a society’s registration must be lodged
before the end of the period of notice of the proposed cancellation given under
section 6.

(6) If a decision to refuse to register a society is overruled on appeal, the FCA must
5register the society and give it an acknowledgment of registration under
section 3.

Part 2 Name, rules, powers etc

Name and charitable status

10 10A society’s name

(1) A society may not be registered under this Act under a name which in the
opinion of the FCA is undesirable.

(2) The last word in the name of every registered society must be—

(a) “limited”, or

(b) 15if the society’s rules state that its registered office is to be in Wales,
either “limited” or “cyfyngedig”.

This is subject to the following provisions of this section.

(3) If the FCA is satisfied that a society’s objects are wholly charitable or
benevolent—

(a) 20it may register the society by a name which does not comply with
subsection (2), or

(b) it may give the society approval under section 13 for a change of name
to one that does not comply with that subsection.

(4) But if it subsequently appears to the FCA that the society (whether in
25consequence of a change in its rules or otherwise) is not being conducted
wholly for charitable or benevolent objects—

(a) the FCA may direct that the word “limited” (or in an appropriate case
“cyfyngedig”) be added as the last word in the society’s name, and

(b) if it does so, it must give the society notice of the direction.

11 30Registered name to be displayed and used

(1) A registered society must ensure that its registered name appears in a
conspicuous position and in legible characters on the outside of—

(a) its registered office, and

(b) every other office or place in which its business is carried on.

(2) 35A registered society’s registered name must appear in legible characters—

(a) in all of its notices, advertisements and other official publications,

(b) in all of its business correspondence,

(c) in all bills of exchange, promissory notes, endorsements, cheques and
orders for money or goods, purporting to be signed by or on behalf of
40the society,

(d) in all its other business documentation, and

(e) on all its websites.

(3) An officer of a registered society, or any other person acting on behalf of a
registered society, who—

(a) issues or authorises the issue of a document within subsection (2)(a), (b)
or (d) that does not comply with subsection (2),

(b) 5signs on behalf of the society a document within subsection (2)(c) that
does not comply with subsection (2) or authorises the signing of such a
document on its behalf, or

(c) causes or authorises the appearance on the internet of a website within
subsection (2)(e) that does not comply with subsection (2),

10commits an offence and is liable on summary conviction to a fine not exceeding
level 3 on the standard scale.

(4) A person convicted of an offence under subsection (3) by virtue of subsection
(3)(b) is also personally liable to the holder of the document for the amount
specified in the document unless that amount is duly paid by the society.

(5) 15References to a society’s website include a section of any other person’s
website that relates to the society if—

(a) the society placed the section on the other person’s website, or

(b) the society authorised it to be placed there.

12 Charitable status to appear on documents etc

(1) 20A charitable registered society whose registered name does not include the
word “charity” or “charitable” must state the fact that it is a charity in legible
characters—

(a) in all of its notices, advertisements and other official publications,

(b) in all of its business correspondence,

(c) 25in all bills of exchange, promissory notes, endorsements, cheques and
orders for money or goods, purporting to be signed by or on behalf of
the society,

(d) in all conveyances purporting to be executed by or on behalf of the
society,

(e) 30in all its other business documentation, and

(f) on all its websites.

(2) Subsection (1) does not apply to any document wholly in Welsh if the society’s
registered name includes the word “elusen” or “elusennol”.

(3) The statement required by subsection (1) must be in English, except that it may
35be in Welsh if—

(a) the document is otherwise wholly in Welsh, and

(b) the statement consists of or includes the word “elusen” or “elusennol”.

(4) An officer of a registered society, or any other person acting on behalf of a
registered society, who—

(a) 40issues or authorises the issue of a document within subsection (1)(a), (b)
or (e) that does not comply with this section,

(b) signs on behalf of the society a document within subsection (1)(c) that
does not comply with this section or authorises the signing of such a
document on its behalf,

(c) 45executes on behalf of the society a document within subsection (1)(d)
that does not comply with this section or authorises the execution of
such a document on its behalf,

(d) causes or authorises the appearance on the internet of a website within
subsection (1)(f) that does not comply with this section,

commits an offence and is liable on summary conviction to a fine not exceeding
level 3 on the standard scale.

(5) 5A person convicted of an offence under subsection (4) by virtue of subsection
(4)(b) is also personally liable to the holder of the document for the amount
specified in the document unless that amount is duly paid by the society.

(6) For the purposes of this section—

(a) “conveyance” means any document for the creation, transfer, variation
10or extinction of an interest in land;

(b) references to execution include—

(i) purported execution, and

(ii) the doing of any act which (though not by itself execution)
combined with other acts constitutes execution or purported
15execution;

(c) references to a society’s website include a section of any other person’s
website that relates to the society if—

(i) the society placed the section on the other person’s website, or

(ii) the society authorised it to be placed there.

13 20Change of name

(1) A registered society may change its name if—

(a) a resolution for that purpose is passed at a general meeting of the
society, appropriate notice of the resolution having been given, and

(b) the FCA gives its approval in writing to the change of name.

(2) 25“Appropriate notice” means—

(a) the notice required by the society’s rules for a resolution changing its
name, or

(b) if the rules do not make special provision about the notice for such
resolutions, the notice required by the rules for a resolution to amend
30the rules.

(3) A change in the name of a registered society does not affect any right or
obligation of the society or of any member (and any pending legal proceedings
may be continued by or against the society notwithstanding its new name).

Rules: general

14 35Content of a society’s rules

A registered society’s rules must contain provision about the following
matters—

1. Name

The society’s name (which must comply with section 10).

402. Objects

The objects of the society.