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

Co-operative and Community Benefit Societies BillPage 10

3. Registered office

The place of the society’s registered office, to which all communications and
notices to the society may be addressed.

54. Membership

The terms of admission of the members, including any society or company
investing funds in the society under the provisions of this Act.

5. Meetings, voting, changes to rules

The method of holding meetings, the scale and right of voting, and the method
10of making, altering or rescinding rules.

6. Committees and officers

The appointment and removal of a committee (by whatever name) and of
managers or other officers and their respective powers and remuneration.

7. Maximum shareholding

15Determination in accordance with section 24 of the maximum amount of the
interest in the shares of the society which may be held by any member
otherwise than by virtue of section 24(2).

8. Borrowing powers etc

Determination whether the society may contract loans or receive moneys on
20deposit subject to the provisions of this Act from members or others, and if so
under what conditions, under what security, and to what limits of amount.

9. Shares

Determination whether any or all shares are transferable, and provision for the
form of transfer and registration of shares, and for the consent of the committee
25to transfer or registration.

Determination whether any or all shares are withdrawable, and provision for
the method of withdrawal and for payment of the balance due on them on
withdrawing from the society.

10. Audit

30Provision for the audit of accounts in accordance with Part 7.

11. Withdrawal etc

Determination whether members may withdraw from the society and if so
how, and provision for the claims of the representatives of deceased members
and of the trustees of the property of bankrupt members (or, in Scotland,
35members whose estates have been sequestrated), and for the payment of
nominees.

12. Application of profits

The way in which the society’s profits are to be applied.

13. Seal

40If the society is to have a common seal, provision for its custody and use.

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14. Investment of society’s funds

15 Rules to bind members

(1) A registered society’s registered rules bind the society and all its members and
5all persons claiming through them to the same extent as if—

(a) each member had subscribed the member’s name and affixed the
member’s seal to the rules, and

(b) there were contained in the rules a covenant on the part of each member
and any person claiming through the member to observe the rules
10(subject to the provisions of this Act).

(2) But a member of a registered society is not bound by an amendment of the
society’s rules registered after the person became a member if and so far as the
amendment—

(a) requires the member to take or subscribe for more shares than the
15number held by the member at the date of registration of the
amendment,

(b) requires the member to pay upon the shares held by the member at that
date any sum exceeding the amount unpaid upon them at that date, or

(c) in any other way increases the liability of that member to contribute to
20the share or loan capital of the society,

unless the member consents in writing to the amendment.

(3) In its application to Scotland, subsection (1) has effect as if the words “and
affixed the member’s seal” were omitted.

16 Amendment of rules

(1) 25Any amendment of a registered society’s rules is not valid until the
amendment is registered under this Act.

(2) A registered society must give the FCA 2 copies of any amendment to its rules,
signed by the society’s secretary and—

(a) where both or all of its members are registered societies, by the
30secretaries of 2 of those registered societies;

(b) otherwise, by 3 of its members.

(3) Subsections (1) and (2) do not apply to a change in a society’s registered office
or name, but—

(a) the FCA must be given notice of any change of registered office, and

(b) 35where such notice is given, or where a registered society’s name is
changed (see section 13), the FCA must register the change of registered
office or name as an amendment of the society’s rules.

(4) If the FCA is satisfied that an amendment of a society’s rules is not contrary to
the provisions of this Act, it must—

(a) 40register the amendment, and

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

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17 Appeal against refusal to register amendment of rules

(1) A society may appeal to the appropriate court from a decision of the FCA
refusing registration of an amendment of the society’s rules.

(2) “The appropriate court” means—

(a) 5if the society’s registered office is in Scotland, the Court of Session;

(b) otherwise, the High Court.

(3) If the decision is overruled on appeal, the FCA must register the amendment
and give the society an acknowledgment of registration under section 16.

18 Duty to provide copy of rules on demand

(1) 10A registered society must give a copy its registered rules to any person who
asks for them and (subject to subsection (2)) pays such fee as the society may
require.

(2) No fee is payable where the request is made by a member of the society who
has not previously been given a copy of those rules.

(3) 15The fee may not exceed £5 or such other amount as the Treasury may by order
specify.

Rules: supplementary provisions

19 Provision of rules with intent to mislead or defraud

(1) A person commits an offence if, with intent to mislead or defraud, the person
20gives to any other person—

(a) a copy of any rules other than the registered rules of a registered society
on the pretence that they are the society’s existing rules or that there are
no other rules of the society, or

(b) a copy of the rules of a society which is not a registered society on the
25pretence that they are the rules of a registered society.

(2) A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 1 on the standard scale.

20 Creation of offences by a society’s rules

A registered society’s rules may provide that any contravention or failure to
30comply with any of the rules is an offence, punishable on summary conviction
by a fine not exceeding such reasonable sum as is specified by the rules.

21 Rules as to fund for purchase of government securities

(1) The rules of a registered society (or a society to be registered under this Act)
may make provision for the setting up and administration by the society of a
35fund for the purchase on behalf of members contributing to the fund of—

(a) defence bonds,

(b) national saving certificates, or

(c) any other securities of Her Majesty’s Government in the United
Kingdom for the time being prescribed under section 47(1) of the
40Friendly Societies Act 1974.

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(2) The rules may make provision for enabling persons to become members of the
society for the purpose only of contributing to that fund and without being
entitled to any rights as members other than rights as contributors to that fund.

22 Rules of agricultural, horticultural or forestry society may provide for loans
5without security

(1) This section applies to a registered society (or a society to be registered under
this Act) if—

(a) the society consists mainly of members who are—

(i) producers of agricultural or horticultural produce or persons
10engaged in forestry, or

(ii) organisations of such producers or persons, and

(b) the society’s object or principal object is the making to its members of
advances of money for agricultural, horticultural or forestry purposes.

(2) The fact that the society’s rules provide (or would if amended provide) for the
15making of such advances without security is not a ground for refusing to
register those rules (or the amendment).

23 Supplementary provisions as to rules

(1) The rules of a registered society (or any schedule to them) may specify the form
of any instrument necessary for carrying the purposes of the society into effect.

(2) 20Any provision made by or under this or any other Act requiring or authorising
the rules of a registered society to deal with particular matters does not affect
the power of a registered society to make rules about any other matter which—

(a) are not inconsistent with the provision (or any other provision of this or
any other Act), and

(b) 25are not otherwise unlawful.

Maximum shareholding

24 Maximum interest in a society’s withdrawable shares

(1) A member of a registered society (or of a society to be registered under this Act)
may not have or claim any interest in the society’s withdrawable shares
30exceeding £100,000.

(2) Subsection (1) does not apply—

(a) to a member that is a registered society,

(b) to an authority that acquired the holding by virtue of section 58 or 59(2)
of the Housing Associations Act 1985 or section 22 of the Housing Act
351996 (promotion and assistance by local authority of housing
associations),

(c) if the society is a private registered provider of social housing, to shares
acquired by a local authority under the power in section 2 of the Local
Government Act 2000 (power of local authority to promote well-being)
40or section 1 of the Localism Act 2011 (local authority’s general power of
competence), or

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(d) to a member who acquired the holding by virtue of paragraph 2 of Part
1 of the Schedule to the Agricultural Credits Act 1923 at a time when
section 2 of that Act applied to the society.

25 Power to amend limit in section 24

(1) 5The Treasury may by order substitute for the sum for the time being specified
in section 24(1) (maximum interest in withdrawable shares) such other sum
(not less than £5,000) as may be specified in the order.

(2) The order may—

(a) make any such provision in connection with the alteration of the limit
10for the time being applicable under section 24(1) as was made by
section 1 of the Industrial and Provident Societies Act 1975 in
connection with the alteration made by section 1(1) of that Act (power
of committees to amend rules etc), and

(b) contain such other transitional, consequential, incidental or
15supplementary provisions as appear to the Treasury to be necessary or
appropriate in that connection.

Power to hold land

26 Power to hold land etc

(1) A registered society may—

(a) 20(unless its registered rules provide otherwise) hold, purchase or take a
lease of any land in its own name;

(b) sell, exchange, mortgage or lease any such land;

(c) construct, alter or demolish buildings on it.

(2) No purchaser, assignee, mortgagee or tenant is bound to inquire as to the
25authority for any such dealing with the land by the society.

(3) The society’s receipt is a discharge for all moneys arising from or in connection
with any such dealing.

(4) In Scotland, this section has effect as if—

(a) for “exchange” there were substituted “excamb”;

(b) 30for “mortgage” there were substituted “grant a heritable security over”;

(c) for “mortgagee” there were substituted “creditor in a heritable
security”.

Power to invest etc

27 Power to invest

(1) 35A registered society may invest any part of its funds in or upon any security
authorised by its registered rules.

(2) A registered society may, unless its registered rules provide otherwise, invest
any part of its funds—

(a) in or upon any relevant security of a relevant authority (see subsection
40(3));

(b) in the shares or on the security of—

Co-operative and Community Benefit Societies BillPage 15

(i) any other registered society,

(ii) a building society, or

(iii) a company registered under the Companies Acts or
incorporated by Act of Parliament or by charter,

5being a society or company with limited liability;

(c) in or upon any other security in which trustees are for the time being
authorised by law to invest (for which purpose sections 1 to 6 of the
Trustee Investments Act 1961 apply as if the society were a trustee and
its funds were trust property).

(3) 10In this section—

  • “building society” has the same meaning as in the Building Societies Act
    1986;

  • “relevant authority” means—

    (a)

    a billing authority or precepting authority, as defined in section
    1569 of the Local Government Finance Act 1992,

    (b)

    a fire and rescue authority in Wales constituted by a scheme
    under section 2 of the Fire and Rescue Services Act 2004 or a
    scheme to which section 4 of that Act applies,

    (c)

    a levying body within the meaning of section 74 of the Local
    20Government Finance Act 1988, or

    (d)

    a body as regards which section 75 of that Act applies;

  • “relevant security” means any mortgage, bond, debenture, debenture
    stock, corporation stock, annuity, rentcharge, rent or other security (not
    being securities payable to bearer) that is authorised by or under any
    25Act.

28 Proxy voting by societies

(1) A registered society which has invested any part of its funds in the shares or on
the security of any other body corporate may appoint one of its members as its
proxy (whether or not the member is a shareholder of the body corporate).

(2) 30A member appointed under this section is, during the period for which the
member is appointed, to be taken by virtue of the appointment as holding the
number of shares held by the society for all purposes except—

(a) the transfer of any such share, and

(b) the giving of a receipt for any dividend on any such share.

35Power to restrict use of assets

29 Power to restrict use of assets of a community benefit society

(1) The Treasury may by regulations make provision for enabling any community
benefit society, or any community benefit society of a prescribed kind, to
ensure that—

(a) 40assets of the society of a prescribed kind,

(b) assets of the society specified by it in accordance with the regulations,
or

(c) all of the society’s assets,

cannot be used or dealt with except in a case mentioned in subsection (2).

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(2) The cases are—

(a) where the use or dealing is, directly or indirectly—

(i) for a purpose that is for the benefit of the community and is of
a prescribed kind, or

(ii) 5if no kinds of purpose are prescribed under this paragraph, for
any purpose that is for the benefit of the community, or

(b) where the circumstances are such as may be prescribed.

(3) Where under the regulations a society has ensured as mentioned in subsection
(1) as respects any of its assets, the assets concerned are “dedicated assets” for
10the purposes of this section.

(4) Regulations under this section may, in particular—

(a) provide for the procedure by which a society may ensure as mentioned
in subsection (1);

(b) provide for such of a society’s rules as are of a prescribed kind to be
15unalterable, or for them to be alterable only in prescribed circumstances
or in circumstances specified in rules of a prescribed kind;

(c) provide that, in any circumstances prescribed under subsection (2)(b),
dedicated assets must be dealt with in a prescribed way;

(d) make provision for ensuring that any society, company or other person
20to whom any dedicated assets are transferred in prescribed
circumstances cannot use or deal with those assets except in a case
mentioned in subsection (2);

(e) provide for members of a society who lose property rights as a result of
the society’s ensuring as mentioned in subsection (1) to be
25compensated for that loss (whether by payment of a prescribed amount
or of an amount determined in a prescribed way or otherwise), subject
to such exceptions as may be prescribed;

(f) provide for the enforcement of provisions designed to ensure as
mentioned in subsection (1);

(g) 30make provision for the carrying out of investigations by persons
appointed by a prescribed person;

(h) confer power on a prescribed person to require persons of a prescribed
description to provide the prescribed person with information in order
to enable or assist that person to perform any of the person’s functions
35under the regulations;

(i) provide for restrictions on the use and disclosure of information
obtained by any person in the performance of any function under the
regulations.

(5) Regulations under this section may—

(a) 40impose criminal liability;

(b) confer functions on a prescribed person;

(c) confer jurisdiction on any court;

(d) authorise a prescribed person to make rules, binding on persons of a
prescribed description, for the purpose of enabling or assisting the
45prescribed person to perform any of the person’s functions under the
regulations;

(e) make provision as to the making, publication and enforcement of such
rules;

(f) provide for a prescribed person to charge fees sufficient to meet the
50costs of performing any of the person’s functions under the regulations;

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(g) modify, exclude or apply (with or without modifications) any
enactment or rule of law;

(h) contain such incidental, consequential and supplementary provision as
the Treasury consider appropriate;

(i) 5make different provision for different cases.

(6) Regulations under this section may not create any new criminal offence
punishable with imprisonment for more than 7 years.

(7) In this section—

  • “community benefit society” includes a pre-commencement society that
    10meets the condition in section 2(2)(a)(ii);

  • “prescribed” means prescribed by regulations under this section.

Part 3 Members and officers

Register of members and officers

30 15Register of members and officers

(1) A registered society must keep a register of members and officers (“the
register”) at its registered office.

(2) The following information must be entered on the register in relation to each
member—

(a) 20the member’s name and postal address;

(b) where the member has notified the society of an electronic address for
the purposes of receiving notices or documents under this Act, the
electronic address and the purposes for which it has been notified;

(c) the number of shares held by the member and the amount paid or
25agreed to be considered as paid on the shares;

(d) a statement of other property in the society held by the member
(whether in loans, deposits or otherwise);

(e) the date the person was entered on the register as a member;

(f) (where applicable) the date the person ceased to be a member.

(3) 30The following information must be entered on the register in relation to each
officer—

(a) the officer’s name and postal address;

(b) where the officer has notified the society of an electronic address for the
purposes of receiving notices or documents under this Act, the
35electronic address and the purposes for which it has been notified;

(c) the office held;

(d) the date the person took office.

(4) Where it appears to the society that an electronic address shown on the register
pursuant to subsection (2)(b) or (3)(b) is no longer current, the society may
40remove that address from the register.

(5) The register may be kept by—

(a) making entries in bound books, or

(b) recording the matters in question in any other way.

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(6) Where the register is kept otherwise than by making entries in a bound book,
the society must take adequate precautions for—

(a) guarding against falsification, and

(b) facilitating its discovery.

(7) 5A registered society must—

(a) keep a duplicate register at its registered office, containing the
information in the register except information about members’ shares
and other property in the society, or

(b) construct the register in such a way that it is possible to open to
10inspection so much of the information in it as would be contained in a
duplicate register without exposing information recorded in it about
members’ shares and other property in the society.

(8) A person authorised for the purpose by the FCA may at all reasonable hours,
on producing evidence of the authorisation, inspect any entry in a register or
15duplicate register kept under this section.

(9) A registered society’s register or duplicate register kept under this section, or
any other register or list of members or shares kept by the society, is prima facie
evidence of any of the following information entered in it—

(a) the name, postal address, electronic address and occupation of a
20member;

(b) the number of shares held by a member, the shares’ distinguishing
numbers (if any), and the amount paid or agreed to be considered as
paid on any of those shares;

(c) the date a person’s name was entered on the register or list as a
25member;

(d) the date any person ceased to be a member.

Provisions about certain kinds of member etc

31 Members under 18

(1) A person under the age of 18 may be a member of a registered society unless
30the society’s registered rules provide otherwise.

(2) A person under the age of 18—

(a) may enjoy all the rights of a member of a registered society, and

(b) if aged 16 or over, may execute all instruments and give all receipts
necessary to be executed or given under a society’s registered rules.

35This is subject to the society’s registered rules and to the provisions of this Act.

(3) A person under the age of 16 may not be a member of a registered society’s
committee or a trustee, manager or treasurer of a registered society.

32 Bodies corporate may be members

Shares in a registered society may be held by any other body corporate (if that
40body’s regulations so permit) by its corporate name.

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33 Society a member of another society: references to members making and
signing documents etc

(1) This section applies where a registered society (“society A”) is a member of
another registered society (“society B”).

(2) 5For the purposes of any enactment relating to a registered society’s members
making or signing an application, instrument or document, any reference in
the enactment to a member is to be read, in relation to society A as a member
of society B, as a reference to 2 members of society A’s committee and its
secretary.

10Dealings with members

34 Advances to members

A registered society’s rules may provide for advances of money to members—

(a) on the security of real or personal property or, in Scotland, of heritable
or moveable estate, or

(b) 15if the society is registered to carry on banking business, in any way that
is customary in the conduct of such business.

35 Remedies for members’ debts

(1) Money payable by a member to a registered society is a debt due from the
member to the society, and is recoverable as a debt—

(a) 20in the county court, or

(b) in Scotland, before the sheriff whose jurisdiction contains the society’s
registered office or the member’s residence, at the option of the society.

(2) A registered society has a lien on a member’s shares in the society for any debt
due from the member to the society, and may set off any sum credited to the
25member on those shares in or towards the payment of that debt.

36 Payments in respect of persons lacking capacity

(1) This section applies if—

(a) a registered society’s committee is satisfied (after considering medical
evidence) that a member is incapable of managing the member’s own
30affairs by reason of a mental disorder or mental disability, and

(b) the committee is satisfied that no person has been duly appointed to
administer the member’s property on behalf of the member.

(2) The society may (if it is proved to the committee’s satisfaction that it is just and
expedient so to do) pay the amount of any shares, loans, and deposits
35belonging to the member to a person whom the committee judges proper to
receive it on behalf of the member.

(3) Receipt by that person is a valid discharge to the society for the sum paid.

(4) Subsections (1) to (3) do not apply where—

(a) the member lacks capacity (within the meaning of the Mental Capacity
40Act 2005) for the purposes of this Act,