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Co-operative and Community Benefit Societies BillPage 20

(b) there is a donee of an enduring power of attorney or lasting power of
attorney (within the meaning of that Act) or a deputy appointed for the
member by the Court of Protection, and

(c) the donee or deputy has power in relation to the member for the
5purposes of this Act.

(5) In this section references to a member include a person claiming through a
member.

(6) A payment made under this section to a person appearing to the committee at
the time of the payment to be entitled under this section is valid and effectual
10against any demand made upon the committee or society by any other person.

Distribution of member’s property in society on death

37 Nomination by member of entitlement to property in society on member’s
death

(1) A member of a registered society may, in accordance with subsection (2),
15nominate one or more persons to become entitled at the member’s death to—

(a) the whole of any property in the society (whether in shares, loans or
deposits or otherwise) which the member may have at the time of
death, or

(b) to such part or respective parts of that property as may be specified in
20the nomination.

(2) A nomination must be—

(a) made in a written statement signed by the member and delivered at or
sent to the society’s registered office during the member’s lifetime, or

(b) made in any book kept at the society’s registered office.

(3) 25The nomination of a person who (at the date of the nomination) is an officer or
employee of the society is valid only if that person is the nominator’s spouse,
civil partner, parent, child, brother, sister, nephew or niece.

(4) For the purposes of the disposal of any property which is the subject of a
nomination, if at the date of death the amount of property in the society
30comprised in the nomination exceeds £5,000, the nomination is valid to the
extent of £5,000 but not further or otherwise.

(5) A registered society must keep a book recording—

(a) the names of all persons nominated under this section, and

(b) any revocation or variation of a nomination.

(6) 35An order under section 6 of the Administration of Estates (Small Payments)
Act 1965 (power to provide for increases in amounts disposable on death by
nomination) has effect in relation to the limits in subsection (4) as it has effect
in relation to the limits referred to in section 2 of that Act.

38 Section 37: variation and revocation of nominations

(1) 40In this section “nomination” means a nomination under section 37.

(2) A member’s nomination may be varied or revoked by—

(a) a subsequent nomination by the member, or

Co-operative and Community Benefit Societies BillPage 21

(b) any similar document in the nature of a revocation or variation signed
by the member and delivered at or sent to the society’s registered office
during the member’s lifetime.

(3) A member’s nomination is not revocable or variable by the member’s will (or
5by any codicil to the will).

(4) Any nomination made by a member who subsequently marries or forms a civil
partnership is revoked by the marriage or formation of the civil partnership.

(5) But if any of the member’s property is transferred by an officer of the society
in pursuance of the nomination in ignorance of the marriage or civil
10partnership, the nominee’s receipt is a valid discharge to the society (and the
society is under no liability to any other person claiming the property).

39 Section 37: procedure on death

(1) This section applies where a member of a registered society has made a
nomination under section 37.

(2) 15On receiving satisfactory proof of the member’s death, the society’s committee
must—

(a) transfer to a person any property to which the person is entitled under
the nomination, or

(b) pay the person the full value of that property.

(3) 20Subsection (2) applies in relation to property consisting of shares in the society
even if the society’s rules provide that its shares are not transferable.

(4) But if the transfer of shares to a person in accordance with the nomination
would raise the person’s share capital beyond the maximum for the time being
permitted in the case of the society, the society’s committee—

(a) 25must not transfer to the person more of those shares than raises the
person’s share capital to that maximum, and

(b) must pay the person the value of any of those shares not transferred.

(5) The society may pay any sum falling to be paid under subsection (2) or (4) to a
person under the age of 16 (“the nominee”) to—

(a) 30a parent or guardian of the nominee, or

(b) any other person aged 18 or over who undertakes to hold it on trust for
the nominee or to apply it for the nominee’s benefit and whom the
society considers to be a fit and proper person for the purpose.

The receipt of the parent, guardian or other person is a valid discharge to the
35society for any sum paid under this subsection.

40 Death of member: distribution of property not exceeding £5,000

(1) This section applies if—

(a) a member of a registered society dies,

(b) the member’s property in the society (as at death) in respect of shares,
40loans or deposits does not exceed £5,000, and

(c) that property is not the subject of a nomination under section 37
(nomination by member of entitlement to property in society on
member’s death).

Co-operative and Community Benefit Societies BillPage 22

(2) The society’s committee may, without letters of administration or probate of
any will (or, in Scotland, confirmation) having been obtained, distribute that
property among such persons as appear to the committee (on such evidence as
it considers satisfactory) to be entitled by law to receive it.

(3) 5A payment or transfer made under this section to a person appearing to the
committee at the time of the payment or transfer to be entitled under this
section is valid and effectual against any demand made upon the committee or
society by any other person.

(4) An order under section 6 of the Administration of Estates (Small Payments)
10Act 1965 (power to provide for increases in amounts disposable on death
without representation) has effect in relation to the limit in subsection (1)(b) as
it has effect in relation to the limits referred to in section 1 of that Act.

Officers and employees in charge of money etc

41 Security to be given by certain officers

(1) 15This section applies to an officer of a registered society who receives or is in
charge of money.

(2) If the society’s rules so require, the officer must (before undertaking the duties
of office) give security in such sum as the society’s committee may direct
conditioned for—

(a) 20the officer rendering an accurate account of all moneys received and
paid by the officer on account of the society, at such times as its rules
provide or as the society or its committee requires, and

(b) the payment of all sums due from the officer to the society.

(3) The security must be given by the officer—

(a) 25becoming bound, with or without a surety (or, in Scotland, cautioner)
as the society’s committee may require, in a bond in one of the forms
set out in Schedule 1 or in such other form as the committee may
approve, or

(b) giving the security of a guarantee society.

42 30Duty of certain officers and employees to account

(1) This section applies to—

(a) an officer of a registered society who receives or is in charge of money,
and

(b) an employee of a registered society who receives or is in charge of
35money and is not engaged under a special agreement to account.

A person to whom this section applies is referred to below as a “relevant
person”.

(2) A relevant person must render such an account as the society or its committee
may require (to be examined and allowed or disallowed by it)—

(a) 40at such time as the relevant person is required to do so by the society’s
rules, or

(b) on demand, or

(c) on notice in writing requiring the relevant person to do so, given or left
at that person’s last or usual place of residence.

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(3) A relevant person must, on demand or on the giving of notice of a kind
mentioned in subsection (2)(c), pay over all moneys and deliver all property for
the time being in the relevant person’s hands or custody to such person as the
society or its committee may appoint.

(4) 5Duties imposed on a relevant person under subsection (2) or (3) are, after that
person’s death, to be treated as imposed on the person’s personal
representatives.

(5) In case of any neglect or refusal to comply with the preceding provisions of this
section, the society may—

(a) 10sue on any bond or security given under section 41, or

(b) apply to—

(i) the county court (which may proceed in a summary way) or a
magistrates’ court, or

(ii) in Scotland, the sheriff.

(6) 15The order of the county court, magistrates’ court or sheriff is final and
conclusive (despite anything in section 77 of the County Courts Act 1984).

Part 4 A society’s capacity and related matters

Capacity of society and power of committee to bind it

43 20Capacity of a society and relationship with its rules

(1) The validity of an act done by a registered society may not be called into
question on the ground of lack of capacity by reason of anything in the
society’s registered rules.

(2) A member of a registered society may bring proceedings to restrain the doing
25of an act which would, but for subsection (1), be beyond the society’s capacity.

(3) But proceedings may not be brought in respect of an act to be done in fulfilment
of a legal obligation arising from a previous act of the society.

(4) It remains the duty of the members of a registered society’s committee to
observe any limitations on their powers flowing from the society’s registered
30rules.

(5) Action by the members of the committee which would, but for subsection (1),
be beyond the society’s capacity may be ratified by the society only by a special
resolution.

(6) A special resolution ratifying such action does not affect any liability incurred
35by a member of the committee or any other person; relief from any such
liability must be agreed to separately by special resolution.

(7) In the case of a charitable registered society whose registered office is in
England or Wales, ratification under subsection (5) is ineffective without the
prior written consent of the Charity Commission for England and Wales.

(8) 40Section 44 contains provisions about special resolutions under this section.

(9) This section is subject to—

Co-operative and Community Benefit Societies BillPage 24

(a) section 47 (application to charitable societies);

(b) section 48 (transactions with members of the committee and connected
persons in excess of powers).

44 Special resolutions under section 43

(1) 5This section supplements section 43.

(2) A resolution is a “special resolution” if—

(a) it is passed at a general meeting by at least 75% of the eligible members
who vote, and

(b) at least 21 days’ notice of the meeting, specifying the intention to
10propose the resolution, is given in accordance with the society’s rules.

(3) In subsection (2)

(a) “eligible member” means a member who is entitled to vote;

(b) references to voting are to voting in person or, where the society’s rules
allow proxies, by proxy.

(4) 15A copy of a special resolution, signed by the chair of the meeting at which the
resolution was passed and countersigned by the society’s secretary, must be
sent to the FCA and registered by it.

(5) The resolution does not take effect until a copy of it has been registered.

45 Power of committee to bind society

(1) 20In favour of a person dealing with a registered society in good faith, the power
of the committee to bind the society (or to authorise others to do so) is treated
as free of any limitation under the society’s registered rules.

(2) For this purpose—

(a) a person “deals with” a society if the person is a party to any transaction
25or other act to which the society is a party,

(b) a person is not regarded as acting in bad faith by reason only of
knowing that an act is beyond the powers of the committee under the
society’s registered rules, and

(c) a person is presumed to have acted in good faith unless the contrary is
30proved.

(3) The references above to limitations on the powers of the committee under the
society’s registered rules include limitations deriving—

(a) from a resolution of the society in general meeting or a meeting of any
class of members, or

(b) 35from any agreement between the members of the society or of any class
of members.

(4) Subsection (1) does not affect any right of a member of the society to bring
proceedings to restrain the doing of an act which is beyond the powers of the
committee.

(5) 40But proceedings may not be brought in respect of an act to be done in fulfilment
of a legal obligation arising from a previous act of the society.

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(6) Subsection (1) does not affect any liability incurred by a member of the
committee, or any other person, by reason of the committee’s exceeding its
powers.

(7) This section is subject to—

(a) 5section 47 (application to charitable societies);

(b) section 48 (transactions with members of the committee and connected
persons in excess of powers).

46 No duty to enquire as to capacity of society or authority of committee

A party to a transaction with a registered society is not bound to enquire as
10to—

(a) whether the transaction is permitted by the society’s registered rules, or

(b) any limitation on the powers of the committee to bind the society or
authorise others to do so.

47 Application of sections 43 and 45 to charitable societies

(1) 15Sections 43 and 45 (capacity of society not limited by its rules and power of
committee to bind society) apply to an act of a charitable registered society only
in favour of—

(a) a person who—

(i) gives full consideration in money or money’s worth in relation
20to the act, and

(ii) does not know that the act is not permitted by the society’s
registered rules or is beyond the powers of the committee (as
the case may be), or

(b) a person who does not know at the time the act is done that the society
25is a charity.

(2) However, where a charitable registered society purports to transfer or grant an
interest in property, the fact that—

(a) the act was not permitted by the society’s registered rules, or (as the
case may be)

(b) 30the committee in connection with the act exceeded any limitation on its
powers under those rules,

does not affect the title of a person who subsequently acquires the property (or
any interest in it) for full consideration without actual notice of any such
circumstances affecting the validity of the society’s act.

(3) 35In any proceedings arising out of subsection (1) a person who alleges—

(a) that a person knew that an act was not permitted by the society’s
registered rules or was beyond the powers of the committee, or

(b) that a person knew that the society was a charity,

has the burden of proving the allegation.

48 40Transactions with committee members etc in excess of powers

(1) This section applies where—

(a) a registered society enters into a transaction the parties to which
include—

(i) a member of the society’s committee, or

Co-operative and Community Benefit Societies BillPage 26

(ii) a person connected with such a member, and

(b) in connection with the transaction, the society’s committee exceeds any
limitation on its powers under the society’s registered rules.

(2) The transaction is voidable at the instance of the society.

(3) 5Whether or not it is avoided, a party to the transaction who is within subsection
(1)(a)(i) or (ii), and any member of the committee who authorised the
transaction, is liable—

(a) to account to the society for any gain made directly or indirectly by the
transaction, and

(b) 10to indemnify the society for any loss or damage resulting from the
transaction.

(4) Nothing in the above provisions excludes the operation of any other enactment
or rule of law by virtue of which the transaction may be called in question or
any liability to the society may arise.

(5) 15The transaction ceases to be voidable if—

(a) restitution of any money or other asset which was the subject matter of
the transaction is no longer possible,

(b) the society is indemnified for any loss or damage resulting from the
transaction,

(c) 20rights acquired bona fide for value and without actual notice of the
committee’s exceeding its powers by a person who is not party to the
transaction would be affected by the avoidance, or

(d) the transaction is ratified by the society in general meeting in such a
way as the case may require.

(6) 25A person other than a member of the committee is not liable under subsection
(3) if the person shows that at the time the transaction was entered into the
person did not know that the committee was exceeding its powers.

(7) This section does not affect the operation of section 45 (power of committee to
bind the society) in relation to any party to the transaction not within
30subsection (1)(a)(i) or (ii) above.

(8) But if the transaction is voidable by virtue of this section and valid by virtue of
that section in favour of such a person, the appropriate court may, on the
application of that person or the society, make such order affirming, severing
or setting aside the transaction, on such terms, as appear to the court to be just.

(9) 35In the case of a charitable registered society whose registered office is in
England or Wales, any ratification of the transaction is ineffective without the
prior written consent of the Charity Commission for England and Wales.

49 Section 48: definitions

(1) This section supplements section 48.

(2) 40“The appropriate court”, in relation to a registered society, means the court
having jurisdiction to wind up the society under the provisions of the
Insolvency Act 1986 as applied by section 123.

(3) “Transaction” includes any act.

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(4) The reference in section 48(1) to limitations under the society’s registered rules
includes limitations deriving—

(a) from a resolution of the society in general meeting or a meeting of any
class of members, or

(b) 5from any agreement between the members of the society or of any class
of members.

(5) Sections 252 to 255 of the Companies Act 2006 apply for the purposes of
references to a person’s being “connected” with a committee member—

(a) as if any reference to a director of a company were to a member of a
10committee of a registered society, and

(b) subject to such other adaptations and modifications as may be specified
by regulations made by the Treasury under this section.

Seals

50 Common seal

(1) 15Notwithstanding any enactment or rule of law, a registered society need not
have a common seal.

(2) A registered society which has a common seal must have its registered name
engraved in legible characters on the seal.

(3) A registered society which decides to have a common seal must not cause such
20a seal to be made unless its registered rules contain provision for the custody
and use of that seal.

(4) An officer of a registered society, or a person acting on behalf of a registered
society, commits an offence if the officer or person uses or authorises the use of
a seal purporting to be the society’s common seal which does not have the
25society’s registered name engraved in legible characters on it.

(5) A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.

51 Power of society to have official seal for use abroad

(1) This section applies to a registered society if—

(a) 30it has a common seal, and

(b) its objects require or comprise the transaction of business in foreign
countries.

(2) The society may, if authorised by its registered rules, have an official seal for
use in any territory, district, or place outside the United Kingdom.

(3) 35An “official seal” is a facsimile of the society’s common seal with the addition
on its face of the name of every territory, district or place where it is to be used.

(4) The official seal, when duly affixed to a document, has the same effect as the
society’s common seal.

52 Authorisation of use of official seal

(1) 40If a registered society has an official seal, it may authorise any person
appointed for the purpose as respects any territory, district or place appearing

Co-operative and Community Benefit Societies BillPage 28

on the face of that seal to affix it to any deed or other document to which the
society is party there.

(2) An authorisation for the purposes of subsection (1) must be given—

(a) in the case of a society whose registered office is in Scotland, by writing
5subscribed or authenticated in accordance with the Requirements of
Writing (Scotland) Act 1995;

(b) in any other case, by writing under the society’s common seal.

(3) As between the society and a person dealing with such an agent, the agent’s
authority continues—

(a) 10if a period is mentioned in the authorisation, during that period, or

(b) if no period is mentioned there, until notice of the revocation or
determination of the agent’s authority has been given to the person
dealing with the agent.

(4) The person affixing the official seal must certify in writing on the deed or other
15instrument to which the seal is affixed the date on which and the place at which
it is affixed.

Execution of documents

53 Methods for execution of documents: England and Wales

(1) This section contains provisions about the execution of documents by a
20registered society under the law of England and Wales.

(2) A registered society which has a common seal may execute a document by
affixing its common seal to it.

(3) A document—

(a) signed by 2 authorised signatories (see subsection (6)), and

(b) 25expressed (in whatever form of words) to be executed by a registered
society,

has the same effect as if it were executed under the society’s common seal.

(4) A document executed by a registered society which makes it clear on its face
that it is intended by the person or persons making it to be a deed—

(a) 30has effect, upon delivery, as a deed, and

(b) is presumed to be delivered upon its being executed by the society,
unless a contrary intention is proved.

(5) In favour of a purchaser—

(a) a document is treated as duly executed by a registered society if it
35purports to be signed by 2 authorised signatories, and

(b) where it makes it clear on its face that it is intended by the person or
persons making it to be a deed, is treated as delivered upon its being
executed.

“Purchaser” here means a purchaser in good faith for valuable consideration,
40and includes a lessee, mortgagee or other person who for valuable
consideration acquires an interest in property.

(6) For the purposes of this section, in relation to a society—

(a) each of the members of the society’s committee is an authorised
signatory, and

Co-operative and Community Benefit Societies BillPage 29

(b) the society’s secretary is also an authorised signatory.

(7) Subsections (3) to (5) apply whether or not the society has a common seal.

54 Method for execution of contracts under seal: England and Wales

(1) A contract which, if made between individuals, would be by law required—

(a) 5to be in writing, and

(b) to be under seal (if made according to the law of England and Wales),

may be made, varied or discharged on behalf of a registered society in writing
under its common seal.

(2) This section does not affect the application of the Corporate Bodies’ Contracts
10Act 1960.

(3) This section does not apply to Scotland.

55 Execution of documents: Scotland

Under the law of Scotland, for the purposes of any enactment—

(a) providing for a document to be executed by a registered society by
15affixing its common seal, or

(b) referring (in whatever terms) to a document so executed,

a document signed or subscribed (or, in the case of an electronic document,
authenticated) by or on behalf of the society in accordance with the provisions
of the Requirements of Writing (Scotland) Act 1995 has effect as if so executed.

56 20Execution of documents: presumption of validity of officer’s signature

(1) This section applies to a document—

(a) by which a contract is purportedly made, varied or discharged by or on
behalf of a registered society, and

(b) which is purportedly signed by a person holding an office in the
25society.

(2) The signature is presumed, unless the contrary is proved, to be the signature of
a person holding that office at the time the signature was made.

Other matters

57 Contracts, deeds and obligations made before registration of society

(1) 30A contract that purports to be made by or on behalf of a registered society at a
time when the society has not been registered under this Act has effect, subject
to any agreement to the contrary, as one made with the person purporting to
act for the society or as agent for it.

(2) Accordingly, the contract is to be treated as—

(a) 35imposing on that person all the obligations it purports to impose on the
society, and

(b) conferring on that person all the rights it purports to confer on the
society.

(3) Subsections (1) and (2) apply—

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