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(a) “eligible member” means a member entitled under the society’s rules to
vote;

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

(4) 5At a general meeting such as is mentioned in subsection (2), a declaration by
the chair that the resolution has been carried is conclusive evidence of that fact.

(5) Within 14 days from the day the special resolution is confirmed at the second
meeting, the society must send the FCA a copy of it—

(a) signed by the chair of the second meeting, and

(b) 10countersigned by the society’s secretary.

(6) The FCA must register the copy of the special resolution received under
subsection (5).

(7) The special resolution does not take effect until the copy of it has been
registered.

(8) 15Nothing in subsection (5) invalidates registration after the end of the 14 days
mentioned there.

(9) If one or more of the societies is a PRA-authorised person, the FCA must send
a copy of the special resolution to the PRA.

Conversion of society into company etc

112 20Conversion of society into a company, amalgamation with a company etc

(1) A registered society may by special resolution determine to—

(a) convert itself into a company,

(b) amalgamate with a company, or

(c) transfer its engagements to a company.

25In this section “company” means a company under the Companies Acts.

(2) A registered society’s registration under this Act becomes void and (subject to
section 126) must be cancelled by the FCA if the society—

(a) is registered as a company,

(b) amalgamates with a company, or

(c) 30transfers all its engagements to a company.

(3) Section 113 contains provisions about special resolutions under this section.

(4) Section 114 contains further provisions about the conversion of a society into a
company.

(5) An amalgamation or transfer of engagements does not prejudice any right of a
35creditor of the society.

113 Special resolutions under section 112

(1) This section supplements section 112.

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

(a) the resolution is passed at a general meeting by at least 75% of the
40eligible members who vote,

Co-operative and Community Benefit Societies BillPage 61

(b) at least 50% of the eligible members vote on the resolution,

(c) notice of this meeting (“the first meeting”), specifying the intention to
propose the resolution, is duly given in accordance with the society’s
rules,

(d) 5the resolution is confirmed at a subsequent general meeting by over
50% of the eligible members who vote,

(e) notice of this meeting (“the second meeting”) is duly given, and

(f) the second meeting is held at least 14 days, and no more than one
month, from the day of the first meeting.

(3) 10In this section—

(a) “eligible member” means a member entitled under the society’s rules to
vote;

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

(4) 15At a general meeting such as is mentioned in subsection (2), a declaration by
the chair that—

(a) all reasonably practicable steps have been taken to ascertain the
number of eligible members, and

(b) the resolution has been carried,

20is conclusive evidence of those facts.

(5) Within 14 days from the day of the second meeting, the society must send the
FCA a copy of the special resolution that is—

(a) signed by the chair of the second meeting, and

(b) countersigned by the society’s secretary.

(6) 25The FCA must register the copy of the special resolution received under
subsection (5).

(7) The special resolution does not take effect until the copy of it has been
registered.

(8) Nothing in subsection (5) invalidates registration after the end of the 14 days
30mentioned there.

(9) If the society is a PRA-authorised person, the FCA must send a copy of the
special resolution to the PRA.

114 Conversion of society into a company: supplementary

(1) This section applies in relation to the conversion of a society into a company
35under section 112.

(2) Where—

(a) a special resolution for converting a registered society into a company
contains the particulars required by the Companies Acts to be
contained in a company’s memorandum of association, and

(b) 40the FCA has registered a copy of it,

a copy of it under the FCA’s stamp and seal has the same effect as a
memorandum of association duly authenticated under the Companies Acts.

(3) Registration of a registered society as a company does not affect—

(a) any right or claim for the time being subsisting against the society, or

Co-operative and Community Benefit Societies BillPage 62

(b) any penalty for the time being incurred by the society.

(4) For the purpose of enforcing any such right, claim or penalty, the society may
be sued and proceeded against in the same way as if it had not become
registered as a company.

(5) 5Any such right or claim, and the liability to any such penalty, has priority as
against the company’s property over all other rights or claim against, or
liabilities of, the company.

Conversion of company into society

115 Conversion of company into a registered society

(1) 10A company registered under the Companies Acts may by special resolution
determine to convert itself into a registered society.

(2) The resolution must—

(a) be accompanied by a copy of the society’s rules, and

(b) appoint 3 members of the company (“the appointed members”) to
15perform the functions mentioned in subsections (3) and (4).

(3) The appointed members and the company’s secretary (or, if it has no secretary,
a director of the company) must sign the rules.

(4) The resolution must provide either—

(a) that the appointed members are authorised to accept any alterations to
20the rules made by the FCA without further consulting the company, or

(b) that the appointed members must lay any such alterations before the
company in general meeting for acceptance.

(5) A copy of the special resolution and the society’s rules must be sent to the FCA.

(6) On registering the society under this Act, the FCA must (in addition to giving
25it an acknowledgement of registration under section 3) give it a certificate
similarly sealed or signed that the society’s rules have been registered.

(7) The name under which the company is registered as a registered society must
not include the word “company”.

(8) A copy of the special resolution and the FCA’s certificate must be sent to the
30registrar of companies, for registration by the registrar.

(9) The conversion takes effect on the registrar registering the resolution and
certificate.

(10) On the conversion taking effect, the company’s registration under the
Companies Acts becomes void and the registrar must cancel the registration.

116 35Conversion of company into a society: member’s shareholding in company
exceeds maximum permitted amount

(1) This section applies in relation to a resolution under section 115 where the
nominal value of the company’s shares held by a member other than a
registered society exceeds the amount specified in section 24(1) (maximum
40shareholding).

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(2) The resolution may provide for the conversion of the shares representing that
excess into a transferable loan stock—

(a) bearing such rate of interest as may be fixed, and

(b) repayable on such conditions as are determined by the resolution.

117 5Conversion of company into a society: no effect on liabilities

(1) Registration of a company as a registered society does not affect—

(a) any right or claim for the time being subsisting against the company, or

(b) any penalty for the time being incurred by the company.

(2) For the purpose of enforcing any such right, claim or penalty, the company
10may be sued and proceeded against in the same way as if it had not been
registered as a society.

(3) Any such right or claim, and the liability to any such penalty, has priority as
against the society’s property over all other rights or claims against, or
liabilities of, the society.

15Voluntary arrangements and administration

118 Power to apply provisions about company arrangements and administration

(1) The Treasury may with the concurrence of the Secretary of State by order
provide for a company arrangement or administration provision to apply
(with or without modifications) in relation to registered societies.

(2) 20“Company arrangement or administration provision” means—

(a) a provision of Part 1 of the Insolvency Act 1986 (company voluntary
arrangements);

(b) a provision of Part 2 of that Act (administration);

(c) Part 26 of the Companies Act 2006 (compromise or arrangement with
25creditors).

(3) The order may not provide for a company arrangement or administration
provision to apply in relation to a society that is—

(a) a private registered provider of social housing, or

(b) registered as a social landlord under Part 1 of the Housing Act 1996 or
30Part 2 of the Housing (Scotland) Act 2010 (asp 17)2010 (asp 17).

(4) The order may—

(a) make provision generally or for a specified purpose only;

(b) make different provision for different purposes;

(c) make transitional, consequential or incidental provision.

(5) 35Provision made by virtue of subsection (4)(c) may, in particular—

(a) apply an enactment (with or without modifications);

(b) amend an enactment (including any provision of this Act except this
section).

(6) Section 277 of the Enterprise Act 2002 (power of Secretary of State to make
40supplementary, consequential or incidental provision) has effect as if this
section were part of that Act.

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Dissolution by an instrument of dissolution

119 Dissolution of society by an instrument of dissolution

(1) A registered society may be dissolved by an instrument of dissolution that—

(a) complies with subsection (2), and

(b) 5is approved in a way mentioned in subsection (3).

(2) The instrument must set out—

(a) the society’s assets and liabilities in detail;

(b) the number of members and the nature of their interests in the society;

(c) any creditors’ claims, and the provision to be made for their payment;

(d) 10the intended appropriation or division of the society’s funds and
property (unless the instrument states that this is to be left to the award
of the FCA or PRA).

(3) The ways in which the instrument may be approved are as follows—

(a) by at least 75% of the society’s members consenting to it, that consent
15being testified by their signatures to the instrument;

(b) in the case of a dormant society that is not a credit union, by a special
resolution of the society;

(c) in the case of a credit union, by a special resolution of the society that is
confirmed by the appropriate authority.

(4) 20An alteration in an instrument of dissolution may be made—

(a) by the consent of at least 75% of the society’s members, testified by their
signatures to the alteration, or

(b) if the instrument was approved by a special resolution of the society, by
a further special resolution.

(5) 25Section 120 contains provisions about special resolutions under this section.

(6) In subsection (3)(b) “dormant society” means a society—

(a) whose accounts for the current year of account and the two years of
account preceding it show no accounting transactions except—

(i) fees paid to the FCA;

(ii) 30fees paid to the PRA;

(iii) payments of dividends;

(iv) payments of interest; and

(b) that has notified the FCA that it is dormant.

(7) For the purposes of subsection (3)(c) the appropriate authority is treated as
35confirming a special resolution unless it notifies the society in writing to the
contrary within 21 days of the society sending a copy of the resolution to it.

120 Special resolutions under section 119

(1) This section supplements section 119.

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

(a) 40the resolution is passed at a general meeting by at least two-thirds of
the eligible members who vote,

Co-operative and Community Benefit Societies BillPage 65

(b) notice of this meeting (“the first meeting”), specifying the intention to
propose the resolution, is duly given in accordance with the society’s
rules,

(c) the resolution is confirmed at a subsequent general meeting by over
5half of the eligible members who vote,

(d) notice of this meeting (“the second meeting”) is duly given, and

(e) the second meeting is held at least 14 days, and no more than one
month, from the day of the first meeting.

(3) In this section—

(a) 10“eligible member” means a member entitled under the society’s rules to
vote;

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

121 Instruments of dissolution: notification to FCA etc

(1) 15This section applies in relation to an instrument of dissolution within section
119(1).

(2) The instrument must be sent to the FCA (and, if the society is a PRA-authorised
person, the PRA), accompanied by a statutory declaration that all relevant
provisions of this Act have been complied with.

(3) 20The statutory declaration must be made by the society’s secretary and—

(a) 3 members, or

(b) both members (if the society consists solely of 2 registered societies).

(4) A copy of any special resolution under section 119—

(a) signed by the chair of the second meeting, and

(b) 25countersigned by the society’s secretary,

must be sent to the FCA (and, if the society is a PRA-authorised person, the
PRA) within the period of 14 days beginning with the day of the second
meeting.

(5) The FCA must register the instrument of dissolution (and any alterations to it)
30in the same way as an amendment of the society’s rules.

But it must not register it until it has received the society’s annual return for its
last year of account (see section 77(8) or 78(7)).

But it must not register it until it has received the society’s annual return for its
last year of account (see section 77(8) or 78(7)).

(6) 35The FCA must register a copy special resolution received under subsection (4)
at the same time as it registers the instrument of dissolution (and any
alterations to it).

(7) The instrument of dissolution (and any alterations to it) are binding on the
society’s members.

(8) 40In this section “the second meeting” has the same meaning as in section 120.

122 Instruments of dissolution: advertisement, dissolution etc

(1) Where the FCA receives an instrument of dissolution of a society under section
121, it must ensure that notice of the dissolution is advertised in—

(a) the Gazette, and

Co-operative and Community Benefit Societies BillPage 66

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

(2) Subject to subsection (3), the society is dissolved from—

(a) the date of the advertisement, or

(b) 5if later, the date the certificate under section 126 is lodged with the FCA;

and the requisite consents to, or approval of, the instrument of dissolution are
treated as duly obtained without proof of the signatures to it or of the special
resolution (as the case may be).

(3) Subsection (2) does not apply if—

(a) 10within the period of 3 months from the date of the Gazette in which the
advertisement appears, a member of the society or a person interested
in or having a claim on its funds commences proceedings in the
appropriate court to set aside the dissolution of the society, and

(b) the dissolution is accordingly set aside.

(4) 15The “appropriate court” means—

(a) the county court, or

(b) in Scotland, the sheriff having jurisdiction in the locality in which the
society’s registered office is situated.

(5) A person who takes proceedings to set aside the dissolution of a society must
20send the FCA (and, if the society is a PRA-authorised person, the PRA) notice
of the proceedings—

(a) within 7 days after the commencement of proceedings, or

(b) if earlier, by the end of the period mentioned in subsection (3)(a).

(6) If an order setting aside the dissolution of a society is made, the society must
25send the FCA (and, if the society is a PRA-authorised person, the PRA) notice
of the order within 7 days after the making of the order.

Dissolution on winding up

123 Dissolution of society on winding up

(1) A registered society may be dissolved on its being wound up in pursuance of
30an order or resolution made as is directed in the case of companies.

(2) The provisions relating to the winding up of companies have effect in relation
to a registered society as if the society were a company, subject to the following
modifications—

(a) a reference to the registrar of companies is to be read as the FCA;

(b) 35a reference to a company registered in Scotland is to be read as a
registered society whose registered office is in Scotland;

(c) if the society is wound up in Scotland, the court having jurisdiction is
the sheriff court whose jurisdiction contains the society’s registered
office.

(3) 40Where a resolution for the voluntary winding up of a registered society is
passed—

(a) the society must send a copy of it to the FCA (and, if the society is a
PRA-authorised person, the PRA) within 15 days after it is passed, and

Co-operative and Community Benefit Societies BillPage 67

(b) a copy of it must be annexed to every copy of the society’s registered
rules issued after it is passed.

(4) In this section “company” means a company registered under the Companies
Acts.

(5) 5This section is subject to section 126 (dissolution to occur only after society’s
property has been dealt with).

124 Liability of existing and former members in winding up

(1) This section applies where a registered society is wound up by virtue of section
123.

(2) 10The liability of an existing or former member to contribute for payment of the
society’s debts and liabilities, the expenses of winding up, and the adjustment
of the rights of contributories amongst themselves, is qualified as follows—

(a) a former member whose membership ceased at least one year before
the beginning of the winding up is not liable to contribute;

(b) 15a former member is not liable to contribute in respect of a debt or
liability contracted after the person’s membership ceased;

(c) a former member is not liable to contribute unless it appears to the court
that the contributions of the existing members are insufficient to satisfy
the just demands on the society;

(d) 20the maximum contribution that a person may be required to make is the
amount (if any) unpaid on the shares in respect of which the person is
liable as an existing or former member;

(e) in the case of a withdrawable share that has been withdrawn, a person
is treated as ceasing to be a member in respect of that share as from the
25date of the notice or application for withdrawal.

Dissolution following administration

125 Dissolution following administration

(1) A relevant society may also be dissolved under paragraph 84 of Schedule B1 to
the 1986 Act as applied in relation to a relevant society by an order under
30section 118.

(2) In this section “relevant society” means a registered society which is not—

(a) a private registered provider of social housing, or

(b) registered as a social landlord under Part 1 of the Housing Act 1996 or
under Part 2 of the Housing (Scotland) Act 2010.

35Restriction on dissolution etc

126 Dissolution etc to occur only after society’s property dealt with

(1) This section applies where—

(a) a registered society’s engagements are transferred under section 110 or
112, or

(b) 40a registered society is to be dissolved in accordance with section 119 or
123.

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(2) The society must not be dissolved, and its registration must not be cancelled,
until a relevant certificate has been lodged with the FCA.

(3) “Relevant certificate” means a certificate certifying that all property vested in
the society has been duly conveyed or transferred by the society to the persons
5entitled, signed by—

(a) the liquidator, or

(b) the secretary or some other officer of the society approved by the FCA.

Part 10 Offences

10Offences

127 General offences

(1) A person (whether a registered society, an officer or member of a registered
society, or any other person) commits an offence if the person—

(a) fails to do anything (including giving a notice or sending a return or
15other document) that the person is by this Act required to do,

(b) fails to allow anything to be done that the person is by this Act required
to allow to be done,

(c) wilfully neglects or refuses to do any act, or to provide any information,
required for the purposes of this Act by the FCA or PRA or by any other
20person authorised under this Act,

(d) does anything forbidden by this Act, or

(e) makes a return required by this Act, or wilfully provides information
required by this Act, that is in any respect false or insufficient.

(2) A registered society commits an offence if it—

(a) 25contravenes, or fails to comply with, any provision of Part 7 except
section 77, 78, 81, 89(1) or 90(1), or

(b) fails to comply with a direction under section 83(3).

(3) 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.

128 30Offences by societies to be also offences by officers etc

(1) Where a registered society commits an offence under this Act, the offence is
treated as also having been committed by—

(a) every officer of the society who is bound by its rules to fulfil the duty of
which the offence is a breach, or

(b) 35if there is no such officer, every member of its committee.

(2) In proceedings against a person alleged to have committed an offence under
this Act by virtue of subsection (1)(b), it is a defence to prove—

(a) that the person was ignorant of the commission of the offence, or

(b) that the person attempted to prevent the commission of the offence.

(3) 40Subsection (1) does not apply to an offence under section 127 consisting of a
failure to comply with section 12 or 50(2) or (3).

Co-operative and Community Benefit Societies BillPage 69

(4) For the purposes of this section as it applies in relation to a failure to comply
with section 123(3)(a), a liquidator of a society is treated as an officer of it.

129 Continuing offences

An act or default constituting an offence under this Act constitutes a new
5offence in every week during which it continues.

130 Misappropriation of a society’s property etc

(1) A person who, by false representation or deception, and with fraudulent
intent, obtains possession of any property of a registered society commits an
offence.

(2) 10A person who has any property of a registered society in the person’s
possession commits an offence if, with fraudulent intent, the person—

(a) withholds or misapplies the property, or

(b) wilfully applies any part of the property to purposes which are not
authorised by the society’s rules or which are not in accordance with
15this Act.

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

(a) to a fine not exceeding level 2 on the standard scale with costs or
expenses,

(b) 20to be ordered to deliver up the property or to repay all moneys
improperly applied, and

(c) in default of such delivery or repayment or of the payment of any such
fine, to be imprisoned for a term not exceeding 3 months.

(4) If in proceedings against a person for an offence under this section it is not
25proved that the person acted with fraudulent intent, the person may be
ordered to deliver up any property belonging to the society or to repay any
money improperly applied, with costs or expenses.

131 Falsification of a society’s records etc

(1) A person commits an offence if, with intent to falsify a relevant document or to
30evade any of the provisions of this Act, the person—

(a) makes an entry in the relevant document,

(b) removes or omits anything from the relevant document, or

(c) orders or allows the making of such an entry or the removal or
omission of anything from the relevant document.

(2) 35“Relevant document” means—

(a) any balance sheet of a registered society,

(b) any contribution or collecting book of a registered society, or

(c) any return or document required to be sent, produced or delivered for
the purposes of this Act.

(3) 40A person guilty of an offence under this section is liable on summary
conviction to a fine not exceeding level 3 on the standard scale.

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