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A | |
Bill | |
[AS AMENDED IN STANDING COMMITTEE C] | |
To | |
enable the law relating to co-operatives and community benefit societies | |
registered under the Industrial and Provident Societies Act 1965 to be | |
amended so as to bring it into conformity with certain aspects of the law | |
relating to companies; to permit a registered society whose business is | |
conducted for the benefit of the community to provide that its assets are | |
dedicated permanently for that purpose; and for connected purposes. | |
Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and | |
consent of the Lords Spiritual and Temporal, and Commons, in this present | |
Parliament assembled, and by the authority of the same, as follows:— | |
1 Community benefit societies: power to restrict use of assets | |
(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) assets of the society of a prescribed kind, | 5 |
(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). | |
(2) The cases are— | 10 |
(a) where the use or dealing is, directly or indirectly, for a purpose that is | |
for the benefit of the community and is of a prescribed kind or, if 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. | 15 |
(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 | |
the purposes of this section. | |
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(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 | |
unalterable, or for them to be alterable only in prescribed circumstances | 5 |
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 | |
to whom any dedicated assets are transferred in prescribed | 10 |
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 | |
compensated for that loss (whether by payment of a prescribed amount | 15 |
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) make provision for the carrying out of investigations by persons | 20 |
appointed by a prescribed person; | |
(h) confer power on a prescribed person to require persons of a prescribed | |
description to provide him with information in order to enable him to | |
perform his functions under the regulations; | |
(i) provide for restrictions on the use and disclosure of information | 25 |
obtained by any person in the performance of any function under the | |
regulations. | |
(5) Regulations under this section may— | |
(a) impose criminal liability; | |
(b) confer functions on a prescribed person; | 30 |
(c) confer jurisdiction on any court; | |
(d) authorise a prescribed person to make rules binding on persons of a | |
prescribed description and make provision as to the making, | |
publication and enforcement of such rules; | |
(e) provide for a prescribed person to charge fees sufficient to meet the | 35 |
costs of carrying out any of his functions under the regulations; | |
(f) modify, exclude or apply (with or without modifications) any | |
enactment or rule of law; | |
(g) contain such incidental, consequential and supplemental provision as | |
the Treasury consider appropriate; | 40 |
(h) make different provision for different cases. | |
(6) The power to make regulations under this section is exercisable by statutory | |
instrument. | |
(7) No regulations may be made under this section unless a draft of the regulations | |
has been laid before Parliament and approved by a resolution of each House. | 45 |
(8) In this section— | |
“community benefit society” means a society registered (or deemed to be | |
registered) under the 1965 Act which fulfils the condition in section | |
1(2)(b) of that Act; | |
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“enactment” includes an enactment comprised in— | |
(a) an Act of the Scottish Parliament; | |
(b) subordinate legislation, whether made under an Act or an Act | |
of the Scottish Parliament; and | |
“prescribed” means prescribed by regulations under this section. | 5 |
2 Status of charitable societies to appear on correspondence etc | |
After section 5 of the 1965 Act insert— | |
“5A Status of charitable societies to appear on correspondence etc | |
(1) Where a registered society is a charity and its registered name does not | |
include the word “charity” or the word “charitable”, the society must | 10 |
state the fact that it is a charity in legible characters— | |
(a) in all notices, advertisements and other official publications of | |
the society; | |
(b) in all business letters of the society; | |
(c) in all bills of exchange, promissory notes, endorsements, | 15 |
cheques and orders for money or goods, purporting to be | |
signed by or on behalf of the society; and | |
(d) in all bills, invoices, receipts and letters of credit of the society. | |
(2) Where a society’s registered name includes the words “elusen” or the | |
word “elusennol”, subsection (1) of this section shall not apply in | 20 |
relation to any document which is wholly in Welsh. | |
(3) The statement required by subsection (1) of this section shall be in | |
English, except that, in the case of a document which is otherwise | |
wholly in Welsh, the statement may be in Welsh if it consists of or | |
includes the word “elusen” or the word “elusennol”. | 25 |
(4) Section 62 of this Act does not apply in respect of an offence committed | |
by a registered society under section 61 of this Act where the offence | |
consists of a failure to comply with this section. | |
(5) Any officer of a registered society, or any other person acting on such a | |
society’s behalf, who— | 30 |
(a) issues or authorises the issue of any document such as is | |
mentioned in subsection (1)(a), (b) or (d) of this section; or | |
(b) signs or authorises to be signed on behalf of the society any | |
document such as is mentioned in subsection (1)(c) of this | |
section, | 35 |
in which a statement required by subsection (1) is not made in | |
accordance with this section shall be liable on summary conviction to a | |
fine not exceeding level 3 on the standard scale. | |
(6) In the case of a conviction by virtue of paragraph (b) of subsection (5) | |
of this section, the officer or other person shall further be personally | 40 |
liable to the holder of any such document as is referred to in that | |
paragraph for the amount specified in the document unless that | |
amount is duly paid by the society. | |
(7) In this section “charity”— | |
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(a) in relation to a society whose registered office is situated in | |
England or Wales, has the same meaning as in the Charities Act | |
1993; | |
(b) in relation to a society whose registered office is situated in | |
Scotland, means a body established for charitable purposes only | 5 |
(that expression having the same meaning as in the Income Tax | |
Acts).” | |
3 Capacity of society and power of committee to bind it | |
After section 7 of the 1965 Act insert— | |
“Capacity of society and power of committee to bind it | 10 |
7A Capacity of society not limited by its rules | |
(1) The validity of an act done by a registered society shall 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 | 15 |
doing of an act which but for subsection (1) of this section would be | |
beyond the society’s capacity; but no such proceedings shall lie in | |
respect of an act to be done in fulfilment of a legal obligation arising | |
from a previous act of the society. | |
(3) It remains the duty of the members of the committee of a registered | 20 |
society to observe any limitations on their powers flowing from the | |
society’s registered rules; and action by the members of the committee | |
which but for subsection (1) of this section would be beyond the | |
society’s capacity may only be ratified by the society by special | |
resolution. | 25 |
(4) A resolution ratifying such action shall not affect any liability incurred | |
by a member of the committee or any other person; relief from any such | |
liability must be agreed to separately by special resolution. | |
(5) The operation of this section is restricted by section 7D of this Act | |
(application to charitable societies); and section 7E of this Act | 30 |
(transactions with members of the committee and connected persons in | |
excess of powers) has effect notwithstanding this section. | |
(6) In this section “special resolution” means a resolution passed by not | |
less than 75% of such members of the society as (being entitled to do so) | |
vote in person, or by proxy where the society’s rules allow proxies, at a | 35 |
general meeting of which notice, specifying the intention to propose the | |
resolution, has been duly given according to those rules. | |
(7) A copy of every special resolution for the purposes of this section | |
signed by the chairman of the meeting at which the resolution was | |
passed and countersigned by the secretary of the society shall be sent to | 40 |
the Authority and registered by it; and until that copy is so registered | |
the special resolution shall not take effect. | |
7B Power of committee to bind society | |
(1) In favour of a person dealing with a registered society in good faith, the | |
power of the committee to bind the society, or authorise others to do so, | 45 |
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(1) shall be deemed to be free of any limitation under the society’s | |
registered rules. | |
(2) For this purpose— | |
(a) a person “deals with” a society if he is a party to any transaction | |
or other act to which the society is a party; | 5 |
(b) a person shall not be regarded as acting in bad faith by reason | |
only of his knowing that an act is beyond the powers of the | |
committee under the society’s registered rules; and | |
(c) a person shall be presumed to have acted in good faith unless | |
the contrary is proved. | 10 |
(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) from any agreement between the members of the society or of | 15 |
any class of members. | |
(4) Subsection (1) of this section 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; but no such proceedings shall lie | |
in respect of an act to be done in fulfilment of a legal obligation arising | 20 |
from a previous act of the society. | |
(5) Nor does subsection (1) affect any liability incurred by a member of the | |
committee, or any other person, by reason of the committee’s exceeding | |
its powers. | |
(6) The operation of this section is restricted by section 7D of this Act | 25 |
(application to charitable societies); and section 7E of this Act | |
(transactions with members of the committee and connected persons in | |
excess of powers) has effect notwithstanding this section. | |
7C 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 | 30 |
enquire as to whether it is permitted by the society’s registered rules or | |
as to any limitation on the powers of the committee to bind the society | |
or authorise others to do so. | |
7D Application of sections 7A and 7B to charitable societies | |
(1) Sections 7A and 7B of this Act (capacity of society not limited by its | 35 |
rules and power of committee to bind society) do not apply to the acts | |
of a registered society which is a charity except in favour of a person | |
who— | |
(a) gives full consideration in money or money’s worth in relation | |
to the act in question; and | 40 |
(b) does not know that the act is not permitted by the society’s | |
registered rules or, as the case may be, is beyond the powers of | |
the committee, | |
or who does not know at the time the act is done that the society is a | |
charity. | 45 |
(2) However, where such a society purports to transfer or grant an interest | |
in property, the fact that the act was not permitted by the society’s | |
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(2) registered rules or, as the case may be, that the 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. | 5 |
(3) In any proceedings arising out of subsection (1) of this section the | |
burden of proving— | |
(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 | 10 |
(b) that a person knew that the society was a charity, | |
lies on the person making that allegation. | |
(4) Where a registered society is a charity with its registered office situated | |
in England or Wales, the ratification of an act under section 7A(3) of this | |
Act, or the ratification of a transaction to which section 7E of this Act | 15 |
applies, is ineffective without the prior written consent of the Charity | |
Commissioners for England and Wales. | |
(5) In this section “charity”— | |
(a) in relation to a society whose registered office is situated in | |
England or Wales, has the same meaning as in the Charities Act | 20 |
1993; | |
(b) in relation to a society whose registered office is situated in | |
Scotland, means a body established for charitable purposes only | |
(that expression having the same meaning as in the Income Tax | |
Acts). | 25 |
7E Transactions with committee members and other persons in excess of | |
powers | |
(1) This section applies where a registered society enters into a transaction | |
to which the parties include— | |
(a) a member of the committee of the society, or | 30 |
(b) a person connected with such a member or a company with | |
whom such a member is associated, | |
and the committee of the society, in connection with the transaction, | |
exceeds any limitation on its powers under the society’s registered | |
rules. | 35 |
(2) The transaction is voidable at the instance of the society. | |
(3) Whether or not it is avoided, any such party to the transaction as is | |
mentioned in subsection (1)(a) or (b) of this section, and any member of | |
the committee who authorised the transaction, is liable— | |
(a) to account to the society for any gain which he has made | 40 |
directly or indirectly by the transaction; and | |
(b) to indemnify the society for any loss or damage resulting from | |
the transaction. | |
(4) Nothing in the above provisions shall be construed as excluding the | |
operation of any other enactment or rule of law by virtue of which the | 45 |
transaction may be called in question or any liability to the society may | |
arise. | |
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(5) The 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; or | |
(b) the society is indemnified for any loss or damage resulting from | |
the transaction; or | 5 |
(c) rights 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. | 10 |
(6) A person other than a member of the committee is not liable under | |
subsection (3) of this section if he shows that at the time the transaction | |
was entered into he did not know that the committee was exceeding its | |
powers. | |
(7) This section does not affect the operation of section 7B of this Act in | 15 |
relation to any party to the transaction not within subsection (1)(a) or | |
(b) of this section. | |
(8) But where a transaction is voidable by virtue of this section and valid | |
by virtue of that section in favour of such a person, the court may, on | |
the application of that person or of the society, make such order | 20 |
affirming, severing or setting aside the transaction, on such terms, as | |
appear to the court to be just. | |
7F Definitions relating to section 7E | |
(1) In section 7E of this Act “transaction” includes any act; and the | |
reference in subsection (1) of that section to limitations under the | 25 |
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) from any agreement between the members of the society or of | |
any class of members. | 30 |
(2) In section 7E(1) of this Act “company” has the same meaning as in the | |
Companies Act 1985. | |
(3) Section 346(2) to (8) of the Companies Act 1985 shall apply for the | |
purposes of references in section 7E(1) of this Act to a person’s being | |
“connected” with a committee member or to a committee member’s | 35 |
being “associated with” a company, but shall so apply— | |
(a) as if any reference to a director of a company were a reference | |
to a member of a committee 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 | 40 |
section. | |
(4) Any regulations made under this section shall be made by statutory | |
instrument which shall be subject to annulment in pursuance of a | |
resolution of either House of Parliament. | |
(5) In section 7E(4) of this Act “enactment” includes an enactment | 45 |
comprised in— | |
(a) an Act of the Scottish Parliament; | |
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