Co-operatives and community benefit societies

Current project status

• Initiation: Could include discussing scope and terms of reference with lead Government Department
• Pre-consultation: Could include approaching interest groups and specialists, producing scoping and issues papers, finalising terms of project
• Consultation: Likely to include consultation events and paper, making provisional proposals for comment
• Policy development: Will include analysis of consultation responses. Could include further issues papers and consultation on draft Bill
• Reported: Usually recommendations for law reform but can be advice to government, scoping report or other recommendations

The Law Commission has been asked by HM Treasury to review the legal framework governing co-operatives and community benefit societies. We published a consultation paper and a summary  in September 2024 and are seeking views on our proposals. The consultation is open until 11.59pm on Tuesday 10 December 2024.

About co-operatives and community benefit societies 

Co-operatives and community benefit societies are business associations. They are alternatives, for example, to companies and partnerships.

Co-operatives are associations of consumers, producers, or workers. Part of their purpose is to harness economies of scale. For example, when producers or workers combine as members of a co-operative, the co-operative might command better prices in the market for the produce or labour. When consumers combine as members of a co-operative, the co-operative might access cheaper prices for goods or services. The co-operative can then pass on those better prices when selling to its consumers, buying from its producers, or paying its workers.

There are more than 7000 co-operatives in the UK, with around 14 million members, contributing about £40 billion to the economy. A visible example on the high street is the Co-op chain of supermarkets.

A community benefit society carries on business for the benefit of the community. They can engage in a range of activities, from owning a local pub, through publishing a newspaper or developing a local renewable energy network, to providing social housing.

About this project 

Co-operatives and community benefit societies are governed by the Co-operative and Community Benefit Societies Act 2014. We have been asked to review the Act, to ensure that it is fitting to the nature and needs of co-operatives and community benefit societies, and to ensure that regulation is proportionate and effective.

We have now published our consultation paper, and a summary, both available below. The consultation paper discusses the current law and makes provisional proposals for reform. We ask stakeholders for their views on our proposals.

Principal proposals for reform include:

• New statutory definitions for co-operatives and for community benefit societies, and the regulation of charitable community benefit societies.
• An overhaul of the law relating to society shares, with definitions of withdrawable and transferable shares, prescribed conditions for withdrawal and transfer, protections for class rights and when writing down shares, limits to interest payable on shares, as well as confirmation that shares can be issued with varying rights and to non-user investors.
• Society officers to be listed on the Mutuals Public Register, with statute to prescribe duties owed by officers.

The consultation paper discusses a long list of further reforms; the length of the list reflects the fact that parts of society law have not been systematically reviewed for over a century.

 

Next Steps

We encourage stakeholders to respond using the online questionnaire. The closing date for responses is 11.59pm on Tuesday 10 December 2024. We will use the responses to the consultation to develop our final recommendations for reform, which ultimately will be published in a report. We expect the report will be published in 2025.

Contact 

Anyone wishing to be added to our email list can contact us on the following address: coops@lawcommission.gov.uk 

Related projects 

You might also be interested in our review of the law relating to friendly societies.