Reform of Co-operative and Community Benefit Societies Proposed

The Law Commission has today published a consultation paper containing provisional proposals for reform to the Co-operative and Community Benefit Societies Act 2014. The Law Commission is seeking the views of those with knowledge or an interest in the issues on these proposed reforms. A summary of the paper is also available.

Co-operatives and community benefit societies are business associations. They are alternatives, for example, to companies and partnerships and register under the 2014 Act.

Co-operatives are associations of consumers, producers, or workers. Part of their purpose is to harness economies of scale. For example, 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.

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, to publishing a newspaper or developing a local renewable energy network, or providing social housing.

Sir Peter Fraser, Chair of the Law Commission said.

“Some of the laws governing co-ops and community benefit societies are over a hundred years old and are in need of review. We would encourage anyone with knowledge or an interest in this area to give us their views so that we can ensure that the law is reformed to be simple, fair and up to date”.

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.

Stakeholders are encouraged to share their views using the online questionnaire. Alternatively, stakeholders can write by email or post. Full details of how to respond are set out in the consultation paper, and in the summary.

The consultation is open until 10 December 2024.