Co-operative and Community Benefit Societies Bill

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 Co-operative and Community Benefit Societies Act 2014 received Royal Assent on 14 May 2014

The Act consolidates legislation from 1965 onwards on co-operative and community benefit societies (formerly known as industrial and provident societies).  It gives effect to a Report made by the Law Commission and the Scottish Law Commission making recommendations for changes to the law being consolidated.  The Report was laid before Parliament and published on 19 December (Cm 8768), when the consolidation Bill was introduced into Parliament.  That Bill was accompanied by Tables of Origins and Destinations and notes by parliamentary counsel for the Joint Committee on Consolidation Etc Bills which considered the Bill and Report.

The Act extends to both England and Wales and Scotland so fell within the responsibility of both the Law Commission for England and Wales and the Scottish Law Commission.  The Government department responsible for this area of law is the Treasury.

Project history

This consolidation project was originally proposed by the Prime Minister in a speech in January 2012.  It has been taken forward by the Law Commission under arrangements made with the Treasury in 2012.

Drafts of the Bill, the Table of Origins, Drafter’s Notes to the Joint Committee and some possible Law Commission recommendations were published for consultation on 26 September 2013 by the Law Commission and Scottish Law Commission. The consultation closed on 15 November 2013

Background

The legislation relating to co-operative and community benefit societies has its origins in the nineteenth century and has some features in common with the original legislation on other forms of mutual society (such as friendly societies, building societies and credit unions). The law has been consolidated before, most recently in the Industrial and Provident Societies Act 1965.

That Act has been heavily amended and supplemented by a number of subsequent Acts and Statutory Instruments altering the law relating to these societies. The significant legislative activity has partly been due to the need to keep up with developments in company law, changes to the regulation of financial services and changes to EU law.

Registration under the existing legislation gives a society corporate personality with limited liability and so provides an alternative legal form to registration under the companies legislation. While some aspects of the legislation have been assimilated with the corresponding company law there remain many differences.

The conditions for registration have become tighter over the years. A society must now be a bona fide co-operative society or conducted for the public benefit in order to apply successfully for registration.

It is important that the legislation is as clear as possible. Some of it is complicated and technical and it is not easy to navigate around the various separate enactments on the subject or to understand how the legislation as a whole fits together. These are some of the reasons why consolidation is necessary.

The Co-operative and Community Benefit Societies Bill

The Bill from which the Act derives replaces the legislation on the relevant societies listed in Schedule 7.  The material listed includes some provisions that are spent or otherwise obsolete, such as provisions textually amending Acts consolidated in the Bill. Those provisions are not reproduced in the Bill.

The Bill takes account of some changes to the law that are planned to be made by statutory instrument in the current Session of Parliament. These will implement provisions of the Co-operative and Community Benefit Societies Act 2010, among other things.  The Treasury has recently consulted on a package of measures relating to co-operative and community benefit societies and credit unions. Amendments to be made by these measures to the Industrial and Provident Societies 1965 Act are included in the consolidation Bill. These measures include:

• raising the limit on the amount of withdrawable share capital that a registered society may hold,
• applying, with modifications, the provisions of the Insolvency Act 1986 for company voluntary arrangements and administration,
• applying, with modifications, Part 14 of the Companies Act 1985 relating to investigations, and
• allowing for the electronic submission of registration documents.

The consolidation does not include the corresponding societies legislation in Northern Ireland, which has always been separate from the law in Great Britain.

Nor does it include the legislation about credit unions contained in the Credit Unions Act 1979. Credit unions are another form of mutual entity. Currently, these are registered under the Industrial and Provident Societies Act 1965 and some provisions of that Act and other legislation consolidated by the Bill are currently “applied” to credit unions, with modifications. The decision not to include credit union legislation in the Bill left the drafter with a choice between leaving the old societies legislation in place as it applies to credit unions or repealing it and adapting the references in credit union law to refer to the relevant provisions of the Bill. The decision has been made to take the latter approach.

The aim of the consolidation is to reproduce the effect of the current legislation, while putting the law into a more logical, accessible, clear and modern form. This includes using gender neutral language and altering archaic language wherever possible. Developments in the general law (including EU law) also have to be taken into account – for example if they have made existing provisions obsolete or unnecessary or left them giving a misleading or incomplete account of the law.

The only substantive changes to the law included in the Bill are those recommended by the Law Commission and the Scottish Law Commission in order to facilitate the production of a satisfactory consolidated text. Changes affecting only&nnbsp;one jurisdiction (England and Wales or Scotland) are recommended by the appropriate Law Commission. Changes affecting both jurisdictions are made jointly.

The scope of what can be dealt with by Law Commission recommendation is limited. The parliamentary procedure for consolidation Bills is not designed for significant changes of policy. The only changes that can be made are to address technical issues that emerge during the process of consolidating the law.