Legal News for UK Co-ops and Mutuals

This is a blog where brief information about developments in UK Co-op and mutual law will be reported. Readers of this blog will also find Linda Barlow's Co-operatives UK Blog at helpful. For an network of academics working on co-ops, mutuals and social enterprises visit

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Interested in sharing information and knowledge around legal issues for co-ops and social enterprises in the co-oplawnews blog and thoughts on random issues in the "real" blog.

Saturday, January 07, 2012

Co-op, Bencom, and Credit Union Law Changes from 08.01.12: A Summary

On 8th January 2012 most of the changes to the legislation governing co-operatives and community benefit societies first discussed in 2007 come into effect. They were enacted in the snappily named Legislative Reform (Industrial and Provident Societies and Credit Union) Order 2011 SI 2011/2687, popularly known as the "LRO". Those regulations come into effect on 8th January 2012, two months after the Order was finally made.

The text of the Order can be found here

The history of its development and the rationale for it can be found here

Co-operative and Community Benefit Societies are still officially called industrial and provident societies as section 2 of the Co-operative Community Benefit Society and Credit Unions Act 2010 which renames them is not yet in force but here they will be given their new name on the basis that the 2010 Act will be brought into effect one day.

Summary of Changes

The LRO makes the following changes by amending the relevant Acts of Parliament

These changes apply to societies other than credit unions:

  • The limit on the value the shares that can be held in a society is abolished for shares which are not withdrawable

  • Societies can decide their own years of account for the purpose of their annual returns

These changes apply to any society including a credit union:

  • Societies can charge up to £5 to provide a copy of their rules to people who are not members or to members who have already had a copy

  • The minimum age limit of 16 for membership of a society is abolished and the minimum age for serving on the board and signing documents and receipts becomes 16. The society's rules may still limit membership to people aged 18 or more

  • Dormant societies with no transactions in their accounts (apart from FSA fees, dividend payment and interest payments) for two years before the current accounting year can be dissolved by special resolution of their members. A credit union also has to have FSA confirmation of the resolution.

  • Societies may publish unaudited interim revenue accounts and balance sheets together with its latest year end account and balance sheet as long as it clear marks them as unaudited.

These changes apply only to credit unions:

  • New and more liberal Common Bond requirements

  • Corporate members permitted subject to conditions and limits

  • limit on percentage of non-qualifying members removed

  • Deferred shares and interest bearing shares allowed

  • Effect of securing loan on member's shares clarified

  • Fee for ancillary services not limited to recovery of cost of providing them

  • Liberalisation of limit on share dividend payable by credit unions

© Ian Snaith 2012 This work is licensed under the Creative Commons Attribution-NonCommercial-Noderivs 2.0 England and Wales Licence. To view a copy of this licence visit or send a letter to Creative Commons, 559 Nathan Abbott Way, Stanford, California 94305, USA


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