Legal News for UK Co-ops and Mutuals

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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.

Thursday, September 05, 2013

Submission on IPS Consultation: A Debate on Democratic Control?

My detailed personal submission on the HMT Consultation "Growth Through Co-operation" went in today. It's  about WSC holding limits, insolvency procedures for IPS's and credit unions, inspections and investigations for societies, access to the register of members and electronic information filing. I managed to comment on the draft SI's published last month as well. I have tried to do a thorough job. Here's the full Text to download if you like:

Consultn IS submission 08.13

The main points can be found in this summary answers to questions:

HMT Summary Q & A 04.09.13

Essentially, most of this is very welcome.

However, I have strong reservations about the plan to allow societies to charge their members to inspect the Register of Members (which companies are not allowed to do) and even to allow them to charge for providing copies (which companies are permitted to do). This seems inappropriate when democratic member control is at the centre of co-operation.

The right for societies to apply to court to prevent members from gaining this information at all is also unhelpful. That could mean imposing costs on ordinary members who just want that information. They would always have to give detailed information including reasons for wanting the information and details of everyone to whom it might be passed. That will make it harder for members to get information as of right.

Neither the fee nor the possible court application will affect members who just want to look at their own entry. Other members are already prevented from seeing the financial information about a member's account but these changes would make it harder for members to find out who else is also a member. In a small workers' co-op members may know everyone else but they won't in a big consumer co-op.

In co-operatives with thousands, or millions, of members, how can people organise or get the numbers needed e.g. to call a special general meeting, alter the agenda, or just to form a coalition to change things if they are not allowed, or cannot afford, to find the contact details of other members? Even if there is a legal right, as now, the cost and effort involved may be prohibitive. Complicating that legal right will make matters worse. We need more accountability by boards and executives - not less.

The planned measures, apart from charging members to inspect the register, reflect the position for companies. They were introduced because of the perceived threat by animal rights activists to shareholders in Huntingdon Life Sciences.

However, for societies I think just applying this without a careful review of statutory rules about relations between members and their society and fuller consideration of the statutory duties societies should have to their members would be wrong. For example, the clear duty to provide information, enforceable by court order and a daily fine, that applies to companies would not be carried over but the criminal offence by a member who provides misleading information when applying to see the register would. That is unfair on members of societies.

I am sure these problems are inadvertent and can see why societies want this reviewed. But there should be a full two sided review and not just the application of a Companies Act rule to internal co-op democracy.

What do you think?

Responses needed to by 20th September 2013

© Ian Snaith 2013 This work is licensed under the Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 2.0 UK: England & Wales License.

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