Why Co-ops can have corporate directors

Last April Dave Hollings of Co-operative and Mutual Solutions Limited asked me two questions. He's kindly given me permission to shares the Q & A's on here.

Both questions are about co-operative societies. Apparently they were raised by a co-operative consortium planning to operate across national boundaries. there's currently lots of interest in that model in the worker co-op sector. For example, both Altgen and uniteddiversity are working on developing the model.

Question 1 was answered in my last post. Here's question 2:

2. Whilst the Act says clearly there can be corporate members, can there be corporate directors as in Companies?

Yes:

A corporate body can be a member of a society - s32 CCBSA 2014.

A "person" can be a committee member - s 30(3) CCBSA 2014.

In any Act "unless the contrary intention appears", the word "'Person” includes a body of persons corporate or unincorporate" - s5 & sched 1 Interpretation Act 1978. Therefore the answer seems to be "yes".

Ian Snaith 2015

 

Need Co-op Shares Be in GB£?

 Last April Dave Hollings of Co-operative and Mutual Solutions Limited asked me two questions. He's kindly given me permission to shares the Q & A's on here.

Both questions are about co-operative societies. Apparently they were raised by a co-operative consortium planning to operate across national boundaries. there's currently lots of interest in that model in the worker co-op sector. For example, both Altgen and uniteddiversity are working on developing the model.

This post is on Question 1 the next one will be on Question 2.

Q 1 Does the minimum shareholding have to be in pounds or could it be in US dollars?

It would be interesting to designate share capital in US dollars (or any other currency) to see whether the FCA raise a problem on registering the rules but we can't be sure of the outcome until a court (or the FCA on rule registration) come down on one side or another. Anyone know of a society already registered with shares not in £GB?

Here's why: There is no direct law on societies as far as I know. However, the leading Company Law case, Scandinavian Banking Group PLC says that company shares can be in any currency or different classes in different currencies so long as a PLC has enough in sterling to meet the minimum of £50,000 that they are required to have issued - because that has to be in sterling.

By analogy, the argument against allowing non-sterling shares in a society is that the maximum holding in section 24 is expressed in sterling. However, that only applies to withdrawable shares so maybe non withdrawable shares could be designated in e.g. US Dollars. The problem with that is that sections 37 to 40 dealing with nominations of shares by members and other transfers on the member's death impose a limit stated in the Act in sterling. Maybe that means that all shares have to be designated in sterling so that those limits are clear.

On the other hand, the reason for the problem with the PLC £50,000 limit was that the EU Directive requires the limit to be set in national currencies and it has prioity over conflicting national law (pp 103-104 attached judgment). Society law is unaffected by any EU Directives in this area therefore that argument does not apply to them and maybe the courts would be willing to allow any currency to be used as they do for other purposes as is explained in the Scandinavian Banking Group case (attached). The rest of the judgment shows courts willing not to let the tail (e.g. amount required to requisition meeting) wag the dog of allowing shares in other currencies (p 104 paras B to E). That argument could be applied to sections 37-40 of the CCBSA 2014 in our context. That is in line with the courts' wish to be liberal when it comes to facilitating commerce.

Ian Snaith 2015

Hear the 2013 Co-op Fortnight Lecture and Discussion

Here is a recording of the Co-op Fortnight Law Lecture and Discussion in mp3 form for you to download if you have an hour to spare or trouble sleeping.....If you look at the slides while listening, it may make more sense.
Thanks to the UK Society for Co-operative Studies, DWF LLP and Co-operatives UK for the support and to the audience for good questions and a vigorous discussion in the finest traditions of Co-op Debate.
© Ian Snaith 2013 This work is licensed under the
This work is licensed under a Creative Commons Attribution-ShareAlike 2.0 UK: England & Wales License.

International Co-operative Alliance UK and Blueprint

This link gives an up to date account of the relationship between the ICA's Blueprint Plan on legislation and this year's UK developments. Essentially, we have the consolidation which it is hoped will become law by late 2013 (see My Blog Entry of early 2012) and the 2013 Budget announcement of a plan to review the limit on holdings of withdrawable share capital in societies and to look at applying insolvency rescue procedures to societies - as recommended here. See Linda Barlow's Blog for an outline of the implications.

As usual with Budget announcements, the announcement was thin on detail:

"2.260 Co-operatives legislation – The Government will consult in summer 2013 on options for raising the limit on individual subscriptions for Withdrawable Share Capital in Industrial and Provident Societies (IPSs) and introducing insolvency procedures for IPSs and credit unions."

See Budget 2013 at page 94.

So now we await the consultations in the "Summer" .....and maybe a Draft Consolidation Bill earlier than that?

© Ian Snaith 2013 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 http://creativecommons.org/licenses/by-nc-nd/2.0/uk/ or send a letter to Creative Commons, 559 Nathan Abbott Way, Stanford, California 94305, USA