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Co-operatives and Community Benefit Societies Bill


Co-operatives and Community Benefit Societies Bill

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A

Bill

To

enable the law relating to co-operatives and community benefit societies

registered under the Industrial and Provident Societies Act 1965 to be

amended so as to bring it into conformity with certain aspects of the law

relating to companies; to permit a registered society whose business is

conducted for the benefit of the community to provide that its assets are

dedicated permanently for that purpose; and for connected purposes.                                                                            

Be it enacted by the Queen’s most Excellent Majesty, by and with the advice and

consent of the Lords Spiritual and Temporal, and Commons, in this present

Parliament assembled, and by the authority of the same, as follows:—

 1     Community benefit societies: power to restrict use of assets

     (1)    The Treasury may by regulations make provision for enabling any community

benefit society, or any community benefit society of a prescribed kind, to

ensure that—

           (a)           assets of the society of a prescribed kind,

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           (b)           assets of the society specified by it in accordance with the regulations,

or

           (c)           all of the society’s assets,

            cannot be used or dealt with except in a case mentioned in subsection (2).

     (2)    The cases are—

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           (a)           where the use or dealing is, directly or indirectly, for a purpose that is

for the benefit of the community and is of a prescribed kind or, if no

kinds of purpose are prescribed under this paragraph, for any purpose

that is for the benefit of the community; or

           (b)           where the circumstances are such as may be prescribed.

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     (3)    Where under the regulations a society has ensured as mentioned in subsection

(1) as respects any of its assets, the assets concerned are “dedicated assets” for

the purposes of this section.

     (4)    Regulations under this section may, in particular—

           (a)           provide for the procedure by which a society may ensure as mentioned

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in subsection (1);

 
HL Bill 5753/2
 
 

Co-operatives and Community Benefit Societies Bill

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           (b)           provide for such of a society’s rules as are of a prescribed kind to be

unalterable, or for them to be alterable only in prescribed circumstances

or in circumstances specified in rules of a prescribed kind;

           (c)           provide that, in any circumstances prescribed under subsection (2)(b),

dedicated assets must be dealt with in a prescribed way;

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           (d)           make provision for ensuring that any society, company or other person

to whom any dedicated assets are transferred in prescribed

circumstances cannot use or deal with those assets except in a case

mentioned in subsection (2);

           (e)           provide for members of a society who lose property rights as a result of

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the society’s ensuring as mentioned in subsection (1) to be

compensated for that loss (whether by payment of a prescribed amount

or of an amount determined in a prescribed way or otherwise), subject

to such exceptions as may be prescribed;

           (f)           provide for the enforcement of provisions designed to ensure as

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mentioned in subsection (1);

           (g)           make provision for the carrying out of investigations by persons

appointed by a prescribed person;

           (h)           confer power on a prescribed person to require persons of a prescribed

description to provide him with information in order to enable him to

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perform his functions under the regulations;

           (i)           provide for restrictions on the use and disclosure of information

obtained by any person in the performance of any function under the

regulations.

     (5)     Regulations under this section may—

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           (a)           impose criminal liability;

           (b)           confer functions on a prescribed person;

           (c)           confer jurisdiction on any court;

           (d)           authorise a prescribed person to make rules binding on persons of a

prescribed description and make provision as to the making,

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publication and enforcement of such rules;

           (e)           provide for a prescribed person to charge fees sufficient to meet the

costs of carrying out any of his functions under the regulations;

           (f)           modify, exclude or apply (with or without modifications) any

enactment or rule of law;

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           (g)           contain such incidental, consequential and supplemental provision as

the Treasury consider appropriate;

           (h)           make different provision for different cases.

     (6)    The power to make regulations under this section is exercisable by statutory

instrument.

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     (7)    No regulations may be made under this section unless a draft of the regulations

has been laid before Parliament and approved by a resolution of each House.

     (8)    In this section—

                    “community benefit society” means a society registered (or deemed to be

registered) under the 1965 Act which fulfils the condition in section

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1(2)(b) of that Act;

                    “enactment” includes an enactment comprised in—

                  (a)                 an Act of the Scottish Parliament;

 

 

Co-operatives and Community Benefit Societies Bill

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                  (b)                 subordinate legislation, whether made under an Act or an Act

of the Scottish Parliament; and

                      “prescribed” means prescribed by regulations under this section.

 2     Status of charitable societies to appear on correspondence etc

After section 5 of the 1965 Act insert—

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       “5A            Status of charitable societies to appear on correspondence etc

           (1)           Where a registered society is a charity and its registered name does not

include the word “charity” or the word “charitable”, the society must

state the fact that it is a charity in legible characters—

                  (a)                 in all notices, advertisements and other official publications of

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the society;

                  (b)                 in all business letters of the society;

                  (c)                 in all bills of exchange, promissory notes, endorsements,

cheques and orders for money or goods, purporting to be

signed by or on behalf of the society;

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                  (d)                 in all bills, invoices, receipts and letters of credit of the society;

and

                  (e)                 in all conveyances purporting to be executed by or on behalf of

the society.

           (2)           Where a society’s registered name includes the words “elusen” or the

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word “elusennol”, subsection (1) of this section shall not apply in

relation to any document which is wholly in Welsh.

           (3)           The statement required by subsection (1) of this section shall be in

English, except that, in the case of a document which is otherwise

wholly in Welsh, the statement may be in Welsh if it consists of or

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includes the word “elusen” or the word “elusennol”.

           (4)           Section 62 of this Act does not apply in respect of an offence committed

by a registered society under section 61 of this Act where the offence

consists of a failure to comply with this section.

           (5)           Any officer of a registered society, or any other person acting on such a

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society’s behalf, who—

                  (a)                 issues or authorises the issue of any document such as is

mentioned in subsection (1)(a), (b) or (d) of this section;

                  (b)                 signs or authorises to be signed on behalf of the society any

document such as is mentioned in subsection (1)(c) of this

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section; or

                  (c)                 executes or authorises to be executed on behalf of the society

any document such as is mentioned in subsection (1)(e) of this

section,

                         in which a statement required by subsection (1) is not made in

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accordance with this section shall be liable on summary conviction to a

fine not exceeding level 3 on the standard scale.

           (6)           In the case of a conviction by virtue of paragraph (b) of subsection (5)

of this section, the officer or other person shall further be personally

liable to the holder of any such document as is referred to in that

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paragraph for the amount specified in the document unless that

amount is duly paid by the society.

 

 

Co-operatives and Community Benefit Societies Bill

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           (7)           In this section “charity”—

                  (a)                 in relation to a society whose registered office is situated in

England or Wales, has the same meaning as in the Charities Act

1993;

                  (b)                 in relation to a society whose registered office is situated in

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Scotland, means a body established for charitable purposes only

(that expression having the same meaning as in the Income Tax

Acts);

                  (c)                 in relation to a society whose registered office is situated in one

of the Channel Islands, means a society established for

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charitable purposes only (“charitable purposes” having the

meaning given by the law of the Island in question).

           (8)           In this section “conveyance” means any document for the creation,

transfer, variation or extinction of an interest in land.

           (9)           In subsection (5)(c) of this section the references to execution include—

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                  (a)                 purported execution; and

                  (b)                 the doing of any act which (though not by itself execution)

combined with other acts constitutes execution or purported

execution.”

 3     Capacity of society and power of committee to bind it

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After section 7 of the 1965 Act insert—

“Capacity of society and power of committee to bind it

       7A            Capacity of society not limited by its rules

           (1)           The validity of an act done by a registered society shall not be called

into question on the ground of lack of capacity by reason of anything in

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the society’s registered rules.

           (2)           A member of a registered society may bring proceedings to restrain the

doing of an act which but for subsection (1) of this section would be

beyond the society’s capacity; but no such proceedings shall lie in

respect of an act to be done in fulfilment of a legal obligation arising

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from a previous act of the society.

           (3)           It remains the duty of the members of the committee of a registered

society to observe any limitations on their powers flowing from the

society’s registered rules; and action by the members of the committee

which but for subsection (1) of this section would be beyond the

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society’s capacity may only be ratified by the society by special

resolution.

           (4)           A resolution ratifying such action shall not affect any liability incurred

by a member of the committee or any other person; relief from any such

liability must be agreed to separately by special resolution.

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           (5)           The operation of this section is restricted by section 7D of this Act

(application to charitable societies); and section 7E of this Act

(transactions with members of the committee and connected persons in

excess of powers) has effect notwithstanding this section.

 

 

Co-operatives and Community Benefit Societies Bill

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           (6)           In this section “special resolution” means a resolution passed by not

less than 75% of such members of the society as (being entitled to do so)

vote in person, or by proxy where the society’s rules allow proxies, at a

general meeting of which not less than 21 days’ notice, specifying the

intention to propose the resolution, has been duly given according to

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those rules.

           (7)           A copy of every special resolution for the purposes of this section

signed by the chairman of the meeting at which the resolution was

passed and countersigned by the secretary of the society shall be sent to

the Authority and registered by it; and until that copy is so registered

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the special resolution shall not take effect.

       7B            Power of committee to bind society

           (1)           In favour of a person dealing with a registered society in good faith, the

power of the committee to bind the society, or authorise others to do so,

shall be deemed to be free of any limitation under the society’s

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registered rules.

           (2)           For this purpose—

                  (a)                 a person “deals with” a society if he is a party to any transaction

or other act to which the society is a party;

                  (b)                 a person shall not be regarded as acting in bad faith by reason

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only of his knowing that an act is beyond the powers of the

committee under the society’s registered rules; and

                  (c)                 a person shall be presumed to have acted in good faith unless

the contrary is proved.

           (3)           The references above to limitations on the powers of the committee

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under the society’s registered rules include limitations deriving—

                  (a)                 from a resolution of the society in general meeting or a meeting

of any class of members; or

                  (b)                 from any agreement between the members of the society or of

any class of members.

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           (4)           Subsection (1) of this section does not affect any right of a member of

the society to bring proceedings to restrain the doing of an act which is

beyond the powers of the committee; but no such proceedings shall lie

in respect of an act to be done in fulfilment of a legal obligation arising

from a previous act of the society.

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           (5)           Nor does subsection (1) affect any liability incurred by a member of the

committee, or any other person, by reason of the committee’s exceeding

its powers.

           (6)           The operation of this section is restricted by section 7D of this Act

(application to charitable societies); and section 7E of this Act

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(transactions with members of the committee and connected persons in

excess of powers) has effect notwithstanding this section.

       7C            No duty to enquire as to capacity of society or authority of committee

A party to a transaction with a registered society is not bound to

enquire as to whether it is permitted by the society’s registered rules or

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as to any limitation on the powers of the committee to bind the society

or authorise others to do so.

 

 

 
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