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Co-operatives and Community Benefit Societies Bill


Co-operatives and Community Benefit Societies Bill

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       7D            Application of sections 7A and 7B to charitable societies

           (1)           Sections 7A and 7B of this Act (capacity of society not limited by its

rules and power of committee to bind society) do not apply to the acts

of a registered society which is a charity except in favour of a person

who—

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                  (a)                 gives full consideration in money or money’s worth in relation

to the act in question; and

                  (b)                 does not know that the act is not permitted by the society’s

registered rules or, as the case may be, is beyond the powers of

the committee,

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                         or who does not know at the time the act is done that the society is a

charity.

           (2)           However, where such a society purports to transfer or grant an interest

in property, the fact that the act was not permitted by the society’s

registered rules or, as the case may be, that the committee in connection

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with the act exceeded any limitation on its powers under those rules,

does not affect the title of a person who subsequently acquires the

property or any interest in it for full consideration without actual notice

of any such circumstances affecting the validity of the society’s act.

           (3)           In any proceedings arising out of subsection (1) of this section the

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burden of proving—

                  (a)                 that a person knew that an act was not permitted by the

society’s registered rules or was beyond the powers of the

committee, or

                  (b)                 that a person knew that the society was a charity,

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                         lies on the person making that allegation.

           (4)           Where a registered society is a charity with its registered office situated

in England or Wales, the ratification of an act under section 7A(3) of this

Act, or the ratification of a transaction to which section 7E of this Act

applies, is ineffective without the prior written consent of the Charity

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Commissioners for England and Wales.

           (5)           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;

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

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

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of the Channel Islands, means a society established for

charitable purposes only (“charitable purposes” having the

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

       7E            Transactions with committee members and other persons in excess of

powers

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           (1)           This section applies where a registered society enters into a transaction

to which the parties include—

                  (a)                 a member of the committee of the society, or

 

 

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                  (b)                 a person connected with such a member or a company with

whom such a member is associated,

                         and the committee of the society, in connection with the transaction,

exceeds any limitation on its powers under the society’s registered

rules.

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           (2)           The transaction is voidable at the instance of the society.

           (3)           Whether or not it is avoided, any such party to the transaction as is

mentioned in subsection (1)(a) or (b) of this section, and any member of

the committee who authorised the transaction, is liable—

                  (a)                 to account to the society for any gain which he has made

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directly or indirectly by the transaction; and

                  (b)                 to indemnify the society for any loss or damage resulting from

the transaction.

           (4)           Nothing in the above provisions shall be construed as excluding the

operation of any other enactment or rule of law by virtue of which the

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transaction may be called in question or any liability to the society may

arise.

           (5)           The transaction ceases to be voidable if—

                  (a)                 restitution of any money or other asset which was the subject-

matter of the transaction is no longer possible; or

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                  (b)                 the society is indemnified for any loss or damage resulting from

the transaction; or

                  (c)                 rights acquired bona fide for value and without actual notice of

the committee’s exceeding its powers by a person who is not

party to the transaction would be affected by the avoidance; or

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                  (d)                 the transaction is ratified by the society in general meeting in

such a way as the case may require.

           (6)           A person other than a member of the committee is not liable under

subsection (3) of this section if he shows that at the time the transaction

was entered into he did not know that the committee was exceeding its

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powers.

           (7)           This section does not affect the operation of section 7B of this Act in

relation to any party to the transaction not within subsection (1)(a) or

(b) of this section.

           (8)           But where a transaction is voidable by virtue of this section and valid

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by virtue of that section in favour of such a person, the court may, on

the application of that person or of the society, make such order

affirming, severing or setting aside the transaction, on such terms, as

appear to the court to be just.

       7F            Definitions relating to section 7E

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           (1)           In section 7E of this Act “transaction” includes any act; and the

reference in subsection (1) of that section to limitations under the

society’s registered rules includes limitations deriving—

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

of any class of members; or

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

any class of members.

 

 

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           (2)           In section 7E(1) of this Act “company” has the same meaning as in the

Companies Act 1985.

           (3)           Section 346(2) to (8) of the Companies Act 1985 shall apply for the

purposes of references in section 7E(1) of this Act to a person’s being

“connected” with a committee member or to a committee member’s

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being “associated with” a company, but shall so apply—

                  (a)                 as if any reference to a director of a company were a reference

to a member of a committee of a registered society; and

                  (b)                 subject to such other adaptations and modifications as may be

specified by regulations made by the Treasury under this

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section.

           (4)           Any regulations made under this section shall be made by statutory

instrument which shall be subject to annulment in pursuance of a

resolution of either House of Parliament.

           (5)           In section 7E(4) of this Act “enactment” includes an enactment

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comprised in—

                  (a)                 an Act of the Scottish Parliament;

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

of the Scottish Parliament.

           (6)           In section 7E(8) of this Act “the court”, in relation to a registered society,

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means the court having jurisdiction to wind up the society under the

provisions of the Insolvency Act 1986 as applied by section 55 of this

Act.”

 4     Purported contracts, deeds and obligations

     (1)    After section 29 of the 1965 Act insert—

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       “29A            Purported contracts, deeds and obligations

           (1)           A contract which purports to be made by or on behalf of a registered

society at a time when the society has not been registered under this Act

has effect, subject to any agreement to the contrary, as one made with

the person purporting to act for the society or as agent for it.

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           (2)           Accordingly, the contract is to be treated—

                  (a)                 as imposing on that person all the obligations it purports to

impose on the society; and

                  (b)                 as conferring on him all the rights it purports to confer on the

society.

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           (3)           Subsections (1) and (2) of this section apply—

                  (a)                 to the making of a deed under the law of England and Wales,

and

                  (b)                 to the undertaking of an obligation under the law of Scotland,

                         as they apply to the making of a contract.”

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     (2)    In section 76 of the 1965 Act, after subsection (2) insert—

           “(2A)              In section 29A(1) of this Act—

                  (a)                 the reference to a registered society includes a reference to a

society registered under the law for the time being in force in

 

 

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Northern Ireland for purposes corresponding to those of this

Act; and

                  (b)                 the reference to this Act includes a reference to that law.”

 5     Execution of deeds and other documents

     (1)    After section 29A of the 1965 Act (which is inserted by section 4) insert—

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       “29B            Common seal

           (1)           Notwithstanding any enactment or rule of law, a registered society

need not have a common seal.

           (2)           If a registered society has a common seal, the society shall have its

registered name engraved on the seal in legible characters.

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           (3)           If, after the coming into force of subsection (1) of this section, a

registered society decides to have a common seal, it shall not cause such

a seal to be made unless the registered rules of the society contain

provision for the custody and use of that seal.

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

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

consists of a failure to comply with subsection (2) or (3) of this section.

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

society’s behalf, who uses or authorises the use of any seal purporting

to be the common seal of the society which does not have the society’s

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registered name engraved on it in legible characters shall be liable on

summary conviction to a fine not exceeding level 3 on the standard

scale.

           (6)           In this section “enactment” includes an enactment comprised in—

                  (a)                 an Act of the Scottish Parliament;

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

of the Scottish Parliament.

       29C            Methods for execution of documents: England and Wales

           (1)           The following provisions have effect with respect to the execution of

documents by a registered society under the law of England and Wales.

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           (2)           A registered society may, if it has a common seal, execute a document

by affixing that seal to it.

           (3)           A document—

                  (a)                 signed by a member of the committee of a registered society and

the secretary of the society, or by two members of that

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committee, and

                  (b)                 expressed (in whatever form of words) to be executed by the

society,

                         has the same effect as if it were executed under the common seal of the

society.

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           (4)           A document executed by a registered society which makes it clear on its

face that it is intended by the person or persons making it to be a deed

has effect, upon delivery, as a deed; and it shall be presumed, unless a

contrary intention is proved, to be delivered upon its being so executed.

 

 

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           (5)           In favour of a purchaser a document shall be deemed to have been duly

executed by a registered society if it purports to be signed by a member

of the committee of the society and the secretary of the society, or by

two members of the committee, and, where it makes it clear on its face

that it is intended by the person or persons making it to be a deed, to

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have been delivered upon its being executed.

           (6)           Subsections (3) to (5) of this section apply whether or not the society has

a common seal; and, in subsection (5) of this section, “purchaser” means

a purchaser in good faith for valuable consideration and includes a

lessee, mortgagee or other person who for valuable consideration

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acquires an interest in property.

       29D            Execution of documents: Scotland

           (1)           Under the law of Scotland, for the purposes of any enactment—

                  (a)                 providing for a document to be executed by a registered society

by affixing its common seal, or

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                  (b)                 referring (in whatever terms) to a document so executed,

                         a document signed or subscribed by or on behalf of the society in

accordance with the provisions of the Requirements of Writing

(Scotland) Act 1995 shall have effect as if so executed.

           (2)           In this section “enactment” includes an enactment comprised in—

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                  (a)                 an Act of the Scottish Parliament;

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

of the Scottish Parliament.

       29E            Power of society to have official seal for use abroad

           (1)           This section applies to a registered society if—

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                  (a)                 it has a common seal; and

                  (b)                 its objects require or comprise the transaction of business in

foreign countries.

           (2)           The society may, if authorised by its registered rules, have an official

seal for use in any territory, district, or place elsewhere than in the

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United Kingdom.

           (3)           An “official seal” is a facsimile of the society’s common seal with the

addition on its face of the name of every territory, district or place

where it is to be used.

       29F            Effect of use of official seal

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The official seal of a registered society when duly affixed to a document

has the same effect as the society’s common seal.

       29G            Authorisation of use of official seal

           (1)           If a registered society has an official seal, it may authorise any person

appointed for the purpose as respects any territory, district or place

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appearing on the face of that seal to affix it to any deed or other

document to which the society is party there.

           (2)           An authorisation for the purposes of subsection (1) of this section must

be given—

 

 

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                  (a)                 in the case of a society with its registered office in Scotland, by

writing subscribed in accordance with the Requirements of

Writing (Scotland) Act 1995; and

                  (b)                 in any other case, by writing under the society’s common seal.

           (3)           As between the society and a person dealing with such an agent, the

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agent’s authority continues—

                  (a)                 if a period is mentioned in the authorisation, during that period;

or

                  (b)                 if no period is there mentioned, until notice of the revocation or

determination of the agent’s authority has been given to the

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person dealing with him.

           (4)           The person affixing the official seal shall certify in writing on the deed

or other instrument to which the seal is affixed the date on which and

the place at which it is affixed.”

     (2)    In section 3 of the 1965 Act (registration to effect incorporation of society), omit

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“a common seal and with”.

     (3)    In subsection (6) of section 5 of the 1965 Act (registered name of society) omit

“engraven in legible characters on its seal and”.

     (4)    In subsection (7) of that section—

           (a)           omit paragraph (a); and

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           (b)           in paragraph (b) for “that name” substitute “the society’s registered

name”.

     (5)    Omit section 36 of the 1965 Act (provision about the execution of documents by

societies in Scotland which has been superseded and repealed there but which

remains in force elsewhere).

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     (6)    In section 76(2) of the 1965 Act (provisions which apply to Northern Ireland

societies that have recorded their rules with the Financial Services Authority),

for “26 to” substitute “26 to 29, 29B to 29D,”.

     (7)    For paragraph 13 of Schedule 1 to the 1965 Act substitute—

        “13                If the society is to have a common seal, provision for its custody and

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use.”

     (8)    In section 91 of the Land Registration Act 2002 (c. 9) (formalities in relation to

electronic dispositions) after subsection (9) insert—

           “(9A)              If subsection (3) of section 29C of the Industrial and Provident Societies

Act 1965 (execution of documents) applies to a document because of

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subsection (4) above, subsection (5) of that section (presumption of due

execution) shall have effect in relation to the document with the

substitution of “authenticated” for “signed”.”

     (9)    The Schedule to this Act (which contains repeals made as a result of this

section) shall have effect.

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 6     Interpretation

In this Act “the 1965 Act” means the Industrial and Provident Societies Act

1965 (c. 12).

 

 

 
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