Are your co‑operative’s rules up to date? Five good reasons to review them…

First things first: what are a co‑operative’s rules? 

They’re another way of referring to a governing document. They set out how the organisation is run, including its purpose, membership, board structure and decision‑making processes. The terminology depends on the legal structure: 

• Co‑operative and community benefit societies have rules. 
• Co‑operatives registered as companies have articles of association. 

Both are types of governing document – and both can be reviewed and amended. For simplicity, let’s use ‘rules’ to refer to both.  

Why is it important for co‑operatives to review their rules? 

Because co‑ops don’t stand still – and neither should their rules. Legislation changes, best practice evolves and a co‑operative’s needs may be very different from when it first started out. A regular review helps ensure its rules remain legally compliant and support what it’s trying to achieve. It’s not necessarily about making big changes. Sometimes a handful of small amendments can make a huge difference. 

What are the most common reasons for co‑ops to amend their rules? 

1. To keep up with legislation and good practice 
Some societies may still be working with rules that pre-date the Co‑operative and Community Benefit Societies Act 2014. While this doesn’t automatically invalidate the rules, provisions that conflict with current law may no longer be enforceable. Best practice also evolves, so reviewing rules helps bring provisions up to date.  

2. To make sure the board can operate effectively 
Imagine a co‑operative whose rules require a minimum of 12 directors but is struggling to find six. Or perhaps its meeting rules make it difficult to be quorate. Amending rules gives a co‑op the flexibility it needs while maintaining oversight and member control. 

3. To save time and money 
Outdated rules can create administrative burdens, unnecessary costs and overly complicated processes. Reviewing a governing document can identify and remove these requirements, making the co‑operative more efficient and freeing up resources. 

4. To support growth and new opportunities 
Perhaps a co‑operative wants to raise investment through a community share offer, or introduce new membership categories, but the rules don’t allow it. Amending them can make these changes possible and create governance that supports future plans. 

5. To reflect the co‑operative’s evolving purpose 
A co‑operative’s objects – the section of its rules setting out what it was established to do – may no longer reflect its activities. For example, a co‑op providing pre‑school education that wants to expand into running after‑school sports clubs must amend its objects to do so.

Do you have examples of how rule amendments help co‑operatives? 

We’ve helped societies whose outdated rules required them to carry out a full annual audit, even though they qualified for an exemption. Full audits can be costly and time‑consuming. By helping these societies amend their rules, we’ve enabled them to take advantage of exemptions where the legal requirements are met, removing an unnecessary burden and potentially saving them significant time and money. 

What are the risks of not keeping rules up to date? 

Outdated rules can make life harder. A co‑operative might struggle to recruit enough directors, incur unnecessary costs or find its rules prevent it from pursuing new opportunities. Decision‑making may also be hindered if, for example, the organisation is not quorate.  

More seriously, major decisions – such as raising capital, issuing shares or appointing directors – could be challenged if they conflict with the co‑operative’s rules. In some circumstances, this could result in a decision or transaction being declared legally void, or potential personal liability for directors. 

How often should co‑operatives review their rules? 

Every three years, or whenever they undergo a significant change. And if a co‑operative hasn’t looked at its rules for decades, now’s a good time! A review doesn’t automatically mean amendments are needed. It might just confirm that the rules are still doing their job.  

How can Co‑operatives UK help co-ops get their rules up to date? 

Our Governing Document Review service helps co‑operatives keep their rules relevant, legally compliant and fit for purpose. Whether it’s a specific amendment or checking rules that haven’t been reviewed for years, we can review your governing document, identify where changes are needed and help navigate the amendment process.  

You don’t have to know exactly what needs changing before getting in touch. That’s what we’re here for. Email the team at [email protected] and we’ll help you work it out.