Consultation outcome: Getting a better deal for societies

Consultation summary

In total 38 different members participated in the consultation. We received 30 responses to the online poll and nine written submissions. Our respondents provided valuable diversity in terms of co-operative practice, experience and aspiration. Respondents included leading consumer retail co-operatives, workers’ co-operatives, community co-operatives, housing co-operatives and co-operative development practitioners. Below is a summary of the results.

Statutory common capital

The law should be changed to give co-operative societies the option of adopting either, or both, of the following 'statutory common capital' provisions:

• Non-distributable assets
• Indivisible reserves

We will work with specialists to draft 'non-distributable assets' provisions, to be inserted into the Co-operative and Community Benefit Societies Act at the earliest opportunity. 

More work is needed to understand the requirements for a statutory indivisible reserve. We will work with experts and members to further develop the design of statutory indivisible reserves, with a view to drafting legislation in the near future.

Other legislative action 

We believe we are in a position to proceed to specialist drafting of legislation and to seeking government or parliamentarian action to enact the following:

• Rules for distributable residual assets - a requirement for co-operative societies to clearly state in their rules how distributable residual assets are to be distributed among members
• Community benefit society asset lock - allowing community benefit societies with a statutory community benefit asset lock to adopt a stronger charitable asset lock

With the following, we believe we are in a position to play a fully supportive role in the next project phase:

• Statutory indivisible reserves - We will work with experts and members to further develop the design of statutory indivisible reserves, with a view to drafting legislation in the near future
• Repaybale shares - We will support the work of experts and members to develop the design of a new repayable equity instrument for societies  
• Statutory purpose lock - We will work with experts and members to develop the design of a statutory purpose lock for co-operative societies and then consult the sector

With the following, we believe more consultation with our members is needed before we can take a position:

• Project to adapt features of company law for society law
• Measures to improve the transparency of membership 
• Statutory solvency statement

Non-legislative action

In June 2018 government promised to explore non-legislative options to improve ‘regulatory clarity’ for societies. We now know that this commitment will be fulfilled through a Social Sector Forum, promised in the Civil Society Strategy, and that Co-operatives UK is down to play a leading role for societies. We’ll be using the responses we received from this consultation to inform our priorities for this forum. 

Our priorities for the Social Sector Forum, drawn from this consultation are:

• Registrar policy and process
• Making Tax Digital for societies
• Accounting standards 
• Supporting sector-led initiatives on standards for societies
• Societies in government procurement

Next steps

Non-legislative options

We are waiting for government to provide more details about its new Social Sector Forum and will prepare a priorities paper in advance of its first meeting.

Legislative options

We believe we are in a position to proceed to drafting legislation and seeking government or parliamentarian action on the below:

• We will work with specialists to draft 'non-distributable assets' provisions, to be inserted into the Co-operative and Community Benefit Societies Act at the earliest opportunity 
• We will work with specialists to draft an amendment to the Co-operative and Community Benefit Societies Act that requires co-operative societies to clearly state in their rules how distributable residual assets are to be distributed among members, to be enacted at the earliest opportunity  
• We will work with specialists to draft an amendment to the Co-operative and Community Benefit Societies Act that would allow community benefit societies with a statutory community benefit asset lock to adopt a stronger charitable asset lock, to be enacted at the earliest opportunity  

We believe we are in a position to play a fully supportive role in the next project phase for the below:

• We will work with experts and members to further develop the design of statutory indivisible reserves, with a view to drafting legislation in the near future
• We will support the work of experts and members to develop the design of a new repayable equity instrument for societies and then consult the sector
• We will work with experts and members to develop the design of a statutory purpose lock for co-operative societies and then consult the sector

We believe more consultation with our members is needed fro the below: 

• A project to adapt features of company law for society law
• Measures to improve the transparency of membership 
• A statutory solvency statement