A Private Members’ Bill has been introduced to Parliament which could help co-operative and community benefit societies to be a more powerful tool for people and planet.
Co-operatives UK supports the intent of this Bill. Our evidence shows that its provisions enjoy support in the sector and would have a very strong positive impact.
The Bill has been introduced by Anna McMorrin MP, with support from consultancy Mutuo and Co-operatives UK.
The Co-operative and Community Benefit Societies (Environmentally Sustainable Investment) Bill (also being called the 'Green Shares Bill') would enable government to use secondary legislation to:
- give co-operative societies the option of legally preventing their capital surplus (what is left after share capital is repaid) being distributed among members upon dissolution
- give co-operative societies the option of legally preventing their future conversion to a company
- provide a new equity instrument that is repayable at the option of the society rather than withdrawable at the option of the shareholder
Anna McMorrin MP is very keen for the Bill to support environmentally sustainable investment but the exact provisions in this regard are yet to be confirmed.
Note: The Bill will not actually introduce these changes. It gives government the powers it needs to do the detailed work via secondary legislation, which requires much less Parliamentary and departmental time.
We have had an opportunity to contribute to this Bill. We've done so on the basis of what our members have told us in consultation. Our priority has been to give co-operative societies the option of adopting a statutory lock that prevents the distribution of capital surplus among members on dissolution.
Q: What chance does this Bill have of becoming law?
Only a minority of Private Members' Bills become law, but this Bill has a better chance than most because Anna McMorrin MP’s name was drawn out in a special ballot, which means her Bill is guaranteed crucial time on the Parliamentary agenda.
So the Bill will be debated. But once that happens MPs have to vote in favor it proceeding to committee stage.
Getting government support for the Bill will be critical if the Bill is to become law. We have already had detailed discussions with HM Treasury about some of the legislative changes this Bill works towards.
Government and MPs will need to be convinced that the Bill has the support of the sector and that it will have a strong positive impact for co-ops, people and planet.
Q: What are the benefits of the Bill?
The Bill will make it easier for government to change the law, so that:
- co-operative societies can legally guarantee that their common capital is non-distributable, which elsewhere has proven instrumental in encouraging the endeavor, participation, support and allocation of capital needed for co-ops to thrive
- co-operative societies can ensure their co-operative purpose, ownership and control is legally locked in, blocking off a common demutualisation route
- societies have a powerful new option for raising the equity they need from members and mission-aligned investors, which evidence suggests is often vital if co-operatives are to make a significant impact in the world
In our conversations with partners and government, we have stressed the importance of ensuring the introduction of 'repayable shares' does not have unintended negative consequences for the utility of withdrawable shares. We are optimistic this can be done.
Q: Who is behind this Bill?
Anna McMorrin MP has decided to adopt this as her Private Members’ Bill with the support of Mutuo and Co-operatives UK.
Co-operatives UK and Mutuo have been working together to agree legislative objectives of a Bill for more than a year.
In prioritizing non-distributable capital surplus for co-operative societies, Co-operatives UK is acting on the outcome of our consultation with members.
Q: How can I find out more?
Our policy officer can tell you more about this Bill and the legislative changes it works towards:
t: 0161 214 1775