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Co-operatives and elections

Board elections and the law

A lack of legislation

There is no legislation that specifically governs elections to the board in a co-operative.

The Co-operative and Community Benefit Societies Act 2014 (“the Act”) requires that the rules of a registered society must contain:

“The method of holding meetings, the scale and right of voting, and the method of making, altering or rescinding rules” and also:

“The appointment and removal of a committee (by whatever name) and of managers or other officers and their respective powers and remuneration.”

The Act does not, however, specify any detailed requirements in relation to any of the above.

The Financial Conduct Authority (FCA), in its capacity as the registrar of mutual societies, has produced guidance on the registration function which includes how it decides what constitutes a “bona fide co-operative” for the purposes of the Act.

The guidance notes, at section 4.10, that a co-operative must be “democratically controlled”. The FCA states that it expects to be able to “verify and validate” that democratic control exists through the rules and governance arrangements of a co-operative society, along with statements about how it will operate. It goes on to acknowledge that there are various types of co-operative, and notes that the “guidance is not exhaustive”.

Flexibility for elections

Legally, therefore, there is a great deal of flexibility around how co-operatives that are societies carry out any election process – though there are some important principles and constraints which are noted in the guidance below.

Where a co-operative is registered as a company (including a community interest company) then there will be no external regulatory scrutiny of any election processes.

A co-operative's constitution

The starting point for understanding what any co-operative must do in relation to elections will be its constitution (in a registered society, the rules, and in a company, the articles of association).

The constitution will normally specify the basic process which the co-operative must follow, though the level of detail varies significantly. The constitution must always be followed, otherwise the co-operative will be acting outside of its powers.