2.2 Share capital in societies
Co-operative and community benefit societies can issue shares that are transferable or non-transferable, and withdrawable or non-withdrawable. For the purposes of this Handbook, non-withdrawable, non-transferable shares are referred to as membership shares. Community shares are withdrawable, non-transferable shares in a society with a voluntary or statutory asset lock. Transferable shares, be they withdrawable or non-withdrawable, are outside the scope of the Community Shares Unit for the reasons explained in Section 2.2.3. The Charity Commission for England and Wales and the Office of the Scottish Charity Regulator have accepted that a charitable community benefit society can issue withdrawable shares, but it has not considered whether it would be acceptable for such a society to issue shares that were transferable. Currently, there is no legal provision for societies to issue redeemable shares, which are unique to company law.
In addition to there being different types of shares, a society can issue more than one class of share of the same type, with different rights attached to each class, clearly stated in the rules of the society. Membership and voting rights are normally attached to share capital, although some societies with multiple classes of shares, issue shares that do not carry voting rights. This is explored in more detail in Section 2.2.6.
Regardless of which type of shares a society issues, it is normal for all three types of society to practice member democracy, based on the principle of one-member-one-vote, rather than one-share-one-vote, which is the default position of company law. The Co-operative and Community Benefit Societies Act 2014 has nothing to say about how voting rights are allocated in a society, although the new FCA registration guidance makes it clear that it expects all types of society to adopt the principle of one-member-one-vote, as a condition of registration.