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The Community Shares Handbook
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2.2.7 Different member constituencies, voting rights and representation (weighted voting)

Societies are fundamentally democratic organisations. They differ from companies, which are based on the concept of one share one vote, meaning that those with the greatest capital investment have the ability to determine the company’s direction.  

Generally, society governance is based on the key principle of voluntary and open membership and an equality of participation in which all members have an equal stake in the governance that flows from their equal support for the society’s objects, regardless of their ability to invest in the society’s capital.  As a result, the starting point for a society voting practice is one member one vote, with each vote having an equal weighting in all decisions.  

In certain circumstances, a society may wish to amend its rules to define certain constituencies of members, with different voting rights and differentials, which can have a greater or lesser ability to direct the society's affairs. 

On principle, these approaches may be used on the basis that: 

  1. They are proportionate and commensurate with the society’s founding objects and ensure that their definitions of community and/or member benefit are better met and;
  2. They do not give more control of the society to members solely on the basis of their position as investors/providers of capital. 

Available mechanisms include (N.B. these examples are not exhaustive): 

  • Weighted voting arrangements (e.g. a Community Anchor holds one share which is weighted at 26% of the vote on certain resolutions, some resolutions require a 75% majority and so such arrangements may affect the results of such decisions);
  • Restrictions on voting by specific constituencies of members on certain resolutions (e.g. where the votes of user members are weighted compared to non-users, i.e. investors);
  • Providing reserved positions on the Board of the society for specific constituencies of members elected by the total membership or by specific constituencies e.g. reserved positions for user members, specific employees etc.);
  • Quorum for general meetings requiring a majority of a specific constituency of members present (e.g. at least a certain number of community members need to be present for a quorum to be reached). 

All of the above are subject to the legal requirements that are stipulated in the Co-operative and Community Benefit Societies Act 2014.  

Resolutions with specific statutory requirements  

The Act stipulates that certain types of resolution have specific statutory requirements, for example: 

  • Votes on the Audit Exemption
  • Votes on amalgamations, transfers of engagement and conversions. 

However, on the above, it is still possible to state in the rules that only certain constituencies of membership are eligible to vote on these resolutions.  

Dissolution 

On votes on dissolution all members must be eligible to vote, and no weighted voting is permitted. 

FCA approval

It should be noted that that the Financial Conduct Authority (the Registrar) may ask more questions and require additional confirmation re: fairness and transparency, and may not approve a society’s governing document that includes provisions for weighted voting. The FCA will scrutinise these rules to check that the society will still achieve community benefit or member benefit in the case of a co-operative.