2.6.1 Converting a company into a society
A company can, by special resolution, convert into a registered society. Additional requirements apply to community interest companies (see Section 2.6.2).
A special resolution is a resolution passed by a majority of at least three-quarters of the voting shares, if it is a company limited by shares, or three-quarters of the voting members, if it is a company limited by guarantee. A copy of this special resolution, signed by the secretary of the company and the chair of the meeting at which the resolution was approved, must accompany the application to convert into a society.
A company can re-register either as a co-operative or a community benefit society, unless the company is a registered charity, in which case it can only convert into a charitable community benefit society, subject to the consent of the charity regulator for the nation in which the charity is located (see Section 2.6.3). The rules of the new society must be signed by the secretary and three members of the company.
If the enterprise is a company limited by shares, then care has to be taken to ensure that the value of withdrawable shares held by any individual member in the new society will not exceed £100,000, the maximum legally permissible (£20,000 in Northern Ireland). If a member of the company holds in excess of £100,000 in paid-up share capital, the excess share capital should be designated as transferable share capital in the society, and there must be provision in the rules for the society to issue this type of share capital. Alternatively, the company may decide to redeem the shares of members whose shareholdings exceed £100,000, providing that it has the reserves to do so, or it might ask members to convert any excess shareholdings into a loan agreement. These agreements would need to be in place before the conversion was made.
If the company is a company limited by guarantee, then provision must be made for the members of the company to become members of the society by purchasing the minimum amount of share capital stated in its rules. This also applies to a company limited by guarantee that is a registered charity, which must first obtain the consent of the charity regulator in the nation where it is located (see Section 2.6.3).