2.7 Amalgamations and transfers of engagements
The FCA’s registration guidance provides detailed guidance on amalgamations and the transfer of engagements between societies and other legal entities. This guidance is summarised in this section. However, any society embarking on this course of action should follow the FCA’s guidance on these matters, and not rely on the summary presented here.
An amalgamation is the merger of one society with another society or company, to form a new legal entity. A transfer of engagements involves the transfer of a society’s business to another society, or to a company. Sections 109-13 of the Co-operative and Community Benefit Societies Act 2014 make provision for both of these actions.
Any two or more societies may be amalgamated to form one new society by means of each society passing a special resolution, supported by at least a two-thirds majority of its members at a general meeting, and subsequently confirmed by a simple majority at a second general meeting held between 14 days and one month after the first meeting.
Members of each amalgamating society will become members of the new society and hold shares in that society in place of the shares they held in the separate societies before amalgamation. The property of each society will be vested in the new society without the need for any form of conveyance. The special resolutions must be registered and approved with the FCA. In the case of a transfer of engagements from one society to another society, members of the transferring society will be made members and shareholders of the other society and the transferring society will cease to exist.
In the case of a society amalgamating with or transferring its engagements to a company, the special resolution proposing this change must secure a three-quarters majority in favour, with a least half of all eligible members participating in the vote. The special resolution must make provision for the society’s members’ share capital and voting rights in the company that emerges from this process. The special resolution must be confirmed by a simple majority vote at a second general meeting held between 14 days and one month after the first meeting. The society will cease to exist when the amalgamation or transfer is completed.
Prescribed community benefit societies and charitable community benefit societies can amalgamate or transfer their engagements to other prescribed community benefit societies and charitable community benefit societies respectively. They can also amalgamate or transfer their engagements to a registered charitable company.
Any society registered before 1 August 2014 that wishes to refer to itself as a specific type of society on its business stationery, must register a new society of this type and transfer its engagements to this new society.