Reform of Industrial & Provident Societies

Much has been made of the proposed reforms affecting the Credit Union movement in Northern Ireland (quite understandable given its size) but to date discussion has been relatively muted regarding reform of co-operatives and community benefit societies (which have a significant presence among the housing and agricultural sectors here). This is likely to change with the publication later in the year of a joint Treasury/DETI consultation on Industrial & Provident Society (IPS) reform.

Meanwhile, two pieces of legislation have been introduced to give effect to the reform of Industrial & Provident Societies in Britain. With any reforms in Northern Ireland likely to mirror those changes across the water it is worth taking a closer look at the two legislative documents.

1. Legislative Reform (Industrial & provident Societies and Credit Unions) Order 2010

Some of the key reforms include:

- An end to the minimum age restrictions for membership of a society.
- Reducing the age limit to become an officer to 16
- Removal of the £20,000 limit on any members maximum shareholding. The restriction has removed the limit for non-withdrawable shares. Withdrawable shares are still subject to the maximum limit.
- allowing a society to choose its own year end date
-facilitating the easier dissolution of societies by easing the voting requirements to dissolve.

2. Co-operative And Community Benefit Societies And Credit Unions Act 2010

Some of the key reforms include:

-renaming the previously titled Industrial & provident Society Acts to the Co-operative and Community Benefit Societies Acts (In effect a brand change).
- requiring all new Industrial & Provident Societies to be registered as either a co-operative or community benefit society.
- giving HM Treasury the power to apply to IPS, with appropriate modifications, company law on investigation of companies, company names and dissolution and restoration to the register.

The reforms in a Northern Ireland context:

The removal of the limit on non-withdrawable shares and the flexibility regarding year ends would be of benefit to any agricultural co-operative operating in Northern Ireland.

The removal of the limit would allow members of agricultural co-operatives to invest greater sums of money to expand the business and increase profitability. Agricultural Co-operatives would also be able to link their financial year end to the agricultural cycle which would make greater financial and commercial sense than the current arrangements.

With the name changes and increased Treasury powers to apply company law, the Government seeks to address concerns by bringing the Industrial & Provident Society format into the 21st century. It is hoped that these changes will add new vitality to a legal structure which has fallen in popularity in recent years.