Industrial & Provident Society Forms (Bona Fide & BenComm)

An Industrial & Provident Society (IPS) can take one of two distinct forms, namely that of a Bona Fide Co-operative or a Society for the Benefit of the Community (BenComm).

A Society may register as an IPS if it:

(1) carries on any industry, business or trade, whether retail or wholesale AND

(2) is either one of the two aforementioned forms.

But what is the difference between a Bona Fide Co-operative and the BenComm?

Bona Fide Co-operative

A Bona Fide Co-operative is an incorporated society which acts for the mutual benefit of all of its members.

Whilst there is no statutory definition of a Bona Fide Co-operative certain criteria has been laid down defining this form:

(1) Members' benefits in the main stem from their participation in the business of the society

(2) Control of the society is vested in members equally, through the principle of 'one person, one vote'

(3) return on capital does not exceed a rate necessary to retain sufficient capital to carry out the society's objectives

(4) Any profits after payment of interest will, if distributable amongst the members, be distributed in proportion to the extent to which members have traded with or taken part in the society's business

(5) Membership will not be restricted artificially with the object of increasing the value of proprietary rights and interests.

The criteria is designed to ensure that members interest in the society is not based solely on the amount of capital they have put into the organisation.

Example: members of a social club serving current and former transport workers. The members interest in the club is a genuine community one shared with fellow and former work colleagues. A person does not join with the sole aim of obtaining some financial return, although that may occur in some circumstances.

Indeed, the legislation governing IPS states that a Co-operative society does not include a society which carries on, or intends to carry on, business with the object of making profits mainly for the payment of interest, dividends or bonuses on money invested or deposited with, or lent to, the society or any other person. Such co-operative entities would likely incorporate as a company instead.

Society for the Benefit of the Community (BenComm)

Unlike the Bona Fide form, a BenComm will act for the benefit of the community rather than just its members.

Profits will not be distributed among members but will be returned to the community. A BenComm is one of the many legal structures employed by Social Enterprises. A BenComm may also be a charity although this will depend on its constitution and objectives.

Special reasons must be given as to why the society should not be registered as a company. Its rules should also prohibit the distribution of assets among members.

Example: Housing Associations are often registered as BenComms as they serve the interests of the wider community rather than the narrow spectrum of their membership.



Both forms must adhere to the general conditions relating to societies as governed by the Industrial & Provident Societies Act (NI) 1969 (The Co-Operative and Community Benefit Societies Act 1965 in England & Wales - formerly referred to as Industrial & Provident Societies Act 1965)