Renewable Energy Co-Operatives

Barely a day goes by without renewable or green energy being highlighed in the media and as the world frantically seeks to exploit these forms of energy to satisfy its insatiable appetite the question as to who should own the natural resources and the financial benefits of their exploitation come increasingly to the fore.

Many community organisations have successfully engaged in renewal projects across the UK and Ireland with one of the most obvious examples being that of Baywind Energy Co-Operative Ltd

The likes of Baywind have looked to the co-operative (Industrial & Provident Society) model when deciding upon a suitable legal structure which will deliver their stated ojectives.

A co-operative structure offers democratic control (one member/one vote) of the decision making process and involves the local community on a wider scale, putting them at the heart of the management of the enterprise. Doing this helps the local community buy into the concept from the outset which is important given the contentious nature of some renewable energy projects. Some people may argue for example against the erection of wind turbines but if those people are successfuly integrated into the project and see the economic, social and enviromental benefits produced for their community then they are less likely to oppose the enterprise before it has even become established.

The democratic control offered by the co-operative structure is further strengthened by the ability to raise much needed finances from the community by issuing shares. Those persons with shares may then see a financial return when profits are distributed, thus supporting the local economy and rural regeneration.

An asset lock may also be put in place to protect the assets and ensure that they are retained for the benefit of the community, although importantly it would be the choice of the community as to whether they wished to ensure this.

The co-operative model offers the best legal vehicle through which a community may engage in a renewable energy project.

Company Name Disputes

Social enterprises, despite their often altruistic motives, are still firmly immersed in the commercial world and all the business related themes that entails. Consequently, social enterprises (and for that matter any commercial enterprise) should view the protection of their intellectual property as an integral part of the business process.

The ownership of ideas, products and services will often form part of the goodwill enjoyed by a company. That goodwill generates business which in turn helps enterprises to create profit and/or meet their social objectives.

One of the most important and obvious examples of the way in which intellectual property can generate goodwill is through the company name. The name affords the company a highly visible means of identification through which the enterprise can build a reputation and brand; vital components for any successful commercial entity.

Thus it is understandable given the importance of the name that disputes can, and often do arise between companies over ownership. The Company Act 2006 offers some legislative remedy to those disputes under the guise of section 69.

Under S69 (1) A person ("the applicant") may object to a company name on the ground that:

(a) the name is the same as a name associated with the applicant in which he has goodwill.

(b) that the name is sufficiently similar to such a name that its use within the UK would be likely to mislead by suggesting a connection between the company and the applicant.

If the applicant can satisfy one of the above then it is up to the other party ("the respondent") to put forward one of the accepted grounds of defence as laid out in S69(4) of the Act.

1. The first defence that may be relied on is if the name was registered by the respondent before the commencement of the activities on which the applicant relies to show goodwill. Therefore it would be prudent for any enterprise contemplating an objection of a company name to check when the other party first registered the name with Company House. (Sub-section 4(a))

This defence does not apply where the company name was registered in anticipation of goodwill or reputation being established by another company. An example would be where someone knows that a merger is about to take place between two companies and so registers one or more variations of the name that the newly formed commercial entity is likely to require. The registration(s) would be opportunistic in that the registration holder’s purpose in obtaining the registration was to cash in on the other entity’s fame. This is known as an opportunistic registration.

2. The second defence arises if the (respondent) company is operating under the name, or is proposing to do so and has incurred substantial start-up costs in preparation; or was formerly operating under that name and is now dormant (subsection 4(b))

This defence would not be available if the name was registered but the company never conducted business under that company title.

Like in the first defence if the applicant can prove that it was a opportunistic registration this will trump a successful defence under 4(b)

3. The respondent could also argue that the name was registered in the ordinary course of a company formation business and the company name is available for sale to the applicant on the standard terms of that business. (sub-section 4(c))

Again an opportunistic registration will defeat this defence whatever its merits.

4. The respondent can state that the name was adopted in good faith; that it was not carried out with some conspiracy in mind but that the similarities are mere coincidence and that the respondent's motivation and knowledge are beyond reproach. (sub-section 4 (d))

5. The last potential defence under S69 is where the interests of the applicant are not adversely affected to any significant extent by the fact that that the name is the same or is similar. (sub-section 4 (e))

Consequently a goodwill or reputation of little or no commercial significance would not be sufficient and would allow the respondent to mount a successful defence under this subsection.

In effect section 69 only afford protection to the applicant if (s)he can prove that the registration of another company name was opportunistic in nature and/or that it adversely affected the applicant's business.

The first port of call if you do feel aggrieved over another company name should be Company House. If you believe that an opportunistic registration has taken place then you should contact the Company Name Adjudicator.

Both organisations should be able to offer initial guidance and support.

Public Procurement Action Plan (Northern Ireland)

The Department of Finance & Personnel have recently released their response to the Assembly's Inquiry into public procurement in Northern Ireland. The Response outlines how the Department will address many of the reccommendation made by the Assembly Committee in it's report.

New Legal Tool (Get Legal)

The NCVO has introduced a new on-line tool which helps prospective charities, social enterprises and co-operatives to sift through the host of different legal structures available and to pick the one that best suits their respective needs and objectives.

Many organisation face the issue of choosing a legal structure with some trepidation so this tool will hopefully be of considerable benefit.

Rate relief for Charities in Northern Ireland

Rate Relief

Charities typically enjoy full rate relief on property they own, resulting in substantial savings for the charity.

The property however must be must be occupied and used by the charity for solely charitable purposes. Such charitable purposes may include the 'advancement of education' or the 'relief of poverty'.

Confusion can arise where part of the property in question is used for non-charitable purposes. Land & Property Services will apportion the rate relief based on the proportion of the premises used for the respective charitable & non-charitable objectives.

Example: A charity shop does not have to pay rates if it sells only donated goods but if it was to sell goods purchased from a wholesaler then the value of relief is apportioned between the two uses.

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)

Intellectual Property and Social Enterprises

Intellectual property is an integral aspect of any business and social enterprises are no different in this regard. Yet this often confusing legal concept can cause headaches for even the most savvy business as they attempt to grapple with the rights of ownership of their ideas, products or services.

So what is 'intellectual property' and how does it impact on social enterprises?

Copyright

Copyright is the protection of an idea which has been expressed in some tangible form. In general terms this can include paintings, music lyrics, novels, photographs architecture etc.

When a social enterprise creates an original piece of work then that work is automatically copyrighted. This work may include a operational manual for the running of the enterprise or an article in a magazine detailing the business model or the photographs found on the enterprises website.

A copyrighted work cannot be reproduced, altered or distributed by another party without the creators permission. To do so creates an infringement of the copyright.

There are important commercial implications for a social enterprise in protecting any copyrighted work. By protecting the integrity of the works, they then can then be licensed transferred or assigned by the social enterprise for a fee which would generate income for the business. An example of this in action would include the allowing of a social franchisee to use/adapt the social franchisors operations manual.

Patents

A patent can be defined as a Government licence giving an individual or body the sole right to make, use or sell an invention for a set period.

Whilst not giving automatic rights like that found in copyright it does provide protection against any other parties copying, manufacturing or selling your invention without your permission as long as the patent is registered with the relevant authorities.

Again the commercial opportunities enjoyed by any enterprise which holds a patented invention are significant. The patent could be sold or licensed for a fee or the enterprise could even use the invention as part of its business activities to increase profits.

Trademarks

A trademark can be defined as a distinctive symbol or word(s), legally registered or established by use, as representing a company, product or person.

Many of the most common examples of trademarks can be found in the logos of major companies: the Nike tick or the Adidas stripes.

The protection of trademarks are vitally important as they represent the very essence of an enterprise. If another party was to set up a business using your company name, logo and other trademarks it could pass itself off as another part of the original business. It would in effect be exploiting the goodwill which that business has built up over the years and which might otherwise be directed towards the original enterprise.