Law Commission issues consultation document on Co-operatives and Community Benefit Societies Act 2014

The Law Commission has published its 219 pages consultation document on the review of the Co-operative and Community Benefit Societies Act 2014.

The Act will be required reading for directors of co-operatives and community benefit societies since it proposes reforms to the legal requirements of both sets of organisations and if they came into force would require societies to conform to any new proposals which are accepted.  The consultation is open until 10 December 2024. 

The consultation document can be found on the Law Commission’s website here. 

The Law Commission will be hosting an online event to present a summary of its reform proposals, followed by questions and discussion.  This will take place at 10.30 on Tuesday 1 October 2024 and free tickets can be obtained here.  Questions can be sent in advance to coops@lawcommission.gov.uk.

The consultation document recommends the necessity to update society law and incorporate some of the provisions which are in the Companies Act 2006.

The consultation document follows the provisions of the 1938 Prevention of Fraud Investment Act by way of recommending that there should continue to be definitions of a co-operative and a community benefit society, but which are more precise and reduce the discretion of the registrar of societies, currently the Financial Conduct Authority. 

It is important to remember that the definitions which were introduced in 1938 were intended to prevent what was called share pushing at that time.  In other words, fraudulent financial promotions.  Since then, the Financial Conduct Authority has been established with very detailed provisions relating to financial promotions.  Societies may therefore wish to question whether having detailed legal requirements for societies to follow is in their best interests or should there be flexibility as existed before that Act with financial promotion regulations introduced specifically for societies to deal with fraudulent financial promotions.