Industrial and Provident Societies
These are incorporated bodies There are two distinct types of society covered by the Industrial and Provident Societies Acts of 1965 and 1978 – the Bona Fide Co-operative and the Community Benefit Society.
Features
- The governing document is the “rules”.
- The basic structure comprises membership and a committee of management.
- There must be at least three members.
- The organisation must carry out a trade or business.
- They are regulated by the Financial Services Authority.
A bona fide co-operative is established to benefit its members and therefore profits may be distributed to the members. It cannot therefore be a charity.
A Community Benefit Society, often referred to as a Ben Com, must benefit people or organisations “other than its own members”.
Profit distribution amongst members is not allowed, apart from limited interest on shares.
Membership is based on shareholding, which is capped at £20,000 per member.
It can be expensive and difficult to register.
Administrative requirements are simpler and less burdensome than those of a company.
Social enterprises have traditionally favoured the Community Benefit Society as a suitable legal structure which is attractive to ethical investors and which protects the founding principles and ethos of the business.