Co-op / Industrial Provident Society
Co-operatives have a long and illustrious history. The first co-op was a weaver’s society formed in 1769, the first co-op shop was opened by Robert Owen at New Lanark in 1810 and the number of cooperative societies has grown from that small beginning into one of the largest democratically managed grouping in the country.
An Industrial Provident Society is controlled by its members. Members each have one vote, they elect board members at the AGM, vote on resolutions including voting on profit distribution and can change the rules of the society.
An Industrial and Provident Society has all the freedom and flexibility to trade of a company. Societies are limited by shares but these shares are always at face value, can be withdrawable (i.e. the Society can buy them back) and withdrawable shares have exemptions from the Financial Services and Markets Act 2000 and are therefore suitable for a small community share issue (under £500k). There is no statutory right to proxy voting for members in societies and changes in share ownership are updated once a year in an annual return. Regulation of social purpose in a Society is mainly regulation of changes to the rules by the regulator rather than of activity.
An IPS is an incorporated body with limited liability under the Industrial and Provident Societies Acts 1965-2002 and the Co-operative and Community Benefit Societies Act 2003 and is registered with the Financial Conduct Authority (FCA).
IPS’s are limited by shares, but these are different from company shares – they do not gain in face value and can be bought back by the IPS. One member, one vote always applies, no matter what a member’s shareholding (which can be up to a legal maximum of £20,000 for withdrawable shares). IPS shares provide equity which the society can use both for raising investment and securing additional loan finance.
A minimum of three members are required to form an IPS. IPS rules are usually shorter and easier to follow than a company’s. IPS’s are more expensive to register, but subsequent paperwork required by the FCA is less than for a company. IPS legislation was brought in specifically for the needs of co-operatives and social benefit organisations.
Because the FCA has a positive brief to check the rules of any new society to see if they comply with the legislation, registration of a non-model set of rules can be a long drawn out process. Most IPS’s therefore tend to register with a model set of rules with very few amendments
Green Energy Mull is an Industrial Provident Society (IPS) setup for the benefit of the community, often called a Bencom. You can inspect the letter and certificate from the Financial Conduct Authority confirming registration of Green Energy Mull and ; FCA Registration GEM Registration Certificate.
The rules of Green Energy Mull as set out by the Industrial Provident Society definitions can be found here; Green Energy Mull Rules