One for the Law Nerds: New Draft SI's on IPS Reform

More detail is  now out to add to the July 2013 HMT Consultn IPS 07-09.13 document on Changes to IPS Law. The plan, you will recall, is to increase the limit on withdrawable share capital,  apply insolvency rescue procedures to societies, protect the register of members from vexatious applications for information, and beef up the FCA's investigation powers.

Now these three draft Statutory Instruments have been issued by HM Treasury to anyone who had asked for them. They are the planned legal instruments to bring about three of the changes dealt with in the July 2013 Consultation:

Copy of mutuals register order draft of 7 Aug 2013

Share Capital Increase SI final draft

Copy of Investigations Regulations draft 7 Aug 2013

Comments on the drafting of these SI's are welcome before the end of August (earlier than the Consultation deadline of 20th September) and should be sent to IPSconsultation@hmtreasury.gsi.gov.uk

The SI to implement the insolvency rescue procedures won't be out in draft form until September.

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IPS Reform in Ireland - Comment if you Know More

Chris Gordon was referred to me by the Legal team at Co-operatives UK with a query about fitting IPS reforms into current Irish Company Law reforms.

I've never really researched IPS Law in the Irish Republic, although I know it's based on the UK 1893 Act with some later amendments. I had also come across this consultation back in 2009: ROI IPS Consultation Paper (Final 2) 20.4.09.

However, a little internet research reveals that legislation is about to be brought to the Dail by the Department for Jobs Enterprise and Innovation. Here's the detail of what I found out plus some thoughts and info based on the UK experience.

At least in ROI, unlike the UK, the same Department deals with both IPS and Company Law. I see it's now called the Department of Jobs, Enterprise and Innovation (DJEI) and does cover both - but not in the same legislation.

Here, in the DJEI Action Plan for Jobs 2013 2nd Progress Report at page 84 there is a reference  IPS Law reform:

"Action 237:

Publish legislation aimed at easing the regulatory burden on co-operative societies and making it easier to run a co-operative as
an alternative form of enterprise organisation.

Q2 Measure:
Support the OPC in drafting of the Bill and subsequent publication. (DJEI, OPC)

Update: Delayed
The Department of Jobs, Enterprise and Innovation worked closely with
the Office of the Parliamentary Counsel in the drafting of the Friendly Societies and
Industrial and Provident Societies (Miscellaneous Provisions) Bill and the drafting was completed on July 2nd."

The company law reform is dealt with on page 66:

" Action 168:
Progress the very substantial reform of the Companies Acts, following publication of the Companies Bill in December 2012. This Bill will bring significant benefits to companies of all types throughout the country, and will be a key part of the Government’s drive to make Ireland the best small country in the world in which to do business.”

Q2 Measure:
Assist in completing Second Stage in the Dáil. (DJEI)
Update: Complete
The Second Stage reading of the Bill commenced on April 23rd 2013 and
was completed on
April 25th 2013. Committee Stage is expected to commence in the autumn."

So it looks as if separate legislation will be coming to the Dail on IPS law in due course. It is already drafted.

My limited knowledge of ROI IPS Law is that there is no test like our "bona fide co-op" or Bencom requirements for registration as they were introduced in the UK in 1939, after Irish Independence. I don't know what the decision was in the end about whether to import something similar in ROI, although the Consultation document seems to suggest deferring it unless there was a lot of pressure in favour of it.

I also have limited knowledge of ROI Company law, although the large amount of EU Harmonisation means some things are
bound to be the same as they are in the UK.

Here, the big problem has always been the failure to update IPS Law in line with desirable Company Law changes, while retaining the special co-op and bencom nature of the IPS. So what are the changes we have campaigned for and achieved on that over the years?

Most of them have been based on the idea that, as businesses competing in the market place with companies IPS's should have many of the same rules. Among changes to achieve that by catching up with later company law developments have been:

The Co-operative and Community Benefit Societies Act 2003 which dealt with
the technical processes of making contracts, the old ultra vires rule and issues around directors' powers to bind societies. Essentially, the Company Law provisions were applied to IPS's verbatim see sections 3
to 5 of the 2003 Act.

Then, using the power already provided by the Industrial and Provident Societies Act 2002, changes were made by regulations to bring the accounting exemptions for small societies more closely into line with those available to companies.

When the Co-operative and Community Benefit Societies and Credit Unions Act 2010 is implemented sections 3 and 4 will apply Company Director Disqualification rules to society directors and broadly bring the
investigation and inspection powers applied to IPS's in line with those applied to companies.

Perhaps most important of all, IPS's never benefited from the administration or company voluntary arrangement procedures available to rescue insolvent companies - they were first introduced in 1986. Now, 11 or 12 years after the power was conferred by section 255 of the Enterprise Act 2002, the government plans to apply them and is consulting on how to do that as well as on applying the Inspection and investigation regime from the Companies Act 2006.

Finally, a Consolidation Bill is drafted and will be consulted on in September and, Downing Street promises, passed before the 2015 general election.

Can anyone who knows more about the Irish plans and developments add comments to this post to keep us all up to date?

© Ian Snaith 2013 This work is licensed under the 
This work is licensed under a Creative Commons Attribution-ShareAlike 2.0 UK: England & Wales License.

International Programme for Community Leaders

Rory Ridley Duff writes:

"In my role as Course Leader for the MSc Co-operative and Social Enterprise Management at Sheffield Hallam University, I'm pleased to support - and participate in the delivery of - a new educational initiative organised by European colleagues.  The International Programme for Community Leaders brings together experts in social enterprise development from Social Enterprise Europe Ltd (French Office) and the Education & Solidarity Network (based in Paris).

I would be grateful if you could publicise this new initiative widely, through networks, blogs, newsletters and social media.

The programme has three phases:

·        A preparation phase, including on-line conferences (October 2013)
·        A three day residential in Paris, 25th-27th November 2013
·        A project development phase with the support of the delivery team (2014)

A course flyer, with costs, can be obtained from:

·        Geof Cox - Social Enterprise Europe Ltd - geof@socialenterprise.co.uk
·        Thierry Weishaupt - Education and Solidarity Network - t.weishaupt@mgen.fr

The programme is supported by MGEN, a French educational mutual.

Best wishes

Dr Rory Ridley-Duff
Sheffield Business School, Sheffield Hallam University"