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On 1 August 2014 – It’s goodbye to the Industrial and Provident Society
Trowers Public Insight

On 1 August 2014 – It’s goodbye to the Industrial and Provident Society

From 1 August 2014 Industrial and Provident Societies will become either co-operative societies or community benefit societies.

This may be of real interest to local authorities.  Not only do IPSs change to Community Benefit Societies or  Co-Operative Societies the new entities unlike IPSs can enter into administration.   If you have security in connection with  transactions involving an IPS (excluding Registered Providers) you should check its terms.

Other reforms

In 2012, the Government announced that it was proposing a number of key reforms to the Industrial and Provident Society legislation and last week Parliament passed secondary legislation to bring into force Sections 1 and 3 of the Co-operative and Community Benefit Societies and Credit Unions Act 2010 Act.  Section 1 is the change of name described above and comes into force on 1 August 2014.

Section 3 means that the Company Directors Disqualification Act 1986 will apply to board members of societies as it currently does for companies. This will enable directors found guilty of offences relating to the mismanagement of a society to be banned from holding office at another society. This comes into force from 1 April 2014.   The Government is also in the process of enacting secondary legislation, coming into force 1 April 2014, on the following changes:

  • raising the limit on the amount of withdrawable share capital that a society may hold;
  • applying the provisions of the Insolvency Act 1986 for company voluntary arrangements and administration to societies. Currently, it is proposed that societies which are registered providers of social housing will be excluded from the scope of the power but this could be significant for non registered provider subsidiaries in groups, particularly if they have significant borrowings;
  • applying Part 14 of the Companies Act 1985 relating to investigations into societies. This proposal will give the FCA additional powers to investigate societies should their behaviour be deemed improper or unlawful. The Government is aiming to create a level playing field with companies and is hoping to encourage confidence in the industrial and provident society form; and
  • allowing for the electronic submission of registration documents.

The next big thing in the industrial and provident society world is the Co-operative and Community Benefit Societies Consolidation Bill. This is still making its way through Parliament and is intended that it will come into force on 1 August 2014. We will continue to monitor the legislation process and will update and report back as appropriate.
 

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