Following on from our blog and e-mail update on 5 August, the coming into force of the Co-operative and Community Benefit Societies Act 2014 (the "2014 Act") on 1 August implemented major changes for existing industrial and provident societies which were already registered under the Industrial and Provident Societies Act 1965 (the "1965 Act").
The 2014 Act is a consolidating act, which means that it has combined the provisions of a number of pieces of legislation into one Act. Accordingly, many of the provisions within the 2014 Act are in largely similar terms to legislative obligations which were already in force prior to 1 August.
In the name of change
The biggest change is to the designation of societies as a result of the 2014 Act repealing the 1965 Act in its entirety. Scottish Registered Social Landlords ("RSLs") registered under the 1965 Act as industrial and provident societies must now refer to themselves as 'registered societies'. Further, all formal designations must now refer to RSLs as being registered under the 2014 Act. This will mainly affect legal documentation but may also require amendments to marketing materials, letterheads and e-mail signatures where the words "industrial and provident society" appear or reference is made to the 1965 Act.
Guidance which has been published by the Financial Conduct Authority ("FCA") (the registration body for societies) confirms that the correct designation for registered societies is "[name of society] is a registered society under the Co-operative and Community Benefit Societies Act 2014". Any societies which are registered on or after 1 August will be known as either a 'co-operative society' or a 'community benefit society'. Whilst most RSLs meet the requirements to be classed as a community benefit society and a fully mutual housing co-operative would fall within the category of co-operative societies; the FCA has confirmed that to use either of these terms for a society registered before 1 August would be incorrect.
RSLs may wish to take this opportunity to undertake a general review of all business documentation and marketing material to ensure compliance with the 2014 Act. The relevant provisions which relate to the display and use of a registered society's registered name are contained within section 11 of the 2014 Act. As well as displaying the registered name in a conspicuous position outside its registered office and any other place of business, section 11(2) provides that a registered society must display its registered name:
- "in all of its notices, advertisements and other official publications,
- in all of its business correspondence,
- in all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods, purporting to be signed by or on behalf of the society,
- in all its other business documentation, and
- on all its websites."
RSLs which have charitable status must also comply with section 12 of the 2014 Act by stating their charitable status in the documentation noted above and in all conveyances by or on behalf of the RSL.
As mentioned in our blog of 5 August, many Scottish RSLs are currently undertaking reviews and amendments of their rules, using the 2013 model rules published by the Scottish Federation of Housing Associations as a basis, in order to comply with the Scottish Housing Regulator's regulatory framework. In an ideal world, with the repeal of the 1965 Act, the references within the 2013 model rules to the 1965 Act and any other Acts which have now been repealed should be updated to refer to the 2014 Act. However, those RSLs which are currently reviewing their rules may find making these amendments problematic in terms of the timing for obtaining the necessary regulatory consents and convening the RSL's special general meeting of its members. Fortunately, there is a saving provision within the 2013 model rules which says that references to a statutory provision includes references to the statutory provision as amended or replaced, and so this provision could be relied upon in order to avoid having to make further changes to the model rules.
Where possible, if an RSL is yet to have its draft amended rules approved and still has scope within the relevant timescales for consent, it should consider amending all references to the 1965 Act within its rules to the 2014 Act. The 2013 model rules also include references to the Friendly and Industrial and Provident Societies Act 1968 (the "1968 Act") which has also been repealed by the 2014 Act and references to this Act also require updating. A number of these references are based on the provisions on accounts and appointment of auditors by registered societies. The duty for registered societies to prepare accounts is now contained within Part 7 of the 2014 Act.
End of an 'Industrial and Provident' era
It is, therefore, time for the curtains to close on industrial and provident societies and the 1965 Act. Whilst RSLs may experience an initial sense of upheaval in their identity, the 2014 Act does not impact majorly on their day-to-day running as many of the legislative obligations were already in force in one of the Acts which the 2014 Act consolidates.
Accordingly, we welcome the new era of "registered societies".