RSLs who were Industrial and Provident Societies must change their designation with immediate effect
Scottish Registered Social Landlords ("RSLs") who are registered as industrial and provident societies must now refer to themselves as registered societies after new legislation came into force on Friday 1 August 2014.
Practical implications of the legislative change include RSLs having to change their designation and how they are referred to, which will affect marketing materials, letterheads, e-mail signatures and, most importantly, legal documentation. This change should be implemented with immediate effect.
The new legislation
The Industrial and Provident Societies Act 1965 (the "1965 Act") was repealed by the Co-operative and Community Benefit Societies Act 2014 (the "2014 Act") on 1 August 2014. The 2014 Act will now govern industrial and provident societies ("IPSs") which were registered under the 1965 Act and these will now be known as a registered society (referred to as a "society" within the 2014 Act). Any new societies registered on or after 1 August 2014 will be known as either a co-operative society or community benefit society, provided the conditions within section 2(2) of the 2014 Act are met.
The 2014 Act repeals and replaces the 1965 Act, as well as the 1967, 1975, 1978 and 2002 Industrial and Provident Societies Acts; the Friendly and Industrial and Provident Societies Act 1968; the Co-operatives and Community Benefit Societies Act 2003; and the Co-operative and Community Benefit Societies and Credit Unions Act 2010.
A co-operative society is one which the Financial Conduct Authority (which remains the registration body for societies) is satisfied is a bona fide co-operative society which operates for the benefit of its members, and this category would include a fully mutual housing co-operative. Credit unions and other organisations which aim to make profits which are returned to its members through the payment of interest or dividends on money deposited by members are specifically excluded from the definition of "co-operative society" and are regulated separately.
A community benefit society is one where the business of the society is intended to be conducted for the benefit of the community, and this will be the category which will cover newly-registered societies which are Scottish registered social landlords ("RSLs"). From here on, those RSLs who were already registered under the 1965 Act and who are used to referring to themselves as industrial and provident societies, should begin to call themselves registered societies.
What does this mean for you?
At a formal level the main change affecting IPSs registered under the 1965 Act will be to their designation as they should now be designed and referred to as being registered under the 2014 Act. This will affect marketing materials, letterheads, e-mail signatures and, most importantly, legal documentation, and this change should be implemented with immediate effect.
A number of Scottish RSLs will be currently reviewing their rules in order to ensure compliance with the Scottish Housing Regulator's regulatory framework, and will be using the 2013 model rules published by the Scottish Federation of Housing Associations as the basis for their new rules. The 2013 model rules include a number of references to sections of the 1965 Act which are now out of date, and while ideally these should be amended and updated in the new rules which the RSL adopts, if to make these amendments would be problematic in terms of the timing of obtaining the necessary regulatory consents and convening the RSL's special general meeting of its members, the RSL should be able to rely upon the saving provision in the 2013 model rules which says that references to a statutory provision includes references to the statutory provision as amended or replaced.
Some other notable changes within the 2014 Act include:
- various provisions for the use of electronic communications, for example, electronic addresses for notices (section 30); execution of electronic documents in Scotland (section 55); and sending electronic documents to the Financial Conduct Authority (section 144);
- the application of the Company Directors Disqualification Act 1986 to directors, executives and committee members of societies in a similar vein to company directors; and
- unlike the position with IPSs, co-operative societies and community benefit societies can enter into administration (section 118).
Further more detailed comments on the 2014 Act and its impact on RSLs will followfrom us in the near future. For any further information, please contact the Public Sector and Housing team at Harper Macleod LLP.