Finances, amalgamation and dissolution

Taken from the Primary Rules (2017)

The text below is taken from the Bristol Cable's Primary Rules, which is the legal constitution of the co-op. Read the entire Primary Rules in full.

BORROWING

7. The Society shall have the power to borrow money from its Members and others in order to further its objects providing that the amount outstanding at any one time shall not exceed £10,000,000.

8. The Society shall have the power to mortgage or charge any of its property, including the assets and undertakings of the Society, present and future, and to issue loan stock, debentures and other securities for money borrowed or for the performance of any contracts of the Society or its customers or Persons having dealings with the Society.

9. The rate of interest on money borrowed, except on money borrowed by way of bank loan or overdraft or from a finance house or on mortgage from a building society or local authority, shall not exceed 5% per annum or 2% above the Co-operative Bank’s base rate at the commencement of the loan, whichever is the greater.

10. The Society may receive from any Person, donations or loans free of interest in order to further its objects but shall not receive money on deposit.

FINANCIAL SERVICES AND MARKETS ACT 2000 ACTIVITY

11. For the avoidance of doubt the Society shall not engage in any activity by virtue of any of these Rules that would require a permission from the Registrar to carry on that activity without first having applied for and obtained such permission.

INVESTMENT OF FUNDS

12. The Society may invest any part of its funds in the manner set out in Section 31 of the Act.

LIABILITY OF MEMBERS

94. The liability of a Member is limited to the amount of their shareholding.

APPLICATION OF PROFITS

95. Members of the Society will be rewarded primarily through a social dividend rather than a monetary dividend. Any profits of the Society shall be applied as follows in such proportions and in such manner as may be decided by the Society at the annual general meeting:

(a) To a general reserve for the continuation and development of the Society;

(b) To paying interest on issued share capital at such rate or rates as determined

by the Board from time to time, but not exceeding 5% per annum or 2% above the Co-operative Bank’s base rate, whichever is the greater;

(c) To making payment for social or community purposes within the community served by the Society.

ASSET LOCK

96. Pursuant to regulations made under section 1 of the Cooperatives and Community Benefit Societies Act 2003 all of the Society's assets are subject to a restriction on their use. The Society must not use or deal with its assets except:

(a) Where the use or dealing is, directly or indirectly, for a purpose that is for the benefit of the community;

(b) To pay a Member of the Society the value of his withdrawable share capital or interest on such capital;

(c) To make a payment pursuant to section 24 (proceedings on death of nominator), 25 (provision for intestacy) or 26 (payments in respect of mentally incapable persons) of the Industrial and Provident Societies Act 1965;

(d) To make a payment in accordance with the Rules of the Society to trustees of the property of bankrupt Members or, in Scotland, Members whose estate has been sequestrated;

(e) Where the Society is to be dissolved or wound up, to pay its creditors; or

(f) To transfer its assets to one or more of the following:

(i) a prescribed community benefit society whose assets have been made subject to a restriction on use and which will apply that restriction to any assets so transferred;

(ii) a community interest company;

(iii) a registered social landlord which has a restriction on the use of its assets which is equivalent to a restriction on use and which will apply that restriction to any assets so transferred;

(iv) a charity (including a community benefit society that is a charity); or

(v) a body, established in Northern Ireland or a State other than the United Kingdom, that is equivalent to any of those Persons.

(g) Any expression used in this rule which is defined for the purposes of regulations made under section 1 of the Co-operatives and Community Benefit Societies Act 2003 shall have the meaning given by those regulations.

AMALGAMATION, TRANSFER OF ENGAGEMENTS AND CONVERSION

97. The Society may, by special resolution passed in the way required by the Act, amalgamate with or transfer its engagements to any other society or non-profit body subject to at least the same degree of restriction on the distribution of profits and assets as is imposed on this Society by virtue of these Rules. The Society may also accept a transfer of engagements and assets by resolution of the Board or of a general meeting.

98. The Society may, by special resolution passed in the way required by s52(3) of the Act, amalgamate with or transfer its engagements to a company or convert itself into a company under the provisions of the Act. In relation to calling a general meeting for the purpose of such resolution, the following provisions shall apply:

(a) The Society shall give to Members not less than two months’ notice of the meeting;

(b) Notice of the meeting shall be posted in a prominent place at the registered office and at all trading premises of the Society to which Members have access;

(c) The notice shall be accompanied by a separate statement setting out for Members:

(i) the reasons for the proposal;

(ii) whether the proposal has the support of the Board of the Society;

(iii) what alternative proposals have been considered, and whether they are viable;

(iv) details of the number of shares in the Society held by Members of the Board, and Persons connected with them;

(v) a recommendation by reputable independent financial advisors that the Members should support the proposal rather than any alternative proposal.

(d) Where the separate statement is contained in another Document, information shall be provided in the notice specifying where Members can obtain a copy of the Document.

(e) The quorum for a meeting at which a special resolution to amalgamate with, transfer engagements to or convert into a company is to be voted upon shall be 150 Members or 50% of the Members present in Person, whichever is the greater, subject to an absolute minimum of three Members.

DISSOLUTION

99. The Society may be dissolved by the consent of three quarters of the Members by their signatures to an instrument of dissolution, or by winding up in a manner provided for by the Act.

100. If on the winding up or dissolution of the Society any of its assets remain to be disposed of after its liabilities are satisfied, these assets shall not be distributed among the members, but shall be transferred instead to some other non-profit body or bodies subject to at least the same degree of restriction on the distribution of profits and assets as is imposed on this Society by virtue of these Rules, as may be decided by the members at the time of or prior to the dissolution.