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Industrial and provident societies to come under ordinary company law

Comment 10th July 2010

I am involved with two industrial and provident societies as a director and a shareholder.  The process for setting up and having to justify becoming an IPS is burdensome, lengthy, expensive, unnecessary complicated as you have to go through an approved umbrella body to use a model set of rules, and every time you amend your rules you have to get permission first.

Why not instead simpy bring IPSs under ordinary company law and transfer their registration to Companies House.  They are very similar to Community Interest Companies with their public interest aims and asset locks, with CICs being registered at Companies House and under the CIC Regulator as well, so this would make sense.  Perhaps the CIC regulator could also approve IPSs in the same way.

Ultimately, perhaps a limited company should be be permitted to have both members and shareholders and to be able to sell withdrawable shares publically like an IPS which is the main reason why most are set up.

Why does this matter?

Many communities use the IPS form to raise money for projects such as community owned renewable energy schemes using the IPS's ability to publically sell withdrawable shares – something ordinary companies are not permitted to do.  It would make sense to encourage communities to use this legal form by making it as quick and simple to set up as possible – we had to use a solicitor and spent around £3,000 to have one formed whilst a CIC can be set up for £35.

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