What is a Community Benefit Society?

A Community Benefit Society is a form of co-operative registered with the Financial Conduct Authority (FCA) under the Industrial & rovident Societies Act !"#$% It is run &y its mem&ers' who each have one vote (whatever the si(e of their shareholding) in setting policy and electing a Board to oversee the &usiness% )he main difference from a conventional (*&ona fide+) co-operative is that it must &e run for the &enefit of a wider community rather than ,ust its mem&ers% So in this case the intention is that it should serve the interests of the entire community in the area surrounding Bridgend Farmhouse% A Community Benefit Society is not allowed to distri&ute profits to mem&ers' and the rules normally include a statutory asset loc- preventing any distri&ution of assets% In the event of winding up' any assets remaining after shares have &een repaid must &e passed to another organisation with a similar restriction on the distri&ution of assets% Because their primary purpose is to provide a social rather than financial return' Community Benefit Societies en,oy an e.emption from the Financial Services & /ar-ets Act 0111% )his allows them to raise investment &y issuing shares to the pu&lic without the normal restrictions imposed on companies% 2owever' shares are still normally issued on the &asis of a prospectus outlining the &usiness case and identifying ris-s% )he current legal ma.imum for investment is 301'111 (although that will change to 3!11'111 later this year)% )he Society will set the minimum amount of share capital that must &e invested% 4imited interest may &e paid on shares in order to retain the capital as long as there is a surplus from which to do so% )a. relief of up to $15 of the value of investment may also &e availa&le 6 the 7overnment is currently proposing to e.tend this to loans as well as shares% Shares are not transfera&le (e.cept in the case of death)' &ut may &e withdrawn with due notice and at the discretion of the directors' ta-ing account of the financial position of the Society% It is customary not to allow withdrawal of shares for an initial period (usually 8-$ years) until the &usiness has settled down% Although the FCA acts as the registrar for Community Benefit Societies' it does not regulate their financial transactions' and there is no compensation availa&le to shareholders should the &usiness fail% )he I S Community Benefit Society is an increasingly popular way to raise investment for &usinesses 6 such as 9hitmuir Community Farm and :ig-in Bruntsfield - whose primary motivation is social rather than financial% /artin /eteyard )he Co-operative ;nterprise 2u&