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A bill to consolidate all IPS legislation, which aims to make the somewhat confusing world of IPS law more user-friendly without introducing any new policy or substantial changes to law, is also currently at second reading stage in the House of Lords. It is unclear when this will come into force, but we will provide further updates in future.
An end to “industrial and provident societies”
Nearly four years after receiving Royal Assent, the renaming of IPSs promised by the Co-operative and Community Benefit Societies and Credit Unions Act 2010 finally has a commencement date. All new societies registered from August will be known as either “community benefit” or “co-operative” societies. The Act specifically states that the changes do not affect those societies registered before that date, which will have the catchy title of “Pre-2010 Act Societies”, but in practice they are likely to be known under the same categories.
Whilst seemingly dramatic, the change in terminology essentially aims to modernise the rather outdated term “industrial and provident society” and replace it with terms which are widely used in practice. When registering a new society, it is already a requirement that the applicant states whether it is a community benefit or co-operative society in any case. However, the change does herald a welcome move towards modernising the rather dusty world of IPS legislation.
Other forthcoming changes
In another move towards modernisation, applicants seeking to register a new society will be able to submit documents electronically when registering with the Financial Conduct Authority (“FCA”), the regulator of IPSs, from 6 April. We understand from discussions with the FCA that they have already begun a trial period of accepting registration documents electronically and will soon be making public their preferred process. This change will not, however, affect their standard 15 working day processing time for applications. The National Housing Federation (“NHF”) (whose consent is required to all new registrations utilising the NHF’s model rules) is also in the process of finalising its preferred approach to electronic registration, and we will liaise with both organisations in an attempt to streamline the process as much as possible.
A number of other key changes will also be coming into force on 6 April:
- the provisions of the Company Directors Disqualification Act 1986 will apply to societies in the same way as to registered companies, meaning that board members of societies will be open to the full range of disqualification offences and penalties under the Act. Board members disqualified under the Act will also be unable to hold office at another society, although the ramifications of this change should be fairly limited for housing providers as the NHF’s model rules (which are widely used in the sector) already contain prohibitions on persons acting as board members when they have been disqualified as a director;
- the current limit on withdrawable share capital will increase from £20,000 to £100,000. Again, this should have limited impact in the social housing sector, where share capital in societies is rarely used for equity investment purposes;
- the FCA will have increased investigatory powers, including powers of entry to premises and powers to arrange investigations of societies, coupled with sanctions on societies which fail to co-operate or comply. In deciding whether and how to exercise it, the FCA must adopt an approach based on the principle that it should only be used to the extent necessary to maintain confidence in societies.
For more information
For more information or advice on the impact of these changes, please contact Gemma Bell on email@example.com, David Alcock on firstname.lastname@example.org or your usual contact within Anthony Collins Solicitors.
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