Government to increase limit on member investment in cooperatives to £100,000

Ed Mayo of Co-operatives UK welcomes the Treasury's response to its consultation on industrial and provident societies and says it will help cooperatives to be less dependent on debt

Ed Mayo
Ed Mayo

The government will increase the amount that any one shareholder can invest in cooperatives from £20,000 to £100,000, it announced yesterday.

In its response to its consultation on industrial and provident societies, the Treasury said it would raise the amount of withdrawable share capital that any one member could invest in a society and follows the government's pledge to raise the limit in the 2013 Budget.

The Treasury response said raising the limit would help cooperatives in sectors that needed a lot of investment, such as energy, agriculture and housing.

The same consultation response also announced changes to the financial regulation of industrial and provident societies.

Industrial and provident societies include cooperative societies – which are businesses owned and run by and for their members – and community benefit societies, such as housing associations, which work to help their local area.

The changes include insolvency rescue procedures for industrial and provident societies. At present the only option for insolvent societies is to wind themselves up or have this done by a court. The change would not apply to housing associations, which are regulated by the Homes and Communities Agency.

The government decided against applying provisions for bank insolvency rescue to credit unions. It said it would wait to see whether the new insolvency procedures for industrial and provident societies were sufficient.

The changes announced in the paper will be put into secondary legislation to be enacted alongside the Co-operatives and Community Benefit Societies Consolidation Bill, announced in January, which went before the House of Lords yesterday. Both pieces of legislation are expected to be enacted by summer 2014.

The umbrella body Co-operatives UK welcomed the increase in the withdrawable share capital limit, which it said it has been campaigning for over many years. It said the change would help cooperatives to raise more money and be less dependent on debt.

Ed Mayo, secretary general of Co-operatives UK, said: "There are now more than 15 million members of UK cooperatives and today's rise in share limits confirms the arrival on the mainstream of a new asset class for ethical investment - locally based, co-operative and open to all.

"The appetite and commitment to do business the co-operative way has not waned, and today’s Treasury decision is a massive vote of confidence in the strength of the co-operative sector and recognises the movement’s ambitions for growth and development."

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