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New legislation aims to reduce red tape on cooperatives       printable version

28 Jul 2014: posted by the editor - Ireland

The start of new legislation to ease the regulatory burden on co-operative societies and make it easier to start up and run a co-op as an alternative form of enterprise organisation has today been announced by Jobs, Enterprise and Innovation Minister Richard Bruton.

It follows the December 2012 introduction of reductions of 33-80% in the fees for business transacted with the Register of Friendly Societies, who registers co-operative societies. These moves form part of the delivery of the Programme for Government commitment to promote co-ops as a form of enterprise.

The Government says the legislation will ease the regulatory burden on co-operative societies and make it easier to run a co-operative as an alternative form of enterprise organisation. Because of their importance the Government has committed to assisting this particular form of enterprise to expand, develop and to continue to have a positive impact on business in this country. In particular the legislation will:

Allow individual societies to set their own limit on individual shareholdings in the society

Ease financial reporting restrictions by extending the period for the preparation and submission of the annual return and accounts

Make it easier for cancelled societies to be restored to the register

Ease fund-raising restrictions for non-agricultural societies

In addition, the legislation will make the Examinership process, currently available only to companies, an option for co-operative societies which might find themselves in difficulties (these provisions will be commenced once the Rules of Court are amended).

Finally, the Act also makes changes to the legislation governing friendly societies. There are currently just 47 friendly societies (mostly charitable or benevolent societies) registered with the Registrar of Friendly Societies, and many of these have relatively low levels of activity. There have been just three new entrants to this group in the last 9 years, and it is clear that this nineteenth-century model has out-lived its usefulness and is ill-suited to meeting the needs of the twenty-first century.

Making the announcement, Minister Bruton said: "If we are to sustain the progress we have made in the economy and create jobs we will have to continue working hard to reduce business costs and red tape. A crucial part of this will be to reduce those costs and red tape which are directly under the control of government.

"As we recognised in the Programme for Government, forms of enterprise organisation other than the company can play a role in meeting needs in different sectors, and I am determined to ensure the legislation governing these models supports business development and that the burden of red tape is kept to a minimum.

The Government recognises that co-operatives play a very significant role in our economic and social development, whether it is through the livestock marts that operate in nearly every county, group water schemes or housing co-operatives which provide affordable housing to people with modest incomes. Co-operatives are rooted in the community and offer jobs to local people.

This legislation addresses particular problems which have been identified in the co-operative sector, and will help ensure that this model can thrive and grow to its potential."

The Minister added that the Charities Regulatory Authority, established earlier this year, would provide an appropriate regulatory environment for charitable and benevolent groups and societies, ensuring that there is a suitable framework in place for the proper regulation of such groups into the future.

Link to Act: http://www.irishstatutebook.ie/pdf/2014/en.act.2014.0019.pdf

Tags: Programme for Government, Friendly Societies, Charities Regulatory Authority

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