Clause 1 - Requirements for conversion of a registered society into a company

Part of Industrial and Provident Societies Bill – in a Public Bill Committee at 10:30 am on 13 February 2002.

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Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party 10:30, 13 February 2002

The amendments tabled by the hon. Member for Christchurch (Mr. Chope) would remove that which is already in section 50(3) of the Industrial and Provident Societies Act 1965, which covers similar duties to be fulfilled by the chairman. One difference under the Bill is the inclusion of proposed subsection (3A)(a), the purpose of which is to impose a duty on the chairman to ensure that membership records of a society are sufficiently accurate for him or her to confirm that a high enough percentage of the membership has voted, and thus satisfy the requirement of a 50 per cent. turnout under clause 1. That is the substantive change to the current position.

As the hon. Member for Christchurch said on Second Reading, there are many different societies, with varying numbers of members and systems of record keeping. They range from major retail businesses with hundreds of thousands of members to a small club with few members. It is unwise to lay down specific steps to be taken in all instances. The courts would have no difficulty in applying the concept of what is ''reasonably practicable'' when judging whether the number of qualifying members and the number of votes were sufficient. The requirement on the chairman is necessary to protect the interests of all the members of a society. It also gives him sufficient protection. Under the provision, a chairman will consider carefully the consequences of the breach of duty of which he would be guilty should he fail to take ''all reasonably practicable steps'' to check that such safeguards are in place within the society.

The effect of the amendment would be to leave the decision making of societies on this one issue open to interminable disputes as the chairman's declaration would not be deemed conclusive. As I said in my opening remarks, that is in contrast with the general position with regard to the 1965 Act on similar decisions—transfers of engagements, amalgamations and so forth—for which section 50(3) already applies. It would clearly be unsatisfactory should that section not to be applicable and the requirement that reasonable steps should be taken to check to membership lists were deleted.