Minister McGuinness Publishes Consultation Paper on Co-operative Legislation

Co-operative Sector worth in excess of €12.6 Billion

Mr John McGuinness, T.D, Minister for Trade and Commerce, today (Wednesday 15^th April 2009) published a consultation paper on the legislation which applies to Co-Operative Societies, the Industrial and Provident Societies Acts 1893 to 2005.

The publication of the paper initiates a public review of current co-operative legislation much of which dates from the late 19^th century. The review forms part of the Government’s Better Regulation Programme which seeks to improve the quality of regulation generally and reduce administrative burdens on business.

Minister McGuinness stated: “The co-operative business model has been a very successful one in Ireland over the past century and was worth in excess of €12.6 billion in 2007. We must now ensure that the regulatory system facilitates the continuing growth and development of this highly valuable sector in our economy in the years ahead.”

Among the subjects concerning co-operative societies which are dealt with in the consultation paper are:

Restrictions on the raising of funds, including share capital

Financial reporting requirements of societies

Governance of societies

The paper seeks to identify any practical difficulties for co-operatives in the Industrial and Provident Societies Acts and what action should be taken to deal with them.

The Minister also stated that he would encourage everybody who is involved with co-operatives or has an interest in them to participate in the consultation process.

The Consultation Paper, entitled ‘Co-operative Societies: Consultation paper on the Industrial and Provident Societies Acts 1893 – 2005 is available on the Department’s website at www.djei.ie/commerce/cooplaw or by contacting:

Cooperative Legislation Unit

Department of Enterprise, Trade and Employment

Earlsfort Centre

Lower Hatch Street

Dublin 2

Tel: (01) 631 2655/2607

ENDS/TC366

Notes for Editors

Reasons for the Review

Co-operatives in Ireland usually register under the Industrial and Provident Societies Acts (IPS) (rather than the Companies Acts). The main IPS Act is that of 1893. The Government’s Better Regulation Programme includes a commitment to keep regulatory frameworks and institutions under review and where possible to reduce administrative burdens on business. (See also at Part One of Consultation Paper)

Importance of Co-operatives

Co-operative societies and organisations have been part of economic life in Ireland for over a century. Agricultural co-operatives (including associated companies) accounted for most of the €12.6 billion turnover attributable to the co-operative sector in 2007. Other sectors in which organisations using the co-operative model have made important contributions include housing, fishing, group water schemes and community development. There were 1027 registered Industrial and Provident Societies at year-end 2008.

Share Capital

The current statutory limit on individual shareholdings is €150,000 or 1% of the total assets of the society, whichever is the greater. This limit was last fixed in 2005. The rationale for having such a limit, which dates originally from 1852, is not fully clear today. The Consultation Paper raises the question of whether there should continue to be a statutory limit on individual shareholdings in societies or whether this should be left to individual societies to decide for themselves.

Financial Reporting

Detailed financial reporting requirements, dating mainly from the pre 1922 Acts, apply to co-operatives societies. These involve annual returns, balance sheets, triennial returns of members’ holdings, annual accounts as well as auditing. The Consultation Paper seeks to ascertain whether these requirements are causing difficulties for societies and whether any changes are necessary or desirable.

Corporate Governance

Unlike the Companies Acts, the IPS Acts make only limited provision for corporate governance matters such as duties of directors, making of rules and voting rights (see section F of the Consultation Paper).

Other Matters to be Reviewed

These include fund-raising restrictions for certain societies, borrowing powers, cancellation of societies, amalgamations, winding up, examinership, distribution of property, registration fees and public enforcement arrangements.