Irish Co-op Law – very brief update

In 2013, I wrote about Co-op Law reform proposals in the Republic of Ireland (ROI). They led to this 2014 legislation  which just dealt with some key problems like capital limits. The old industrial and provident societies  legislation from the 1890’s basically still applies there with some amendments.

This issue has been raised in the Community Shares Google Group on the question of whether UK style “community shares” are possible in ROI. As Dave Hollings of CMS has pointed out in response to Dave Boyle’s question on this, the issue is probably about ROI rules on prospectuses, financial promotion and the like. I don’t know the answer for sure but I suspect there may be no exemption for industrial and provident society shares there of the kind we have for co-op and bencom shares here in the UK. However, that needs to be properly checked. The treatment of shares in the new asset locked and limited purpose Designated Activities Companies allowed under Part 16 of the ROI Companies Act 2014 might repay careful study. See the general outline information here.

One day, I hope to find the time to delve into the ROI Companies Act 2014 and associated legislation. If anyone could beat me to that and share their findings, that would be great.

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One Response to Irish Co-op Law – very brief update

  1. isn says:

    Thanks to Jo Bird (www.cbc.coop/about/jo-bird) of Co-operative Business Consultants Limited for the following helpful information on the Community Shares Google Group:

    “Most company legislation and regulation in the Republic follows and copies that of the Britain. But Society legislation is generally unfit for purpose.

    However, some co-operatives (both companies and societies) have successfully raised finance from members and supporters – through loanstock or membership subscriptions/shares. Co-ops in the Republic tend to go about it in a different way than in the UK, using different terminology and reference points.

    I met with the Registry of Friendly Societies in Dublin recently. They are open to what they call redeemable share offers, which are called withdrawable or community share offers in the UK.

    Here is an extract from a paper I wrote on the topic in 2014.

    Key differences in detail between community shares in the Republic of Ireland and UK
    1. There are few examples of Societies owned by more than 100 members who have invested more than €100 euro. There are over 100 examples in the UK.

    2. Societies are regulated by Registrar of Friendly Societies. The regulator is the Financial Conduct Authority (FCA) in Great Britain; and Department for Trade and Industry in Northern Ireland (DETI).

    3. Only agricultural societies are exempt from regulation. Almost all sectors apart from financial services are exempt in UK.

    4. Shares are called redeemable, although withdrawable in practice in certain circumstances. Shares are called withdrawable in UK.

    5. Tax relief such as EII has yet to be awarded to any Society. Over 100 Societies have benefited from EIS.

    6. EII minimum investment is €250 and is counted as state aid. No EIS minimum investment in UK and only sometimes counted as state aid.

    7. EII can provide 30% to 41% tax relief. EIS is 30% tax relief, while Seed EIS is 50% tax relief on share offers up to £150,000.

    8. Upper limit of €150,000 in shares per member. Upper limit of £100,000 per member in UK.

    Its perfectly possible for a Society to have a registered address in the UK, and have directors and members from other EU countries or around the world. The Society would report to FCA/DETI and HMRC.

    I have up to date working knowledge of the co-op landscape across the island of Ireland. I’m happy to talk with Dave or anyone about what motivates a query or their client’s particular situation”.

    To use Jo’s professional co-op advisory services, email her at jo@cbc.coop

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