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Leeds: 0113 244 6100

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Trusted advice on setting up a community benefit society

CBSs are a popular form for community-led housing projects because they ensure land and other community assets are held for the benefit of the community. This page explores the background and benefits to using a CBS to deliver your community-led housing project.

A background to community benefit societies

Wrigleys Solicitors LLP have been advising on the use of CBSs for many years and are experts in this (somewhat niche) area of law.  We have our own model rules for both charitable and non-charitable CBSs.

Community benefit societies have been around for a long time, although the terminology is still relatively new.  They were previously known as industrial and provident societies, but changes in 2010 required industrial and provident societies to be registered as either co-operative or community benefit societies. 

The key features of community benefit societies are:

-       They are formed primarily to benefit their society; they therefore reflect commitment to the wider community with profits being ploughed back into their business (for the benefit of the community) rather than being distributed to members.

-       They must exist for the purposes of carrying on an industry, business or trade.

-       They may or may not have a statutory asset lock, which limits what they can do with their assets. 

-       If they do not have a statutory asset lock they may seek charitable tax status from HMRC.  Charitable community benefit societies are currently exempt from registration with the Charity Commission, although this is expected to change at some point in the future.

There are four principal advantages to being a community benefit society: 

-       Firstly, the issue of withdrawable shares by community benefit societies benefit from exemptions to regulated activity and financial promotion prohibitions under the Financial Services and Market Act 2000.  In short, this means that societies may issue withdrawable shares to the public without needing to comply with the restrictions on financial promotions (such restrictions make public share offers very expensive for companies to undertake).  

-       Secondly, community benefit societies benefit from legislative provisions which mean that re-organisations, particularly mergers between societies, are relatively easy to do. 

-       Thirdly, the statutory asset lock and the ability to obtain exempt charitable status with HMRC means the community benefit society can be an attractive form of structure to funders.

-       Finally, many people are drawn to the idea of societies, because they offer a democratic structure, where membership is drawn from the community and each member has one vote, regardless of how many shares they own in the society.

Process for registering as a community benefit society

In order to register as a community benefit soeciety, you must submit a set of rules and application form to the Financial Conduct Authority, together with the appropriate fee.  Using model rules reduces this fee, which is payable on a sliding scale from £40 (using model rules with no amendments) to £950 (using model rules with ten or more amendments, or using bespoke rules).  If you are using model rules, the sponsor of those rules must sign the application form.

Wrigleys' model rules for community benefit societies

Wrigleys has its own set of model rules: the Wrigleys Community Interest Society model rules.  These are designed for societies with or without an asset lock, which may undertake a community shares issue at some point in the future.

Societies which want to seek charitable status would be able to use the Charity Law Association model rules.  We are able to act as sponsor to any organisation which wishes to use these rules to register a charitable community benefit society.

"Thank you for the guidance that you gave us during the initial stages of the process.  Face to face, on the telephone, in your literature and during the webinar you supported our efforts and we felt that we were in safe hands. Thank you."

- On the Brink - A Co-housing group in Sheffield

"Malcolm Lynch - A dedicated charities lawyer who really knows the subject, and who also has a very charitable spirit - you need to be able to empathise, and Malcolm really can."

- Chambers & Partners

"Wrigleys - a reliable and efficient team that understands the charity sector and maintains a friendly and open approach".

- Chambers & Partners

Working with:

Elizabeth Wilson View Biography

Elizabeth Wilson

Direct Line: 0113 204 5721

Partner
Leeds

Emma Ridge View Biography

Emma Ridge

Direct Line: 0113 204 1118

Partner
Leeds

Laura Moss View Biography

Laura Moss

Direct Line: 0113 204 1145

Solicitor
Leeds

Peter Parker View Biography

Peter Parker

Direct Line: 0113 204 5792

Partner
Leeds

Malcolm Lynch View Biography

Malcolm Lynch

Direct Line: 0113 204 5724

Partner
Leeds

Meet the team

12 Dec 2018

Enfranchisement reform - implications for community-led housing

We look at the impact of proposed changes to enfranchisement law – community-led housing (CLH) groups should respond before 7 January 2019.

30 Nov 2018

Will a refusal to offer a trial period make a redundancy dismissal unfair?

Yes, the refusal of a contractual right to a four week trial period in an alternative role is very likely to lead to an unfair dismissal (EAT).

30 Nov 2018

Can an employee be dismissed for incapability if their contract provides long-term disability benefits?

Incapability dismissal may be unfair and discriminatory if employee is contractually entitled to income when incapacitated by permanent disability.