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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.

You may also find the following article helpful:

News article by charities and social economy solicitor Laura Moss

"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 cohousing group in Sheffield

Of Malcolm Lynch 'Malcolm is one of the leading gurus on issues affecting community benefit societies.'

Chambers and Partners (2022)

'The firm possesses a lot of knowledge, which they are able to impart in a very clear, concise and understandable way.'

Chambers and Partners (2022)

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Meet the team

14 Jun 2022

Senior pensions lawyer, Helen Woodford, joins Wrigleys

Helen Woodford has joined the Pensions team on a permanent basis, following her recent involvement with the firm in a consultancy role.

08 Jun 2022

Private client consultant solicitor, Antonia Moore, joins Wrigleys’ Leeds office

We are delighted to welcome Antonia Moore to our Leeds office.

07 Jun 2022

Holly Marshall qualifies

Holly Marshall has been offered a permanent role with Wrigleys Solicitors following her successful training contract.