Overview

This bill aims to allow Industrial and Provident Societies, Friendly Societies, and certain mutual insurers to issue a new type of redeemable share. These shares would offer a way for these organizations to raise capital while maintaining their mutual structure and limiting the voting power of these new shareholders.

Description

The bill permits the Secretary of State to amend relevant legislation (including the Industrial and Provident Societies Act 1965 and the Friendly Societies Act 1992) to allow for the introduction of redeemable shares. These shares will have specific characteristics:

• They can be transferable but not withdrawable (except under specific circumstances).
• Holders are entitled to only one vote, regardless of the number of shares held.
• Holders are entitled only to the standard level of remuneration and repayment of the nominal share value upon redemption or liquidation, with no bonuses or surplus shares.
• The terms of redemption are determined either before the shares are issued or defined within the society's rules.
• The bill restricts the voting rights of holders of these shares on resolutions regarding major structural changes such as mergers, transfers of engagements, or conversions to companies.

The bill defines "society" to include those registered under the 1965 or 1992 Acts, and certain co-operatives and mutual undertakings; "mutual insurer" is defined as a corporate body with no share capital and permission to underwrite insurance.

Government Spending

The bill does not directly involve government spending. The cost of implementing the changes will likely fall on the organizations issuing the new shares, however, the impact on government income cannot be determined from the information given.

Groups Affected

• Industrial and Provident Societies: Will be able to raise capital through a new share class.
• Friendly Societies: Will have the same opportunity to raise capital as above.
• Mutual Insurers: Will gain access to a new funding mechanism.
• Shareholders (of the new redeemable shares): Will have limited voting rights.
• Existing members of the societies or insurers: May experience changes in governance. However, the impact is likely to be limited due to the restricted voting rights attached to the new redeemable shares.

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