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 investors a return of their investment but with limited voting rights, helping these organizations access more capital while maintaining member control.

Description

The bill empowers the Secretary of State to amend relevant legislation (including the Industrial and Provident Societies Act 1965, the Friendly Societies Act 1992, and the Companies Act 2006) to permit the issuance of redeemable shares. These shares:

• Can be transferable but not withdrawable (for societies under the 1965 Act).
• Have characteristics defined by regulations (for societies under the 1992 Act).
• Have characteristics specified in regulations and are subject to provisions of the Companies Act 2006 (for mutual insurers).
• Grant holders membership but only one vote regardless of the number of shares held.
• Entitle holders only to the standard remuneration and repayment of the share's nominal value upon redemption or liquidation, not to any bonuses or surplus.

The bill also specifies that:

• Redemption can be on a fixed or chosen date, subject to the share's terms.
• Societies may restrict the issue of redeemable shares in their rules.
• Holders of redeemable shares have limited voting rights, especially regarding major structural changes like mergers or conversions.

The terms and manner of redemption can be set by the directors or a resolution, as long as it’s authorised by the organisation’s rules or constitution, and they must state such terms in a statement of capital.

Government Spending

The bill doesn't directly involve government spending. The cost will be associated with the administrative burden of creating and implementing the necessary regulations. No specific figures are provided in the bill text.

Groups Affected

• Industrial and Provident Societies: Can raise capital through a new share class, potentially expanding their operations.
• Friendly Societies: Similar to Industrial and Provident Societies, they gain access to new funding options.
• Mutual Insurers: Can utilize redeemable shares to increase capital while maintaining their mutual structure.
• Investors: Have a new investment opportunity with limited risk and voting power.
• Members of Societies and Insurers: Will have changes to their voting rights, depending on their shareholding.

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