Wednesday, 31 March 2010

co-operative, what's in a name?

from the Companies House list of Prescribed Words in Company names.

"Co-operative - To use this word the company should normally be limited by guarantee with each member having one vote and include a non-profit distribution clause in the articles of association. "

Why does it not say you need the permission of Cooperatives UK? Why the needless restriction on profit distribution when the ICA Principles limit it in a cooperative?

"Mutual - To use this word you must obtain the written support of:
Financial Services Authority, Perimeter Guidance, Email: perimiterguidance@fsa"

You have to get the FSA's permission to call yourself 'Mutual Ltd.' but not 'Sweetness and Light Cooperative Ltd.' You can call yourself a coop and profit take by inflated salaries so long as you don't distribute declared profits.

So to be an honest cooperative company (or LLP)you have to be more restricted in what you can do. But charlatans can abuse the title anyway. s'not fair.


This is not allowed in the multitude of countries which recognise Cooperative as a form of association and protect the word properly by means of a Cooperative Law.

We don't have a Cooperative Law in the UK which makes us the odd one out in most parts of the world. Continental Europe, the Americas (North and South), Africa and Asia, legal protection for cooperatives is the norm. Japan has just introduced a new worker cooperative law.

But not the 'home' of cooperation (as we like to call ourselves) the UK.

In all the current cooperative enthusiasm amongst politicians, would it be possible to get them to commit to clearing this obstacle to cooperative development in the UK? After all they couldnt legislate quickly enough for Social Enterprises (Community Interest Company 2005).

Without a proper legal definition and distinction of cooepratives, we cannot ask for preferential treatment in recognition of the social benefits of cooperative enterprise (and the consequent limitations, such as less mobile capital, we accept on our business behaviou) because anyone can claim to be a coop at present.

1 comment:

  1. Interesting issue, this has been debated many times and there are pros and cons for both sides. Would we want a top down imposed CIC type law?

    Thankfully Governement have not limited Social Enterprises to CIC's but the worry is there.

    For myself, I think the IPS Law does need improving (they are giving it a new lick of paint) and completely agree with you that Companies house needs to be more vigerous in the policing of prescribed words. Or rather delegate that to Co-operatives UK.

    Personally I like the idea of a well funded (by member subscription of course) Fairtrade type mark, denoting co-operative status, to what could become restricting legislation.