A community benefit society, or ‘Bencom’ as it is sometimes known, is registered under the Industrial and Provident Societies Acts 1965-2002. Its main purpose is to conduct business for the benefit of the community. It is similar to a co-operative, the main difference being that a Bencom benefits the wider community, whereas a co-op gives priority to the benefit of its members. The main features are:
• Bencoms are governed by their rules and operate within the framework laid down by the Industrial and Provident Societies Acts, with directors, an annual general meeting and regular accounts. The directors, elected by members, are legally responsible for running the society in the interests of the local community
• Maximum investment for Withdrawable shares is £20,000
• Each shareholder member (or investor – the terms are interchangeable) only has one vote irrespective of the value of his/her investment; shareholders may be paid interest at a rate “necessary to obtain and retain enough capital to run the business”
• Offers of Withdrawable shares in Societies for the Benefit of the Community are exempt from the requirements for an approved prospectus set out in section 85(1) of the Financial Services and Markets Act 2000, as the shares are not classed as a controlled or specified investment under the Act. This means the cost of the share issue is minimised.
• A Bencom can adopt an ‘asset lock’, which means that, in the event of dissolution or winding up, any assets (after repayment of Withdrawable shares) must be used for the benefit of the community or distributed to another society with similar aims, rather than shared amongst its members.