Submitted by Mark Simmonds on Thu, 18/03/2010 - 9:54am.
Most Community shops tend to adopt the Industrial and Provident Society (IPS) legal form. This is a legal form used for many years by co-operatives and other socially philanthropic organisations. It is particularly suited to democratic organisations with a relatively large membership. Some shops also use the Private Limited Company legal form.
There are two kinds of IPS and community shops use both:
Bona fide co-operative. The key feature of this type of IPS is that it is run primarily for the benefit of its consumer members. The high st. large Co-operative Retail Societies ("The Co-op") use this form of IPS. A bona fide co-operative can distribute profit to members in the form of a dividend.
Society for the Benefit of the Community. The key feature of this type of IPS is that whilst it has members who can benefit from their membership, it is run primarily for the benefit of the community and it has members who may not be customers.
In practice many community shops could use either IPS form and the major factor affecting the choice would be whether the shop wanted to distribute any surplus back to the members.
Another advantage of the IPS form is that it is possible to raise money from the community by issuing shares, which would be unlawful or very expensive using other legal forms. Either form is able to pay interest on these shares in order to attract the investment. For more information on using the IPS form to raise community finance, see www.communityshares.org.uk
The Plunkett Foundation have a set of IPS model rules, for a Community Shop, which they are currently reviewing (see separate post) - these rules can be found as a pdf document on this site: http://www.plunkett.uk.net/info/early-days
Most Community shops tend to adopt the Industrial and Provident Society (IPS) legal form. This is a legal form used for many years by co-operatives and other socially philanthropic organisations. It is particularly suited to democratic organisations with a relatively large membership. Some shops also use the Private Limited Company legal form.
There are two kinds of IPS and community shops use both:
In practice many community shops could use either IPS form and the major factor affecting the choice would be whether the shop wanted to distribute any surplus back to the members.
Another advantage of the IPS form is that it is possible to raise money from the community by issuing shares, which would be unlawful or very expensive using other legal forms. Either form is able to pay interest on these shares in order to attract the investment. For more information on using the IPS form to raise community finance, see www.communityshares.org.uk
The Plunkett Foundation have a set of IPS model rules, for a Community Shop, which they are currently reviewing (see separate post) - these rules can be found as a pdf document on this site: http://www.plunkett.uk.net/info/early-days
If you require any further advice then please post a reply or contact me directly - mark.r.simmonds@cooperatives-uk.coop