The Gazette 1989

GAZETTE

pril

1989

New laws for co-ops?

N ew legislation governing co-operatives was promi sed by t he

Mi n i s t er for I ndus t ry and Comme r ce (then M r . Al be rt

Reynolds TD) at t he annual mee t i ng of t he Irish Co-operat i ve

Organ i sa t i on Soc i e ty ( ICOS) on 7 November 1 9 8 8 . A mode rn

code of co-operative l aw wou ld be impor t ant to a w i de range

of interests: agri-groups, credit unions, new wave worker and

c ommun i ty co - ops, se l f -he lp hous i ng groups and t he legal

and accoun t ancy profess ions.

The inadequacy of existing

legislation on co-ops has been

widely acknowledged by the co-

operative movement and docu-

mented in authoritative reports.

The Industrial and Provident

Societies Act, 1893 is still the

principal statute under which most

co-operatives register with the

official authority, the Registrar of

Friendly Societies. The Act of 1893

should not be condemned solely on

the basis of its Victorian origins. It

was flexible and in general served

its purposes fairly well over the

past century. Flexibility has dis-

advantages reflected in the

Industrial and Provident Societies

Acts being used for business

purposes remote from a co-op, a

term which was not defined by

statute. Societies' rules, such as

those based on model rules of Irish

Co-op Organisation Society (ICOS)

are the usual indicators of a

bona

fide

co-op. The main inadequacy is

the lack of a modern code of laws

to cater spec i f i ca l ly for co-

operatives operating in current

commercial realities.

Reports call for New Laws

Many authoritative and repre-

sentative reports have been

prepared in recent decades

regarding the Irish co-operative

movement. During the Lemass era,

the Report of the Committee on

Co-operative Societies under the

late Kevin Mangan, Registrar of

Friendly Societies, recommended in

1963 that new legislation was

required.

A subsequent Registrar

stated in his annual statutory

reports that he had submitted

proposals for amending legislation

to the Minister for Industry and

Commerce in 1983.

More recently there were three

impo r t ant reports: the Irish

Congress of Trade Unions, 1985;

the Oireachtas Joint Committee on

Small Businesses 1986;

and the

Special Committee of the Society

for Co-operative Studies in Ireland,

1986.

While details and emphasis

differ, the reports' recommen-

dations all point to the need for

new legislation on co-operatives.

The Co-op Studies Special

Committee Report on the Wider

An t hony Qu i nn,

B a rrister-at-La w

M A , BC omm . , Di p .Pub l ic

Adm . , F I I S,

Dip. Lagal St ud i es

Application of the Co-op System,

1986, reference 5, was vital. It

represented a strong principled

view among relevant co-operative

umbrella organisations, trade

unions and official agencies that

new legislation should specifically

include

the

internationally

recognised co-op principles e.g.

democratic control (one member,

one vote in primary societies)

based on members' participation

rather than amounts of capital

invested, and also co-operation

among co-ops.

Some Amending Leglsletion

While the principal relevant Act

remains that of 1893, there have

been some amendments over the

years. Following the Mangan report

referred to above, reference 1, the

Credit Union Act, 1966 facilitated

official registration and supervision

of credit unions which are a special

category of industrial and provident

societies. The Industrial and

Provident Societies (Amendment)

Act, 1978, included some law

reform e.g. re wi nd i ng - up of

societies under the Companies

Acts. The 1978 Act, however, was

mainly aimed at deposit-taking

societies such as PMPS rather than

f ac i l i t a t i ng the co-operative

movement.

Legislative Reform -

a Difficult Task

Long delay in introducing a code of

laws specifically for co-ops has

compounded the task of law

reform. The Minister for Industry

and Commerce will presumably

meet co-op interest groups to

discuss possible changes. Most of

those groups have already made

their views known at earlier stages

for the purposes of up-dating the

law. A basic conflict could now

arise regarding the extent to which

co-op law should reflect pure co-op

philosophy based on the inter-

nationally recognised principles

such as democratic control through

one-member, one-vote.

British Industrial and Provident

Acts require societies to be

bona

fide

co-ops before registration. As

many Irish agricultural co-opera-

tives are taking the route of forming

Public Limited Companies, PLC,

with shares traded on the Stock

exchange, it is becoming very

difficult to define precisely a

"bona

fide

co-op".

Anthony Quinn

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