2.2.5 Membership shares and subscriptions
Non-withdrawable, non-transferable shares are referred to as membership shares in this Handbook. (It should be noted that all types of shares in a society confer membership, unless the society adopts rules that specifically exclude such rights from a class of share.) All three types of society can issue this type of share capital. If the shareholder ceases to be a member of the society, the share capital is cancelled and transferred to the general reserves of the society. This type of share capital is normally of fixed and nominal value, typically ranging from £1 to £25, although there is no legal limit on the amount. However, a bona fide co-operative society should not have artificial restrictions to open membership, and a highly priced membership share might be seen as such a restriction.
The rules determining how membership is terminated are important in deciding the price of a membership share. A society can charge a member an annual subscription, and failure to pay this subscription is normally grounds for terminating membership. Where a society charges members an annual subscription, it is normal for the membership share to have a low nominal value, usually deducted from the first year’s subscription.
It is reasonable for a membership share to be set at a higher fixed price if the society does not charge an annual subscription, on the grounds that the cost of providing membership services must be covered by the price of the membership share.
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