1.2.6 Shareholder influence

Shareholders and members of societies are restricted in the amount of influence and control they can exercise individually. This is achieved through two legal mechanisms. Societies are required to state in their rules how decisions will be made at general meetings. Bona fide co-operative societies are required to work to the co-operative principle of one-member-one-vote, regardless of the amount of share capital held by an individual. Society legislation makes no provision for voting arrangements to be allocated on the basis of shareholdings, so the principle of one-member-one-vote also applies to all community benefit societies by default. 

The other way in which shareholder influence is restricted is by placing a legal limit on the maximum amount of withdrawable share capital an individual may hold in a society.  This limit is set at £100,000 (£20,000 in Northern Ireland). This maximum limit prevents a society from being overly dependent on large investors. A society can choose to adopt a lower maximum limit in its rules or share offers, which is advisable for smaller societies, where £100,000 could be a significant proportion of the total capital they require (see Section 3.2.7).

 

If you have any questions or suggestions for new information you would like to find in the Handbook, contact the team by email at communityshares@uk.coop