3.2.11 Terminating membership

Rules governing the termination of membership have important long-term consequences for societies that promote community investment. The rules should enable a society to manage their membership, ensure that members remain in contact with the society, and provide the scope for dealing with dormant or untraceable members.

Provision must be made for the circumstances under which membership of the society may be terminated, and the arrangements for handling terminations. The rules must allow members to cancel their membership, or for membership to be terminated if the member no longer satisfies the criteria for admission. Most societies also adopt rules that allow the board to expel members, for instance, if a member fails to pay an annual subscription, or fails to respond to communications over a period of two years, or is untraceable by the society.

The rules must also state what provisions have been made to handle claims by the representatives of a deceased member, or by the trustee of a member who has been declared bankrupt.

The rules should also make provision for any withdrawable share capital held by a person whose membership has been terminated. Some societies have rules specifying that nominal amounts of share capital are neither withdrawable nor transferable, but are forfeited if membership is terminated. Other societies have rules that allow withdrawable share capital to be converted into loans upon termination of membership. 

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