Proposed legislation will cut the red-tape burden for co-ops

The umbrella body for the country’s co-ops has welcomed proposed new legislation aimed at reducing red tape on how they operate.

The Irish Co-operative Organisation Society described the move by Jobs, Enterprise and Innovation Minister Richard Bruton as a positive step.

The proposed changes are aimed at easing the regulatory burden on the societies and making examinership, currently available only to companies, accessible to them for the first time.

ICOS said the bill, though modest in its ambition, is a welcome start to the long overdue process of ensuring that groups and communities have a choice as to the corporate model they wish to operate under.

The associated businesses of Irish dairy processing co-ops and livestock marts have a combined turnover in the region of €13bn.

There are about 1,000 co-ops in Ireland, and the largest 100 employ about 40,000 people

ICOS president Bertie O’Leary said the co-operative model provides a corporate option which promotes a set of principles and values that are unique and different from those of a company.

He welcomed in particular the provision in the bill providing societies with access to examinership, an omission from the original measures, which ICOS had lobbied to be corrected.

Mr O’Leary said the measures being taken in this bill will in part ease some administrative and regulatory burdens on co-ops.

They will also widen the scope for co-operative societies to choose the accounting year end most suited to their business requirements.

Mr O’Leary said further updating and modernising of the now 120-year old Industrial and Provident Societies Act is a vital exercise which will contribute to economic progress.

“These legislative and policy changes will help to ensure that the co-operative business model benefits from the same opportunities and privileges currently available to investor-owned companies under company law,” he said.

In regard to future legislative changes, Mr O’Leary noted that co-ops function under legislation where there is no statutory definition of what constitutes a co-operative.

Members are also subject to statutory financial limits in regard to how much shareholding they may invest in their co-op. Smaller co-ops also cannot avail of audit exemption provisions available to certain companies and they cannot avail of existing examinership provisions.

“The role of the co-operative movement in Ireland is limited in comparison to that in other countries and there is a striking disparity between Ireland and other countries in the sectors where co-operative businesses have flourished.

“This needs to be addressed to facilitate the future growth and development of modern day co-operative businesses.”