Non-User Investor Members in UK Co-operatives

2006 saw the liberalisation of FSA policy on the use of “investor shares” for non-user investor members. The FSA document permits co-operatives to have non-user investor members who hold “Investor Shares”, subject to restrictions to protect the interests of user members. These include restricted voting rights for investor members, compliance with applicable regulatory requirements under FSMA 2000, and an overriding requirement that the society remains, in the FSA’s view, a “bona fide co-operative” (Investor Membershipof Co-operatives registered under the Industrial and ProvidentSocieties Act 1965 A Policy Note by Michael Cook and Ramona Taylor, Financial Services Authority, 2006). This change was uncontroversial among those consulted by the FSA as it addressed the need of co-operatives to raise capital.

However, it may be of considerably more use and interest now that the statutory limit on holdings by members other than industrial and provident societies has been removed for non-withdrawable shares in societies.