MEMBERS of the 143-year-old Musselburgh & Fisherrow Co-op in East Lothian have voted to demutualise the society and turn it into a limited company.
In a move that will send shock waves through the UK Co-op Movement, a new company could be set up following a second confirmatory vote – providing the switch is approved by the Financial Services Authority.
However the News understands that the FSA is investigating claims that some members may have been disenfranchised and that the confirmatory meeting scheduled for Monday is not valid because the board meeting which arranged it was inquorate.
Co-operatives UK are concerned by the governance issues involved and have placed an advertisement in this weekend's Musselburgh News offering help and guidance to local M&F Co-op members who "may have been removed from membership of the society" without their knowledge.
At the original meeting at the end of September, the proposal to demutualise was supported by 821 of the society's 1,080 members, with only 45 voting against.
Under current plans, existing Co-op members will be offered the chance to become shareholders of Musselburgh and Fisherrow Scotland Ltd or be able to cash in their shares for a one-off payment of £ 500 plus a sum equivalent to five times the value of their share account.
Musselburgh & Fisherrow Society Chief Executive Tom Lees declined to comment to the News, but in a report in his local newspaper which he agreed is fair and accurate, he is quoted as saying that the current trading position of the Co-op Movement meant that societies were no longer able to generate sufficient profits to give members meaningful benefits.
"This is certainly the case for M&F Co-op," he said. "And I believe it is the position of a number of other societies."
"The board have gone out and listened to members and responded to what they want, which is what a democratically run society is all about. We are reacting to the wishes of the majority of our members – and more than 80 per cent want conversion. I think other societies would get the same reaction if they were brave enough to go out and ask their members."
Added Mr Lees: "The community will not be losing anything. There will be a name change and that is literally all that will happen."
Mr Lees denied there would job losses among the society's 40 full-time and 50 part-time staff as a direct result of the proposed demutualisation moves and said conditions and terms of employment would be unaffected.
However at the meeting in the society's Quayside development in Musselburgh, where the potentially historic vote to sever links with the Co-op Movement was taken, chair Barbara Archibald warned there could be no guarantees for the future of some loss-making units irrespective of the outcome of the demutualisation plans.
Ms Archibald said the society had been affected by the apathy of its members which had resulted in board elections being uncontested for the past 15 years and vacancies exisiting on the board for the past five years.
She said that former M&F President George Cunningham – Congress President in Portsmouth in 1993 – had recently commented on the "massive lack of interest in democratic control by members" which was unprecedented in his 35 years with the society.
Mr Cunningham, a former member of the Co-operative Union Central Executive, is currently on holiday and unavailable for comment. However he is thought to be bitterly opposed to the proposed change to a limited company status.
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