Ireland’s Enterprise Committee publishes pre-legislative report on co-ops bill

‘I hope that when enacted it will be an important and significant reform of the co-operative sector’

Scrutiny on a bill to modernise and consolidate Irish co-op law has highlighted issues including the need for asset locks and an improved definition of the co-op model.

Parliamentarians on the Joint Committee on Enterprise, Trade and Employment made their recommendations last month in their pre-legislative scrutiny report on the General Scheme of Co-operative Societies Bill.

Launching the report, the committee’s Cathaoirleach deputy Maurice Quinlivan said there were 27 recommendation, with 19 key issues identified, including “the re-establishment of the co-operative development unit, a more precise and inclusive definition of a co-operative, a statutory requirement of an asset lock, an optional requirement of a mission lock, the collation of disaggregated data on co-operatives and the provision of further resources to the local enterprise offices (LEOs) to support co-operatives in their establishment and growth.

“The joint committee look forward to further engagement on the bill and I hope that when enacted it will be an important and significant reform of the co-operative sector.”

In particular, the commission calls for LEOs to be supported in terms of relevant training, capacity, upskilling and resourcing to facilitate the establishment and growth of cooperatives and further recommends that each LEO should have a minimum of one subject matter expert available in house to provide support.

Other recommendations include considering how to develop an accurate means of reporting on the nature and scale of the co-operative sector in Ireland, and a legal requirement for an asset lock.

The committee wants further evaluation of the proposals around legal reserves, to assess any necessary levels or limits that may be needed.

The committee welcomed the introduction of an audit exemption to ease the cost and administrative burden on SMEs, adding co-ops should be given supports to enable them to do this effectively.

Under the bill, rule changes and mergers between co-ops would require each co-operative to convene two meetings, with 75% support at the first meeting, coupled with a minimum 50%+ support at a second meeting.

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The committee recommends that proposed changes on rule amendments be scrapped and the existing regime maintained, arguing that this has “provided certainty and assurance to co-operative societies and the rules to which they adhere”.

But it suggests that further consideration be given to whether a second meeting should only be required for rule changes where the 75% attendance threshold is met in the first meeting, save for in instances of dissolution.

In terms of worker co-ops, the committee recommends that further consideration be given to the need for a legal definition of a worker co-op and that “further consideration be given to legislating for worker buy outs of businesses in cases of succession planning or administration”.

The committee also supports the reduction in the number of persons required to establish a co-operative from seven to three but suggests that legislation should provide a more precise and inclusive definition of what constitutes a ‘co-operative’.

“The Department of Enterprise, Trade and Employment should consult with relevant stakeholders and the wider public in doing so,” it adds.

The full report is available here.