Industrial and Provident Societies
The Industrial and Provident Society (IPS) is a type of Mutual Society. It is a legal form with a long history, which can be used for organisations which conduct an industry, business or trade either as a co-operative or for the benefit of the community. Like companies, IPSs are bodies corporate; however, they are not registered under the Companies Acts. Instead, the legislation which governs IPSs is the Co-operative and Community Benefit Societies and Credit Unions Act 1965, (formerly the Industrial and Provident Societies Act 1965 until its renaming in 2010), and the registering body which administers them is the Financial Services Authority.
Under the provisions of the CCBSCUA 1965, An IPS must be run either as a co-operative or for the benefit of the community. A co-operative society is run by and for the benefit of its members, and the majority of surplus profits are retained within the society in order to maintain it. Accordingly, the main object of a co-operative society is not to make money, but to finance its own growth in order to benefit its members as a direct result of their participation in the business.
An IPS run for the benefit of the community exists to provide services to people other than its own members. In order to register with this remit, the organisation in question must be run primarily for the benefit of the community at large, rather than for the members of the society. Profits must also be ploughed back into the organisation, rather than being distributed to members, and the business must demonstrate that there are 'special reasons' why it should be registered as an IPS rather than a company under the Companies Act.
As long as they conform to these standards, then IPSs are free to carry on any business or trade.
Because of restrictions placed on their use by the CCBSCUA 1965, IPSs tend mainly to be used as a corporate form for bodies which are set up to benefit the local communities in which they are based - examples include working men's and other local clubs, allotment societies, Women's Institute markets, housing associations, football supporters' groups, social groups and local interest, literary or historical societies. Where it is being run as a co-operative, an IPS will tend to be just that: a co-operative set up to participate in its own field or area of enterprise and which will work towards benefiting its own members and safeguarding their interests within the context of the individual venture. Consumer, agricultural and housing co-operatives are all examples of enterprises which might be incorporated as IPSs.
Recently, the advent of the Community Interest Company (CIC) has provided an alternative to the classic model of an IPS set up to benefit the community. For further information, please see our page on CICs.
Given their rarity, we no longer provide services relating specifically to IPSs, but may still be able to help you should you wish to convert your existing society to another legal form. For more information or a quote, please contact us.