The UK Treasury has announced it is to increase the maximum investment for members in co-operatives from £20,000 to £100,000.
The first new consolidated act for co-operatives since 1965 has been introduced into parliament by Treasury Minister, Sajid Javid.
Withdrawable share capital is used by co-operative businesses that are registered as Industrial and Provident Societies, such as consumer retail societies and agricultural co-operatives, to raise finance. Such capital enables shareholders to withdraw their investment with relative ease, whilst still protecting the financial security of the business. The previous limit on withdrawable share capital of £20,000 has seriously restricted the ability of many co-operatives to raise cash for expansion.
The move is also likely to be of benefit to a wide range of co-operatives, where local people come together through calls for ‘community shares’ to save neighbourhood assets, such as village shops, sports centres, heritage buildings and pubs. They are also used to finance community energy projects and regeneration initiatives.
Ed Mayo, Secretary General of Co-operatives UK, the trade body for co-operatives in the UK said: “The £1 that each of the 28 Rochdale Pioneers invested into their retail co-operative society back in 1844 would have been equivalent to £700 in terms of today’s average earnings, a high sum for hard-pressed weavers. There are now over fifteen million members of UK co-operatives and this rise in share limits confirms the arrival on the mainstream of a new asset class for ethical investment – locally based, co-operative and open to all.
“The appetite and commitment to do business the co-operative way has not waned, and this Treasury decision is a massive vote of confidence in the strength of the co-operative sector and recognises the movement’s ambitions for growth and development.”