The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar has confirmed today (Wednesday, November 16) that work is underway on drafting new legislation for the cooperative sector.
The Cooperative Societies Bill will provide a specific legislative framework for co-ops for the first time.
The farthest-reaching reform for the sector in over a century will introduce modern corporate governance, financial reporting and compliance requirements.
The Tánaiste said that the legislation, which reflects the approach adopted in the Companies Act 2014, will make co-ops more attractive to investors.
The draft heads of the bill include provisions to make it easier to establish and operate a cooperative society by reducing the minimum number of founding members from seven to three.
Smaller co-ops will be provided with audit exemptions and co-ops will be given flexibility around what rules they adopt.
There is currently no specific legislation dealing with co-ops in Ireland.
To date, entities wishing to follow the cooperative model primarily operate under the Industrial and Provident Societies (IPS) Acts 1893-2021.
However, it has been long accepted that this primary legislation is no longer fit for purpose.
Alternatively, groups can register as companies under the Companies Act 2014 and reflect the cooperative ethos in their company constitution.
By the end of last year, there were 967 industrial and provident societies registered in Ireland.
Tánaiste Leo Varadkar pledged to bring the new law into operation “at the earliest date”.
“Many successful cooperatives have operated in Ireland down the years including agricultural co-ops and mutual building societies.
“Cooperatives differ from companies in that they serve the interest of their members, who are often their suppliers, staff or customers, rather than shareholders. It’s a model that can work particularly well for social enterprises.
“However, the law governing cooperatives has not kept up with the times. This new law changes all that, responds to the needs of the cooperative movement and opens a path for a new wave of cooperative societies,” Varadkar said.
Minister of State for Trade Promotion, Digital and Company Regulation, Dara Calleary said that the proposed legislation will provide as much flexibility as possible.
“The legislation will introduce a modern legal framework which will place the cooperative model on a more favourable and clear legal basis.
“It will create a level playing field with the situation applying to companies and encourage the consideration of the cooperative model as an attractive formation option for entrepreneurs and also for social and community activities”.