Finance Act 1986

24 Approved profit sharing schemes: workers' co-operatives

(1) In Schedule 9 to the [1978 c. 42.] Finance Act 1978 (profit sharing schemes) at the end of Part V (interpretation) there shall be added the following paragraph—

“18 In this Schedule "workers' co-operative" means a registered industrial and provident society, within the meaning of section 340 of the Taxes Act, which is a co-operative society and the rules of which include provisions which secure—

(a) that the only persons who may be members of it are those who are employed by, or by a subsidiary of, the society and those who are the trustees of its profit sharing scheme; and

(b) that, subject to any provision about qualifications for membership which is from time to time made by the members of the society by reference to age, length of service or other factors of any description, all such persons may be members of the society;

and in this paragraph "co-operative society" has the same meaning as in section 1 of the Industrial and Provident Societies Act 1965 or, as the case may be, the Industrial and Provident Societies Act (Northern Ireland) 1969.”

(2) In paragraph 7 of that Schedule (conditions as to shares) for paragraph (b) there shall be substituted the following paragraph—

“(b) except in the case of shares in a workers' co-operative, not redeemable; and”.

(3) In section 54 of the Finance Act 1978 (the period of retention etc.)—

(a) at the end of subsection (1)(d) there shall be added "or, in the case of redeemable shares in a workers' co-operative, as denned in Schedule 9 to this Act, by redemption"; and

(b) at the end of subsection (4) there shall be added “or

(d) in a case where the participant's shares are redeemable shares in a workers' co-operative, as denned in Schedule 9 to this Act, the date on which the participant ceases to be employed by, or by a subsidiary of, the co-operative.”

(4) Where, for the purpose of securing (and maintaining) approval of its profit sharing scheme in accordance with Part I of Schedule 9 to the Finance Act 1978, the rules of a society which is a workers' co-operative or which is seeking to be registered under the industrial and provident societies legislation as a workers' co-operative contain—

(a) provision for membership of the society by the trustees of the scheme,

(b) provision denying voting rights to those trustees, or

(c) other provisions which appear to the registrar to be reasonably necessary for that purpose,

those provisions shall be disregarded in determining whether the society should be or continue to be registered under the industrial and provident societies legislation as a bona fide co-operative society.

(5) In subsection (4) above "the industrial and provident societies legislation" means—

(a) the [1965 c. 12.] Industrial and Provident Societies Act 1965, or

(b) the Industrial and [1969 c. 24 (N.I.).] Provident Societies Act (Northern Ireland) 1969,

and "registrar" has the same meaning as in each of those Acts and "co-operative society" has the same meaning as in section 1 of those Acts.