Societies run for the benefit of the community provide services for people other than their members. There need to be specific reasons why the society should not be registered as a company. For purposes of this assignment, the Viking Supporters’ Co-operative will be used as example of an organisation, which was incorporated under the IPS act. Viking Supporters’ Co-operative belongs to its membership. Every member will own one share, with a value of 15, in the Trust.
The benefits or privileges of registration as an industrial and provident society is the Limited liability which means that the personal liability of its members is limited to the amount of their unpaid share capital. Corporate body status, with perpetual succession – unless steps are taken to terminate its registration under the 1965 Act it will continue to exist even if its membership changes.
Also, the society can act, sue and be sued, and own property, land and other assets in its own name without the need for trustees. The conduct of the incorporated society’s business and its subsequent dealings with the shareholders are significantly different to that of the plc. This is highlighted by the act, which states that: ‘The business of the society will be conducted for the mutual benefit of its members in such a way that the benefit which members obtain will in the main stem from participation in its business. ‘
Furthermore, this relates to the dealings with the members as participation may vary according to the nature of the organisation and may consist of, buying from or selling to the society; using the services or amenities provided by it; or supplying services to carry out its business. Therefore it can be argued that in contrast to the companies act, the IPS act focuses more on benefiting the members, on a social level. Arguable the PLC organisations under the companies act operate for the benefit of the owners, whereas the organisations incorporated under the IPS act, operate for the benefit of both its members and the community.
Every industrial and provident society will need satisfy the specific conditions. It must have at least three members, unless it consists of two registered societies. The rules of the society must include all the matters required by Schedule 1 of the 1965 Act. The proposed name of the society must not be undesirable. As a general rule any proposed name must not be similar to any existing society, charity or company name. The rules are a binding contract between a society and all its members.
Contracts on behalf of the society can be made, varied or discharged in the same manner as between private individuals. Therefore debts due to the society from members are recoverable through a court of law. The society has a lien on a member’s share for any debt due by the member and may set off any sum credited on the shares in or towards payment of the debt. However the society enjoys the benefits of limited liability, the officers of the society are liable for prosecution if they are in breach of their duties.
A incorporated society, will be required to carry out the following to protect the interests of the members, through keeping proper books of account and maintain satisfactory systems of control of those books, cash holdings and all receipts and payments. Submitting an accounting return every year by the due date, accompanied by a set of accounts. In an incorporated society, the IPS act requires that there should be a common economic, social or cultural need or interest amongst all members of the co-operative.
In addition, the conduct of organisation is regulated by IPS act, due to the control of the society lies with all members. It is exercised by them equally and should not be based, for example, on the amount of money members have put into the society. In general, the principle of “one member, one vote” should apply. The members who may also vote to remove them from office should generally elect officers of the society. Notably the rules of the society allow profits to be distributed; they must be distributed amongst the members in line with those rules.
Each member should receive an amount that reflects the extent to which they have traded with the society or taken part in its business. For example, in retail trading society or an agricultural marketing society, profits might be distributed amongst members as a dividend or bonus on purchases from or sales to the society. In other societies (for example, social clubs) profits are not usually distributed amongst individual members but members benefit through cheaper prices or improvements in the amenities available. There should normally be open membership.
This should not be restricted artificially to increase the value of the rights and interests of current members, but there may be grounds for restricting membership in certain circumstances, which do not offend co-operative principles. To summarise, the aim of the companies act is to ensure that all shareholders who invest in the organisation are aware of the financial dealings of the business and therefore are treated fairly in the distribution of the dealings, however due to the size of public limited companies, shareholders will be limited in affecting how the business conducts itself.
In contrast, the Industrial & Provident Society act aims to ensure the members and the subsequent stakeholders, have the open right to affect how the organisation is run and therefore benefit from any increase in profits or external investment. Notably it should be considered how these organisations in determining their contractual terms with consumers are regulated by legislation. Currently laws exist to protect the consumers are both civil and criminal and the relevant rights, duties and liabilities have been created or imposed by common law, in particular by that of contract and tort or by stature.
Both Manchester United and the Viking Supporters’ Co-operative are regulated in their contractual agreements with their consumers through several areas of legislation. The government and in part the European Union, have created and implemented legislations, which directly affect how organisations, that are financially linked with consumers, operate. Notably, the law in all areas of their organisational activities affects Manchester United and the Viking Supporters’ Co-operative.
There are two main areas in the law, which will affect these organisations, which include; Consumer Protection and Employee Protection. Notably due to the size of Manchester United and its increase in merchandising, the Competition Legislation also affects the organisation. In the UK, the government body that is responsible for ensuring that anti-competitive business practices are abolished and consumers are protected is the Office of Fair Trading (O. F. T).
This ensures that businesses meet the requirements of the Fair Trading Act 1973. The O. F. T. has the power to recommend any business to the Monopolies and Mergers Commission (M. M. C) for further investigation, if it feels that they are acting against the public interest (e. g. charging very high prices, or restricting consumer choice). The O. F. T. will also investigate any claims of restrictive practices, that is, where businesses act together to reduce the degree of competition in an industry (e. g. price fixing).
The O. F. T. has the power to set maximum price increases to prevent monopoly exploitation, sets quality standards for businesses to achieve, and establishes ‘Watchdog’ bodies to protect consumers’ interests and monitor business practices. The Competition Commission is an organisation that was established by the government in 1948, and it was designed to investigate and monitor proposed mergers and take-overs of large businesses and to ensure that any businesses with monopoly power do not act against the public interest.
In general, any business with a market share of 25% or more is likely to be investigated. The Competition Commission cannot take legal action itself against any businesses that are acting against the public interest, but instead it can recommend to the O. F. T. that action is necessary. Notably the competition legislation overlaps with the contractual terms that affect consumers. The government has passed several pieces of legislation, which aim to ensure that consumers are protected from the negative aspects of the operations of businesses.
The main areas of legislation aimed at protecting consumers in the UK are, which affect both Manchester United and the Vikings Supporters’ Co-operative The Trade Descriptions Act, 1968: This makes it illegal for a business to provide false or misleading descriptions of their products, services, accommodation and facilities. Both Manchester United and the Vikings Supporters’ Co-operative, will be directly affected by this act. This is due to both organisations are advertising products and services, which have to legally reach satisfactory standards, in relation to how they have been advertised.
The Unsolicited Goods Act, 1971: This stated that unsolicited goods become the property of the recipient if the sender does not retrieve them from the recipient within 30 days of notice. The Consumer Credit Act, 1974: This states that any business which offers credit facilities must obtain a licence from the Director-General of Fair Trading and must also display the annual percentage rate (A. P. R) that will be charged. The Sale of Goods Act, 1979: This states that goods must be of merchantable quality, as described in their advertisements and fit for their purpose.
As a result in the case of Manchester United, which obtain marginal amount of its revenue from its merchandise, the organisations will be expected to produce high quality goods at a price that is reasonable in relation to the quality that is produced. The Consumer Protection Act, 1987: This states that it is an offence for a business to give a false or misleading price indication on its product(s) and businesses are liable for any damage and injury that their defective products cause to consumers.
The Food Safety Act, 1990: This states that it is an offence for a business to sell food if it is not registered to do so and also if those handling the food have not been appropriately trained. It also states that the food must be of the expected nature and quality that is demanded by the consumer. Another area, which should be taken into consideration, is the law of Tort as both Manchester United and Viking Supporters’ Co-operative.
The law of Tort extends to negligence, due to the fact that both this organisation, operate on premises, both organisations will need to implement procedures to ensure harm does not come to consumer, due to the negligence of their employees. Therefore the buying and non-buying will be protected by the law of tort As a result of these forms of legislation, all business activities, which the stated organisations take part in, from the establishment of the organisation through to the sale of the product/service to the consumer are influenced by law.
Notably both these organisations enter into contracts, whether with suppliers, employees, financiers or consumers, therefore in view of legislation these contracts are significant to the business operations. Therefore in creating contractual terms, the organisations, will take in to consideration, the legislation to ensure that in practice the terms are fair. However both the organisations may choose to take the option of using disclaimers, notably it should be taken into consideration that disclaimers do not ensure the organisations is exempt from responsibility.
Notably in implementing up contracts (which are fundamentally agreements), both organisations will use oral or written, will be conducted between two or more persons, which are legally enforceable, providing they comprise a number of essential elements. These elements include, offer, acceptance, consideration, intention to create legal relations and capacity. In respect of contracts, the main written contracts, which these organisations will enter into, will be with regard to the premises.
In the retailing of tickets, to matches, Manchester united will set out several terms and conditions, with regards to the use of grounds, which are to ensure the safety of the consumers and legally protect the company. Notably due to the recent development of e-business, Manchester United currently sales merchandise from its website, therefore to ensure that both the consumers and the organisation is legal protected, the consumers will be asked to agree to a set of term and conditions before continuing with their purchases.
In respect of the Vikings Supporters’ Co-operative, the stated legislations will affect the contracts between the consumers, whom use their premises as the organisations will aim to take into consideration, these pieces of legislation to ensure the consumers is not mislead as to the services and subsequent goods which the organisation provides. In conclusion these laws are imposed to covers areas as diverse as trade descriptions, the sales of goods and services, and consumer credit and product liability.
Arguable this indicated that the government is being responsive to the complaints of consumers and their representative organisations and thus use legislation to regulate the relationship between corporations and consumers. It can be argued that this intervention through legislation is a political response to some of the socially unacceptable characteristics of a capitalistic economy.