Conversions Between Registered Societies And Companies

• Published date: 12 October 2022
• Subject Matter: Corporate/Commercial Law, Charities & Non-Profits , Corporate and Company Law
• Law Firm: Wrigleys Solicitors
• Author: Ms Laurel Sleet

Statutory conversion routes provide a streamlined way to change legal structure.

Usually, changing from one legal structure to another involves 1) the incorporation of a new entity, 2) the contractual transfer of assets and activities from the old entity to the new entity using a transfer agreement, and 3) winding up the old entity. This can be an expensive process depending on complexity of the organisation's activities.

However, under sections 112 and 115 of the Co-operative and Community Benefit Societies Act 2014 (CCBSA 2014), it is possible to convert from a society to a company, and from a company to a society, using statutory conversion processes. These routes are available for both companies limited by guarantee and companies limited by shares. However, there are restrictions, including in relation to community benefit societies with a statutory asset lock.

The statutory conversion routes provide a streamlined way to change from one legal structure. If a statutory conversion route is used, the existing entity remains the same legal person, and there is no need to transfer property or assets over.

The High Court provided helpful clarity on this point, confirming the long-held view of many society practitioners, in the case of Mount Wellington Mine Ltd v Renewable Energy Co-operative Ltd [2021] EWHC 1486. In this dispute regarding a lease, the court considered whether a company...