Frequently Asked Questions
- I’m confused by the number of support organisations all offering me help – why are so many agencies offering the same thing?
- Can I work with other support organisations at the same time as the Wales Co-operative Centre?
- Can the Wales Co-operative Centre provide funding for us?
- How much does business support from the Wales Co-operative Centre cost?
- How long will it take before we can register and start trading?
- Can you provide business support in Welsh?
- What sort of training can you provide?
- At what point does the support end?
- How many people do you need to form a co-operative?
- Should we incorporate?
- How long does it take to register?
- What are the responsibilities of the directors?
- Are the directors personally liable for any of the debts of the company?
- What is the difference between a director and a member of an organisation?
- What are the administrative requirements when you are incorporated?
- As a not-for-profit company are we allowed to make money?
- As a not-for-profit organisation are we entitled to any tax relief?
- Can we apply for charitable status as a company?
- How will charitable status affect the running of the business?
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I’m confused by the number of support organisations all offering me help – why are so many agencies offering the same thing?
Admittedly it is confusing, but most agencies specialise in different areas. The Wales Co-operative Centre is the only agency which specialises in helping co-operatively structured projects and businesses. This structure doesn’t suit everybody, so if we find it’s not appropriate for you, we’ll happily help you find an agency that would be more useful.
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Can I work with other support organisations at the same time as the Wales Co-operative Centre?
That’s fine, you can work with as many different bodies as you like. We often work with other agencies to ensure the best possible outcome for our clients. It helps if you tell us who else you’re working with, just so we don’t duplicate what they’re doing – and tell them you’re working with us too!
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Can the Wales Co-operative Centre provide funding for us?
Unfortunately we don’t give out grants, but we are able to help you find funding from other sources. We can tell you about different funds and also help you with the paperwork.
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How much does business support from the Wales Co-operative Centre cost?
It really depends very much on the nature of your business and the support we are providing. Initial support and advice is free – if we need to charge you for a particular service, your development officer will make this clear well in advance.
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How long will it take before we can register and start trading?
It varies from project to project and really depends on how quickly your members and directors move things forward. The pace of the project is always dictated by the client, unless we feel something hasn’t been considered carefully enough, in which case we might advise taking another look at it.
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Can you provide business support in Welsh?
Our business support services can be provided in your language of choice, either English or Welsh, maintaining the same standards in both languages. We can also register your project with Companies House in either language.
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What sort of training can you provide?
The Wales Co-operative Centre provides training courses specifically aimed at people working for co-operatives and social enterprises. Your development officer can take you through a training needs analysis to determine what the people involved in your project need. This training can then be delivered by our training team.
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At what point does the support end?
We provide support to both new and existing co-operatives and social enterprises so there is no fixed point at which we will stop giving advice, although most clients receive between 14 and 35 hours of support. Some clients stop using us once they’ve registered and then come back later for advice on expanding their membership. If we can still help you, we won’t turn you away once you’ve had 35 hours of support.
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How many people do you need to form a co-operative?
Company limited by guarantee: 2 – 1 director and a company secretary.
Industrial and Provident Society – a minimum of 3 people is required.
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Should we incorporate?
There are several triggers that can indicate it is time to incorporate:
- Buying a freehold property which may involve taking out a bank loan
- Taking on credit
- Taking on a lease
- Taking on employees
- Entering into large contracts
- If there is any risk management related to your product or service
If any of the above factors are relevant to your organisation it may be time to incorporate. There are several reasons why the organisation should consider registration.
- Members´ liability for the organisation’s debts is limited. An agreed limit of liability allows for the protection of the members if the organisation gets into financial difficulty.
- The business will become a legal entity in its own right that exists separately from the membership. Therefore, the business will continue to exist in spite of changes in membership.
- The business will be able to take legal action in its own name, own property, enter into contracts, sue and be sued and it can open a bank account in its own name.
- It becomes a legal form recognised by potential funders and supporters. In some instances grant funders, loan funders and banks may insist on a company structure.
- By adopting Memorandum and Articles of Association clarity of business structure is obtained and by incorporating co-operative principles the company can be identified in law as benefiting its members.
- If a group remains unincorporated but has a drawn up constitution and a membership register, then all members can be liable for any debts incurred by the business. Once incorporated, the Directors of the company become the legal managers and, in the eyes of the law, have special duties and responsibilities.
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How long does it take to register?
It usually takes 2 weeks from when we receive all completed paper work. However, this can be delayed if paper work has been completed incorrectly
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What are the responsibilities of the directors?
- A director is responsible in law for running the company and every company must have at least one. In general terms a company director is responsible for the development and implementation of policy. The company´s directors are the people who the law recognises as having the authority to bind it and they act as agents for the company and trustees of the company’s assets. They will normally be appointed at the AGM and sign a form to notify Companies House as such.
Anybody can become a director, with a few exceptions: -- A court must not have disqualified a person from acting as a company director.
- A person must not be an un-discharged bankrupt (except with leave from court).
- A director is expected to show a level of care, diligence and skill appropriate to their actual knowledge and expertise.
- They must be reasonably competent and comply with their fiduciary duties, ensuring it is the company as whole that benefits from the directors decisions and that not individual directors are specific sectors only are benefiting.
- They must not allow the company to trade fraudulently and where the company is in financial difficulties they should not allow the company to trade wrongfully.
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Are the directors personally liable for any of the debts of the company?
Members/directors´ liability for the organisation’s debts is limited. An agreed limit of liability allows for the protection of the members if the organisation gets into financial difficulty.
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What is the difference between a director and a member of an organisation?
A co-operative is based on the principle that a larger group of people, the membership, get together and delegate responsibility for running the organisation to a smaller group of people, the board of directors.
A director is responsible in law for running the company and every company must have at least one. In general terms a company director is responsible for the development and implementation of policy.
Membership gives people the right to participate in the functioning of the company. The role of members includes:- The right to receive information on the organisation’s performance
- The right to take part in the election of the board
- The right to attend and speak at AGM / General meetings
- To vote on any resolutions e.g. changes to constitution
- Get nominated to serve within the democratic / participative structure of the organisation.
Ultimately the directors are answerable to the company´s members, as they can remove them at the Annual General Meeting.
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What are the administrative requirements when you are incorporated?
The Company Secretary is generally responsible for all the legal aspects involved in running the business. This includes:
- Appoint an auditor if turnover of the business exceeds £350,000 per annum.
- Instruct your auditor to undertake the annual audit of your co-operative´s accounts at the end of the financial year.
- File annual accounts at Companies House within 10 months of your financial year-end, accompanied by the Directors´ Report and auditor´s Report. Keep copies at the registered office.
- Maintaining the statutory records of the business.
- Ensure that all procedures about admitting new members are followed, that all members (including management) both new and old are informed of their duties and responsibilities.
- Make sure all stationery comply with legal requirements.
- Display the full name of the business at the registered office and at each place of business.
- Organising meetings i.e. agendas are agreed and minutes are noted and circulated.
- Make sure the correct notice is given for meeting as stated in the Articles.
- Make sure that an Annual General Meeting is held in each calendar year and that there is not more than 15 months between one AGM and the next.
- The secretary should ensure that minutes are full and correct records of procedures are kept at general meetings.
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As a not-for-profit company are we allowed to make money?
Yes, generating income will help towards the business becoming sustainable in the long term. It is what you do with the money that is the important issue. As a not-for-profit organisation, profits cannot be distributed for the personal benefit of the members of the organisation.
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As a not-for-profit organisation are we entitled to any tax relief?
A community co-operative is liable for tax just as any profit making SME. However, a community co-operative can apply to their local Inland Revenue office for mutual trading status. If accepted, the Inland Revenue office will deem the organisation as having charitable objectives and thus will have the same tax relief as a registered charity without having to register as such.
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Can we apply for charitable status as a company?
Yes, the organisation will become a charitable company and will enjoy the advantages of the charity but also the advantage of the company limited by guarantee. The constitution of the charitable company must stipulate common ownership, non-distribution of profits to directors or members, and employees are not allowed to sit on the board.
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How will charitable status affect the running of the business?
Trading by charitable organisations is allowed within certain specific limitations. There are 2 types of trading specified:
- Primary purpose trading
- Trade carried out by the beneficiaries of the charity.
In order to avoid trading restrictions, an organisation may establish a charity with a separate trading arm or establish a trading company with a separate charitable arm where profits are transferred directly to the charity.
