A community benefit society, also known as a ‘Ben Com’, is a form of society that conducts its business for the benefit of the community.
Community benefit societies are subject to restrictions on the level of interest which can be paid to members of the society. Any surplus profits made by community benefit societies are returned to the community that the society has been set up to benefit and are not distributed among members.
Community benefit societies must be registered with the Financial Conduct Authority (FCA) and are subject to rules which must be approved by the FCA on registration. They are often used in crowdfunding campaigns for community organisations where equity investment is sought, because they can raise funds by issuing shares to the public. However, to ensure the society is run in keeping with co-operative principles, a community benefit society is generally expected to run on a democratic one-member-one-vote basis.
It is also possible to register a charitable community benefit society, which must have an asset lock, protecting the assets of the society for the benefit of the community. A charitable community benefit society must apply to HMRC for exempt charity status, however it will not need to register with the Charity Commission.
If you have any questions about the content of this article, or would like further information on setting up a community benefit society, please contact Jessica Long, Solicitor in Social Ventures and Social Finance group.
Posted on 21/11/2016 in Legal UpdatesBack to Knowledge