Simply Legal

1. Simply Legal An overview of the common legal forms and organisational structures of local food initiatives Mark Simmonds Field Officer – Good Food, Good Governance Making Local Food Work Project mark.simmonds@uk.coop

2. What we will cover today • What is incorporation? • The pros and cons of incorporation • The difference between legal form and organisational type • The common legal forms used in the local food sector • The factors affecting the choice of legal form • Select-a-structure tool • Additional training and support available through the MLFW project

3. Unincorporated association • Cheap and easy • No need to register with officialdom • Very flexible • Organisation has no existence (in law) separate to its members • Unlimited personal liability • “Cannot” own property or enter contracts in organisation’s name • Unlikely form for a trading enterprise

4. Examples of Unincorporated Initiatives Green Action Food Co-op, Leeds • Little risk • Uses existing infrastructure – Leeds University Student Union • Reliant on volunteers – no employees • Bulk purchasing – Wholefood, veg boxes

5. Corporate Body Incorporation • Creates a separate legal identity from the membership, the “corporate body” Incorporation

6. Corporate Body Incorporated organisation • Limited Liability • Credibility • Organisation can own property in its own right • Organisation can enter into contracts in name of organisation • Cost • Administrative burden • Penalties for poor administration • Loss of privacy

7. Organisational Types for local food initiatives • Co-operatives • Worker co-operative • Consumer co-operative • Co-operative Consortium • Community Supported Agriculture • Farmers Market • Food Co-op/Buying Group • Village Shop • Community Enterprise • Social Enterprise • Community Land Trust • etc………..

8. Corporate Body Legal Form and Organisational Type • Legal form – How the law regards the organisation • What sort of jam jar have you got? • Organisational type – How the organisation regards itself • What sort of jam have you got in your jar? Corporate Body

9. Mindset for organisations • We know • what we want to do • how we want to do it • Legal forms and organisational types are the tools that can be used to get the job done • But • some forms won’t work together • and some aren’t favoured/understood by funders/investors

10. Example 1 CLG – Green Patch Kettering Community Supported Agriculture project Volunteer growers Paid worker - Groundworks Small board of directors

11. Example 2 CLG – Handmade Bakery Community Supported Bakery project in Slaithwaite, nr. Huddersfield Small Worker Co-operative Subscriber “members” are not members of the company

12. Co-operative society example 1 Hazelhurst CSA Co-operative, Sheffield • Exists for the benefit of the consumer members • Also has investor members • Land is owned for the benefit of the members who also receive organic produce

13. Co-operative society example 2 Green Valley Grocers • Established 2009 (Slaithwaite Co-operative Limited) • 100+ members • Raised £15,000 from the local community in two weeks • Can distribute profits to the members • Interest on shares • Dividend in relation to purchases

14. Co-operative society example 3 The People’s Supermarket • American food co-op model • Pay 10% “dividend” up front as a member benefit • 500+ members

15. Community benefit society - examples Fordhall Farm • 1 farmer, 8000 landlords • Exempt charity • Can buy shares on-line Bridport Local Food Links • Provides locally sourced healthy school meals • Schools, parents and workers are members

16. CIC - examples Weardale CSA CIC • Originally Company Limited by Shares-CIC • Disfavoured by funders • Converted to CLG-CIC Food Chains NE CIC & Ipswich Ripple Food Co-operative CIC • Companies Limited by Guarantee • Provide low cost vegetables to the community through food co-operatives • No profit distribution

17. Charitable Status • Not a structure but a status • Tax and rates relief • Grant funding • Asset protection • Limited “permitted purposes” • Limits to trustee benefits • More onerous administration • Limits on trade

18. Mindset for organisations • We know • what we want to do • how we want to do it • Legal forms and organisational types are the tools that can be used to get the job done • But • some forms won’t work together • and some aren’t favoured/understood by funders/investors

19. Your structure – good start-up governance • First consider as a group or delegate to steering group: • Exactly what is it you want to achieve? • Why you want to achieve it (your ethos)? • Where’s the money going to come from? • What will you do with any surplus? • Who will be involved and how? • Assets and ownership • Future membership and wind-up • Then seek professional advice • Select-a-structure exercise www.selectastructure.uk.coop

20. Members? Objects? Ethos? Powers? Profit? Ownership? All combine to create the... Business plan Governing document Key questions Who involved and how? + What are you going to do? + Why are you doing it? + How are you going to do it? + When are you going to do what? All contribute to...

21. Simply LEGAL • Download from: • www.cooperatives-uk.coop/simplylegal