DUBLIN – ICOS CEO, TJ Flanagan and Legal Counsel & Governance Executive, James Doyle appeared before the Joint Oireachtas Committee on Enterprise, Trade and Employment on Wednesday, 15^th February. They were there to present the ICOS response to the pre legislative scrutiny of the Co-operative Societies Bill 2022.

The General Scheme is the most far-reaching legislative reform in the area of corporate governance and co-op rules since the founding of ICOS. It proposes to make it easier to set up a co-op by reducing the number of founding members from seven to three, providing audit exemptions for smaller co-ops. The scheme also installs additional scope and also prescription on what co-ops can and must provide for in their rules.  

In his opening remarks made to TD’s and Senators, TJ Flanagan said that the scheme would “modernise and consolidate the statutory framework governing co-operative societies in Ireland.” He added, “for the record ICOS wishes to commend this development given the somewhat archaic and piecemeal nature of the existing Industrial and Provident Societies legislation.”

The scheme proposes to change some co-operative terms, for example replacing ‘special general meeting’ with “extraordinary general meeting”. On this, Mr. Flanagan said “member familiarity and co-operative culture should be enhanced not undermined especially where the gains of this proposed homogenisation are not apparent. ICOS calls for retention of these terms per the current law and practice.”

The Scheme proposes an overhaul of the current procedures on how societies may consolidate which ICOS describes as worrying. “These actions would now require two Special General Meetings with support levels of 75% and above 50% respectively.

The current law does not require a second meeting where 75% is secured. For proven reasons of securing a sizeable mandate and moving with efficiency to deliver on the will of members ICOS submits that the current standard works. The proposed change could have serious unintended consequences in the context of service users and their livelihoods”, said Mr. Flanagan.

One of the big changes proposed in the bill is the reduction in the number of people required to establish a co-op, a cut from seven to three. The ICOS view is that the seven-member minimum has served as a reasonable starting point for collective endeavour and should prevail on the statute.

Among a plethora of legislative reforms, the Scheme introduces audit exemption for small co-operatives. Mr Flanagan stated that ICOS has long called for this initiative and therefore support this positive development as the cost of the financial audit can be burdensome in relative terms for small community focused co-operatives. However, he also told the committee that the scheme falls short in devising a solution that safeguards the unique member stakeholder imperatives in a co-operative.

“Prior ICOS submissions to public consultations demonstrate the member control proposals we have considered, designed, and offered. ICOS has grave concerns on the unintended consequences of introducing what is otherwise a very positive concept for co-operative application”, he said.

ICOS believes the Scheme has many positives but equally some of the measures would compromise the prevailing autonomy of co-operatives and their members to tailor rights and structures to their specific needs. It is important that the final legislation addresses that key co-operative principle.